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.

 

***

 

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.

 

***

 

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.