Call
or e-mail us to obtain a copy of our
"Summary of Major Filing and Reporting
Requirements in Puerto Rico".
Puerto Rico has its own internal
revenue code and tax system. In addition, it has
tax incentive programs for manufacturing, hotel
operations, agriculture, venture capital funds
and service industries, that make Puerto Rico an
attractive location to establish operations.
The tax system is the
responsibility of the Treasury Department and the
Secretary of the Treasury. The Treasury
Department issues tax regulations which are
interpretations of the tax code, issues rulings
on the tax effects of transactions, and also
publishes bulletins and circulars clarifying the
provisions of the tax code.
The Internal Revenue Area of the
Treasury Department is divided into the following
bureaus: Auditing, Tax Return Processing, Excise
and Alcoholic Beverage Taxes, and Tax
Collections.
The Puerto Rico tax system has
many similarities to the United States tax code.
Therefore, Puerto Rico imposes taxes on the
income of corporations, partnerships, estates,
trusts, and individuals, as well as on imported
merchandise. There are also unemployment and
disability taxes administered by the Secretary of
Labor and compulsory workmen's compensation
insurance.
Tax withholdings are required on
various payments, such as wages, and for services
rendered by individuals and corporations in
Puerto Rico, and on dividends, royalties, and
other income remitted from Puerto Rican sources
to nonresident corporations, partnerships, and
individuals.
Dividends paid to corporate and
individual shareholders are subject to a 10% tax.
Interest paid to individuals from interest
bearing accounts in Puerto Rico are subject to a
maximum tax of 17%.
Under the Puerto Rico Internal
Revenue Code of 1994, as amended, partnerships
are taxed, generally, in the same way as
corporations, unless certain elections are made.
Puerto Rican individual taxpayers
are allowed certain deductions and personal
exemptions in determining their net income. A tax
credit for income taxes paid to the U.S. and
foreign countries is allowed to resident
individuals and domestic corporations and
partnerships, with certain limitations.
A self-employed person's net
profit or loss from a solely owned trade or
business (including a profession or other
independent occupation) is reportable as income,
and is taxable at individual income tax rates.
Certain limitations apply for the use of these
losses against other types of income.
The federal social security tax
levied on the self-employed and on wage earners,
and federal unemployment insurance taxes in
Puerto Rico are identical to those in the U.S.
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