Departamento de Hacienda
P.O. Box 9024140, San Juan, PR 00902-4140
Tel: +1 787 721 2020
Website: www.hacienda.gobierno.pr
Tax rates at a glance
(As of August 19, 2009)
| Corporate income tax rate |
20% - 40.95% (a) |
| Capital gain tax rates |
15% - 15.75%(b) |
| Branch tax rate |
20% - 40.95% (a) |
Withholding tax |
|
| Dividends |
10% (c) |
| Interest |
0% / 29% (d) |
| Royalties from patents and licenses |
29% (b) |
| Branch remittance tax |
10% (e) |
Net operating losses (years) |
|
| Carryback |
Not allowed |
| Carryfoward |
7 years |
(a) 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 income tax rate includes a newly legislated 5% surtax on the income tax which will be effective for a three year period for the years started after December 31 2008 and before January 1 2012.
(b) Puerto Rico has a special long-term capital gain tax rate of 15% for corporations and partnerships. However, the newly legislated 5% surtax may apply in certain situations to the special long-term capital gain tax rate increasing it to 15.75%.
(c) Certain tax exemption laws provide a total exemption from tax on distribution of earnings and profits from qualified activities and significantly reduced royalty rates.
(d) Interests payments to nonrelated entities not engaged in trade or business within Puerto Rico or interests 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.
(e) 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.
Source: Professionals from Zaragoza & Alvarado, the Puerto Rico member of the Taxand global network of leading independent tax firms.