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Puerto Rico’s Treasury Department Intends to Tax NFT

The present “Sales and Usage Tax” in Puerto Rico has been amended to cover NFT sales by the Treasury Department of Puerto Rico. But even if accepted, the inclusion of NFTs in this reform would help validate the asset class, but it will also raise difficulties in its implementation.

Puerto Rico Is Considering Taxing NFT Sales in the Near Future

Sales of NFTs are being monitored by Puerto Rico’s Treasury Department. Sales and Use Tax Law reforms recommended by the organisation include NFTs as a taxable asset class last month. Including NFTs in the Specific Digital Products group would be the result of this new amendment. The following is how it’s worded:

Digital audiovisual works transferred or delivered electronically, digital audio works, or other digital products, provided that a digital code gives a purchaser the right to obtain the product will be treated in the same way as a specific digital product, including digital products in token format or medium non-fungible or “NFT”.

NFT sales must be reported in detail, including the source of income and the addresses of the buyers if possible, according to a new amendment. This is the treasury’s response to the emergence of NFTs, which have been sold for billions of dollars around the world.

A Difficulty in Applying

Analysts agree that identifying and including NFTs in this reform has its advantages, but most of them feel that the Treasury Department will have difficulty enforcing these laws. Giancarlo Esquilin, a local CPA, believes that the project’s present description is inadequate. He made the following statement:

As it is written right now, it is a bit difficult to get to the application of the tax because there are several factors of where the person who buys it is located. For NFTs, you don’t see who your buyer is or where the bank account is. It would be uphill in terms of control.

Although Puerto Rico may be the first U.S. jurisdiction to regard NFTs as taxable products, Esquilin acknowledges that other jurisdictions may follow suit and propose better regulatory frameworks as a result. Analyst Juan Pedreira said that it is still unclear how the Treasury Department will audit the sale of these assets. Predicted that this would be more complicated than the present Treasury is making it out to be, Pedreira said.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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