SURI Implementation

The Puerto Rico Treasury Department is currently implementing the Unified Internal Revenue System ("SURI" by its Spanish acronym), which is an electronic platform meant to streamline tax administration by integrating and replace most of the currently used platforms.

The following steps with corresponding dates for SURI's implementation were announced:

• Phase 1: Sales and Use Tax, (operational by October 31, 2016)

• Phase 2: Integration of corporate and other business-related taxes (operational by December 2017)

• Phase 3: Integration of individuals, withholding and Gift & Estate Taxes (operational by December 2018).

Beginning October 15, 2016, all existing merchants must update their Merchant's Registration Certificate via SURI.

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

SURI Implementation

The Puerto Rico Treasury Department is currently implementing the Unified Internal Revenue System ("SURI" by its Spanish acronym), which is an electronic platform meant to streamline tax administration by integrating and replace most of the currently used platforms.

The following steps with corresponding dates for SURI's implementation were announced:

• Phase 1: Sales and Use Tax, (operational by October 31, 2016)

• Phase 2: Integration of corporate and other business-related taxes (operational by December 2017)

• Phase 3: Integration of individuals, withholding and Gift & Estate Taxes (operational by December 2018).

Beginning October 15, 2016, all existing merchants must update their Merchant's Registration Certificate via SURI.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

VAT Update

The Puerto Rico Secretary of Treasury has issued Administrative Determination 16-07 providing procedures for a transition from Sales Tax to Value Added Tax effective June 1, 2016. A very brief summary follows:

• The VAT rate is 10.5%;
  
• A "Certificate of Small Business" will be available for businesses with gross income volume of less than $125,000;
  
• The "Reseller Certificates" remain valid for the 1% Municipal Sales Tax exemption;
  
• The "Certificate for Exempt Purchases and Services Subject to the 4% Special-SUT" (Form 2916) remains temporarily in effect until further notice and will serve as a certificate of exempt purchases for VAT purposes.
  
• Eligible Reseller Certificates" expire June 30, 2016 regardless of their expiration date.  After June 30, 2016 these merchants will be fully subject to VAT.
  
•  A new web based portal (SURI) would be available for all tax filings and the first filing is July 20^th, 2016;
  
• The filing of returns for merchants with pre-existing contracts will continue under PICO until June 30, 2016.  The SUT paid on the pre-existing contract will not be creditable against the VAT;
  

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

VAT Update

The Puerto Rico Secretary of Treasury has issued Administrative Determination 16-07 providing procedures for a transition from Sales Tax to Value Added Tax effective June 1, 2016. A very brief summary follows:

-       The VAT rate is 10.5%;

-       A "Certificate of Small Business" will be available for businesses with gross income volume of less than $125,000;

-       The "Reseller Certificates" remain valid for the 1% Municipal Sales Tax exemption;

-       The "Certificate for Exempt Purchases and Services Subject to the 4% Special-SUT" (Form 2916) remains temporarily in effect until further notice and will serve as a certificate of exempt purchases for VAT purposes.

-       "Eligible Reseller Certificates" expire June 30, 2016 regardless of their expiration date.  After June 30, 2016 these merchants will be fully subject to VAT.

-       A new web based portal (SURI) would be available for all tax filings and the first filing is July 20^th, 2016;

-       The filing of returns for merchants with pre-existing contracts will continue under PICO until June 30, 2016.  The SUT paid on the pre-existing contract will not be creditable against the VAT;

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Amendments to Tax Incentives Laws and Rules - Act No. 187-2015

On November 17, 2015 Act No. 187- 2015 was enacted to establish a new integrated electronic data center for validation and fiscalization of business activities that are promoted under special laws and enjoy tax benefits.

Act No. 187 launches the issuance of an annual Certificate of Compliance for decree grantees, by the Director of OITE. This Certificate is intended to attest to the fact that the grantee is in full compliance of its obligations under its grant. The Certificate of Compliance must be included with the tax returns in which benefits under the grant are being claimed and eventually will be posted in the integrated electronic data center when such system is operational.

Without the Certificate of Compliance, the taxing authorities are not obligated to recognize or apply the benefits under the grant. The taxing authorities, including municipalities, must rely on the Certificate of Compliance, but such authorities may request clarifications or additional information if they have any doubt or concern about compliance by the grantee.

Another notable change to the current rules for corporations applying for Act 20 benefits is the requirement for at least five (5) employees to be generated at the time the decree is granted.

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Amendments to Tax Incentives Laws and Rules - Act No. 187-2015

On November 17, 2015 Act No. 187- 2015 was enacted to establish a new integrated electronic data center for validation and fiscalization of business activities that are promoted under special laws and enjoy tax benefits.

