The Treasury Department of Puerto Rico published a document that modifies the “Sales and Usage tax” to include NFTs. Although this proposal is still being considered, experts believe that it validates the asset class and also addresses the challenges of applying this regulation.

Puerto Rico May Soon Tax NFT Sales

The Department of Treasury of Puerto Rico is focused on NFT sales. The organization released a newly proposed reform to the Sales and Usage Tax law last month that includes the concept of NFTs as a taxable asset class. The new amendment would also include NFTs in the Specific Digital Products group. It is

Digital audiovisual work transferred or delivered electronically, and digital audio works or other digital products provided that a purchaser has a digital code will be treated the same as any specific digital product, even digital products in token format, medium non-fungible, or “NFT”.

The amendment outlines the steps taxpayers must take to report NFT sales. It states that the details must include the source and addresses of buyers, if possible. This is the response of the country’s treasury to the rise of NFTs, which have seen billions in sales worldwide.

A Challenge to Apply

While analysts agree that NFTs should be recognized and included in the reform, many believe that the application of these rules to the Treasury department will prove difficult. This is the opinion of CPA Giancarlo Esquilin, who told local media that the current definition of the law project is not adequate. He said

It is difficult to apply the tax as there are many factors that determine where the buyer is. You don’t know who your buyer or where their bank account is for NFTs. It would be difficult to control.

Esquilin recognizes that Puerto Rico may be the first U.S. territory to consider NFTs taxable products. This could lead to other jurisdictions adopting similar regulations. Juan Pedreira, a tech analyst, stated that it is unclear how the Treasury will audit these sales. Pedreira stated that this process would not be as straightforward as the Treasury currently makes it appear.

What do you think about Puerto Rico potentially taxing NFT sales? Please leave your comments below.

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