Tax authorities
Puerto Rico Treasury Department (Departamento de Hacienda)
PO Box 9022140, San Juan, Puerto Rico 00902-2140
Tel: +1 787 721 2020
Tax rates at a glance
(As of August 24 2011)
| Corporate income tax |
20% - 30% |
| Capital gain tax |
15% |
| Branch tax |
20% - 30% |
Withholding Tax |
|
| Dividends |
10% |
| Interest |
0% / 29% |
| Royalties from patents and licenses |
29% |
| Branch remittance tax |
10% |
Net operating losses (years) |
|
| Carryback |
Not allowed |
| Carryfoward |
7 to 10 years |
- Puerto Rico has progressive tax rates depending on the company's net income. In addition, Puerto Rico has several tax incentive laws which provide significantly reduced tax rates or exemptions depending on the activity of the company. The corporate income tax rate includes a newly legislated reduction on the surtax for taxable years commenced after December 31 2010.
- Certain tax exemption laws provide a total exemption from tax on distribution of earnings and profits from qualified activities and significantly reduced royalty rates.
- Interest payments to non-related entities not engaged in trade or business within Puerto Rico or interest payments to entities engaged in trade or business within Puerto Rico, whether related or not, are not subject to income tax withholding. Interest paid to related entities not engaged in trade or business within Puerto Rico is subject to a 29% income tax withholding.
- Certain tax exemption laws provide special income tax rates for royalties paid to related entities which are lower than the regular income tax rate.
- A branch of a foreign corporation in Puerto Rico may either be subject to a tax withholding on the transfer of earnings (paid by the home office through an income tax withholding) or a branch profit tax (paid by the branch in the income tax return) depending on their level of activities in Puerto Rico.
- The net operating losses carryfoward for years 2004 to 2012 was increased from seven years to 10 years. The carryfoward for other years remains at seven years.
Source: Professionals from Zaragoza & Alvarado - Taxand
Puerto Rico
Felipe Mariani
Zaragoza & Alvarado - Taxand
Puerto Rico
Felipe Mariani of Zaragoza & Alvarado – Taxand discusses the most relevant provisions of the Puerto Rico Tax Reform
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