Act No. 187 launches the issuance of an annual Certificate of Compliance for decree grantees, by the Director of OITE. This Certificate is intended to attest to the fact that the grantee is in full compliance of its obligations under its grant. The Certificate of Compliance must be included with the tax returns in which benefits under the grant are being claimed and eventually will be posted in the integrated electronic data center when such system is operational. 

Without the Certificate of Compliance, the taxing authorities are not obligated to recognize or apply the benefits under the grant. The taxing authorities, including municipalities, must rely on the Certificate of Compliance, but such authorities may request clarifications or additional information if they have any doubt or concern about compliance by the grantee.

Another notable change to the current rules for corporations applying for Act 20 benefits is the requirement for at least five (5) employees to be generated at the time the decree is granted.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Accounting Bookkeeper / Analyst

Objectives & Responsibilities - Maintain accurate financial records and help prepare and analyze accounts for all types of businesses. Will be required to provide administrative and clerical support to CPA accountants. The position holder will be required to work flexibly, in a rapidly developing office environment. It may be necessary to assist other staff from time to time.The key duties of the position are as follows:

• General book-keeping duties to include:
• Double entry book-keeping;
• Processing sales invoices;
• Receipts and payments;
• Bank Account Reconciliations;
• Completing IVU returns;
• Preparing wage and withholding from source monthly deposits;
• Helping prepare P&L statements and balance sheets;
• Quarterly Payroll Returns and others;
• Communicate and liaise verbally and in writing between clients/visitors/enquirers and staff and interpret and respond clearly and effectively to spoken requests over the phone or in person, and to verbal or written instructions.
• Manage, organize and update relevant data using database applications.
• Establish and maintain effective working relationships with co-workers, supervisors and the general public.
• Maintain regular consistent and professional attendance, punctuality, personal appearance and adherence to relevant health and safety procedures.
• Adhere to procedures relating to the proper use and care of equipment and materials for which the role has responsibility.
• Able to work under minimal supervision.
• Plus other duties consistent with the position-level as directed.

Because of the changing nature of our business your job description will inevitably change. You will, from time to time, be required to undertake other activities of a similar nature that fall within your capabilities as directed by management.

Required experience:

• Microsoft Excel: 2 years

Required education:

• Bachelor's

Required language:

• English and Spanish

For more information, please send a Resume and Cover Letter to careers@islacpa.com 

Tax Update - Sales Tax on Services Rendered by Non-residents

Services Rendered by a Non-Resident Person to a Person in Puerto Rico

Act 72 of 2015 amended the PR Internal Revenue Code (the "Code") to establish that in the case of services rendered by a non-resident person to a person located in Puerto Rico, the person responsible for remitting the applicable sales and use tax on such services to Treasury is the person who receives the service in Puerto Rico. This provision comes in effect on October 1, 2015.

The applicable SUT rate will depend on the type of service received - taxable services subject to the 10.5% Commonwealth SUT or designated professionals services or services rendered to other merchants subject to the 4% Special SUT.

Municipal SUT rate will not apply since the service is rendered outside of Puerto Rico.

The corresponding SUT will apply to services provided by non-resident persons that are received by persons located in Puerto Rico, only in connection, either directly or indirectly, with operations or activities carried out in Puerto Rico. 

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Tax Update - Act 107 - Condo Associations Exempt from Sales and Value Added Tax

The most recent amendment to the Puerto Rico revenue code (Act 1 from 2011) was enacted on July 2, 2015. Act 107 effectively exempts providers of services to Condo Owner's Association in Puerto Rico from the responsibility to collect Sales and Value Added Tax.

The law also relieved Owner's Associations from the 4% "business to business" tax on professional services previously contemplated in Act 72 from May 29, 2015.

This is a welcomed relieve for all Owner's associations which were facing an inevitable 10-15% increase of all monthly maintenance fees billed to unit owners starting October 1, 2015 in order to be able to balance their operating budgets, if these taxes were to go into effect. 

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Tax Update - Sales and Use Tax (IVU) - Ley 72 de 29 de mayo de 2015

Last Friday, a new law was enacted. Below are the main points related to the Sales and Use Tax (IVU). Please do not hesitate to contact us with questions.

 - As of July 1st, 2015, transactions currently subject to the 7% IVU will be subject to a 11.5% Commonwealth (10.5%) and municipal (1%) IVU. This will be in effect until March 31, 2016.

 - Effective for periods commencing after June 30, 2015, merchants with a Re-seller Certificate may claim 100% credits for IVU paid on their inventory against IVU collected on their sales. The 75% limitation currently in place is eliminated.

