Wednesday, November 13, 2013

Resident Recipients Withholdings

In Puerto Rico payments for services rendered made by the Government of Puerto Rico or any person in excess of $1,500 to another person for services performed within Puerto Rico are subject to a seven percent withholding. This withholding should sent to the Puerto Rico Treasury Department on or before the tenth of the month. Remember that in-kind payment such as when a person a person that transfers property in exchange for services is considered a payment for these purposes.

In calculating the amount to be withheld, consider that things like travel expenses, machinery and parts are not services and should be separated. Separated out items should also include insurance contracts, leasing of personal or real property, printing, publications etc. Once items are separated a correct withholding amount can be determined.

As always there are certain circumstances when the withholding is not 7% -- an example is when as when payments for services to corporations that are current in their tax responsibilities with the Puerto Rico Treasury Department and have me other requirements.

The amounts withheld or deposited is creditable against the income tax liability, and an annual reconciliation filing is required.

The information on this website is general information and is for educational use.  You, the reader, should further research your specific individual situation.  In addition you should contact your accounting professional for for professional advice derived from specific details from your financial position.

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