 - Starting October 1st, 2015 and until March 31st, 2016:

      1. Business to business services that are currently taxable will be subject to an 11.5% IVU.

      2. Business to business services and designated professional services (e.g., certified accountants, lawyers, engineers) that were previously exempt from IVU will be subject to a Commonwealth IVU of 4%. No municipal IVU will apply to services subject to the 4%.

- In the case of services rendered by a non-resident, the recipient in Puerto Rico of the service will be the party responsible for remitting the IVU to the Treasury Department.

- Transactions occurring after March 31, 2016, will be subject to a new VAT (IVA) of 10.5% plus a 1% municipal IVU.

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Business Entity Registration in Puerto Rico

All Puerto Rico business operations should register with the required agencies. Certificates and registrations should be requested before the corporate commences operations on the island oftentimes probationary registrations are able to be promptly issued.  This list of agencies includes but isn't restricted to: Treasury Department, Municipal Revenue Collection & the Municipality,  Department of State, State Insurance, and also the Department of Labor & Human Resources. For Sales & Use Tax registration, a business should present a Merchant Registration Certificate.  One of the most significant changes that Puerto Rico is contemplating involves the replacement of the SUT with a VAT, effective January 1, 2016. We will post extensively when this proposed change is finalized.  Presently the Bill establishes that for the remainder of 2015 the provisions pertaining to sales and use tax will continue as per the Puerto Rico Internal Revenue Code of 2011

There are more rules and this post contains simplifications and is not comprehensive and my be forward looking. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.


IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Expatriate Tax Information

Expatriates who live in Puerto Rico are subject to Puerto Rico taxation.  This includes US citizens who live in Puerto Rico for at least 183 days per year.  For non-us expatriates there are comprehensive tax and employment visa requirements.  Personal tax returns are due the first April 15 following the end of the tax year.  Extensions are available.

The following must file a Puerto Rico income tax return:

• Individuals (Puerto Rico residents), who had gross income over $5,000; 

• Individuals (non-resident of Puerto Rico, citizen of the United States) who had a gross income over $5,000 provided that the taxes have been paid at source

• Individuals (non-resident aliens) who had a gross income from sources within Puerto Rico. 

There are more rules and this post contains simplifications and is not comprehensive and my be forward looking. Additionally, as always, a professional should be consulted and be presented with specific information.

 

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

 

IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Individual Retirement Accounts Modification in 2014

In 2014 Puerto Rico made adjustments to certain aspect of individual retirement accounts ("IRA").   The adjustment included the ability to elect to prepay

at a reduced income tax rate of 8% all or part of their accrued and undistributed balances in IRAs (this does not include the ability to prepay for 2014 interest).

A penalty for early withdrawal of 30% (formerly a 10% penalty) - will apply to any distribution from an IRA of prepaid amounts if the holder of the IRA or its beneficiary has not attained age 60.  Under the act, there is no penalty will apply to a distribution made from an IRA to prepay the 8%.  Interest paid or accrued after June 30, 2014 will be subject to the 17% income tax rate.

There are more rules and this post contains simplifications and is not comprehensive and my be forward looking. Additionally, as always, a professional should be consulted and be presented with specific information.

 

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

 

IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Modifications to Acts 20/22 Incentives

On November 21st and  November 24th, 2014, Senate bills 864 and 1020 were sent to La Fortaleza for the governor's signature.  These bills will work to broaden the pool of people and companies eligible for Acts 20/22 incentives. Among the modifications to the Acts is a reduction in the minimum time one must have lived away from Puerto Rico to qualify for incentives.  The incentives include exemptions from passive investment income taxes, including capital-gains.  Presently the time period away from PR is 15 years, the amendments will reduce it 6 years. In addition there are modifications to Puerto Rico's mandatory inheritance laws.  

Act 1020  has provisions to allow trading companies,  distribution and logistics, assembly, and bottling and management services as types of businesses and services eligible for of Act 20/Act 73 incentives.  These incentives reduce the corporate tax rate to 4% on income generated from the export of certain professional services, including but not limited to financial, legal, and technology services.  

There are more rules and this post contains simplifications and is not comprehensive and my be forward looking. Additionally, as always, a professional should be consulted and be presented with specific information.

 

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

 

IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Puerto Rico Tax Changes Affecting Individual Taxpayers

In July 2014, Act 77 was codified into law.  In it were several amendments to the Internal Revenue Code of Puerto Rico.  Changes affecting individual taxpayers include, but were not limited to, changes in the alternate basic tax bracket, credits for prior year alternate tax payments, changes to individual long-term capital gains, and individual dividend distribution tax rate.  The individual long-term capital gains rate for individuals increased to 15% for all transaction occurring after June 2014.   Similarly, the individual tax rate for dividend distributions was also increased to 15% for all transaction occurring after June 2014. There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

 

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

 

IRS CIRCULAR 230 DISCLOSURE:

To comply with requirements imposed by the Department of the Treasury, Isla CPA informs you that any U.S. tax advice contained in this post (including any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any  taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.

Issues with PICO and the collection of Sales and Use Tax (IVU) at the Ports

Puerto Rico encountered problems in implementing the 6% IVU Sales and Use Tax collection at the ports during its September roll-out.  The problem was due to the PICO system - which presently is an optional system of filing the tax. Despite the roll-out problems, the tax is still required to be paid via the traditional means by utilizing paper forms.  Once fully implemented the PICO system will be the only way to make IVU payments at the ports.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

  Treasury, we inform you that any U.S. tax advice contained in this post (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any

  

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein

Puerto Rico Sales and Use Tax Modifications in 2014

On July 1st, 2014 Act No. 80 of 2014 was passed.  In the act were amendments regarding the Sales and Use Tax for Puerto Rico.

Modifications we made to: Monthly Sales and Use Tax Returns, Sales and Use Tax bond for Importers, Exempt Purchases Certificates, Foreign Trade Zones, and Sales and Use Tax Credit Limitations.

Some details of the modifications include: a new date for monthly Sales and Use Tax filing, a new form " Use tax Declaration for Release of Tangible Personal Property", and a new requirement for the Importers Bond to cover 100% of the Sales and Use Tax obligation plus an additional 25% for penalties and fees.  In addition, for the purposes of the Sales and Use Tax, tangible personal property destined for foreign trade zones within Puerto Rico must be declared and will be subject to Sales and Use Tax.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

  Treasury, we inform you that any U.S. tax advice contained in this post (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any

  

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.

Tourism Development in Puerto Rico

The Tourism Development Act of Puerto Rico of 2010 (Act 74) provides incentives for tourism businesses. This act covers hostels, guesthouses, hotels, condo-hotels, and timeshares/vacation clubs. In addition it includes theme parks, golf courses, marinas for tourism, however casinos are excluded.  

The Act also establishes a tax credit of the minimum of 10% of the total cost of the project or 50% of equity invested (including land). The credit is made available over a two year period. Any unused tax credits may be carried forward.  Additionally, the tax credits may be assigned, transferred or sold.  

In order to qualify, a business must be utilizing new facilities, substantially improved facilities or existing facilities which have not been used for three or more years. 

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

 Treasury, we inform you that any U.S. tax advice contained in this post (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any

  

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.

International Insurer and Reinsurer (Act 98)

Act 98 which is known as the International Insurer and Reinsurer Act (IIRA) enables the creation of international insurers, reinsurers and holding companies. These companies are eligible for attractive tax treatment. The intent of the act was to facilitate the growth of export insurance and reinsurance sectors by establishing a level playing field for Puerto Rico insurers to compete with Bermuda, Cayman Islands etc. Only insurer/reinsurers or another international insurer holding companies that are approved by the Commissioner of Insurance are eligible for this attractive tax treatment. Generally, the tax treatment is 0% on income tax dividends, distributions from liquidation, as well as other taxes. In addition, revenues for non-residents may also be exempt. 

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

Treasury, we inform you that any U.S. tax advice contained in this post (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any

 

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.

Puerto Rico Real Estate Investment Trusts (REIT)

Under Puerto Rico law Real Estate Investment Trusts are permitted to be formed allowing real estate ventures to receive a tax designation for corporations investing in real property that reduces or eliminates corporate income taxes.  This is designation is similar to REIT structures in the United States.  The definition of "Real Property" includes, Apartment Buildings, Hospital facilities, Hotels, Manufacturing buildings, Office buildings, Parking facilities, Shopping facilities, etc.

In order to become a REIT one needs to conform with type-of-income and source-of income requirements in the Puerto Rico code.  The rules include but are not limited to a requirement that Puerto Rico REITs must have 95% or more of the gross income be derived from:  

• Dividends; 

• Interest; 

• Rents from real property; 

• Gain from the sale or other disposition of securities or real property (with certain rules)

Additionally, at least 75% of gross income must be derived from:  

•  Rents from Puerto Rico real property;  

•  Interest on obligations secured by mortgages in Puerto Rico;  

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

Treasury, we inform you that any U.S. tax advice contained in this communication (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any 

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.