2013 in Review: Modifications to Puerto Rico Alternative Minimum Tax for Corporations

The Alternative Minimum Tax (AMT) calculation was modified to account for a tentative minimum tax calculation that includes - 30% tentative minimum tax on alternative minimum net income; or the value from the sum of:

• Payments for related party non-PR services -- 20% tentative minimum tax. (This can include services from a home office to its Puerto Rico local office)
• Personal property acquisitions and purchases from corporate related parties -- 2% tentative minimum tax
• Special Gross Income Tax - special tax ranging from 0.20% to 0.85% depending on the level of the gross income

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 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.

2013 in Review, New Puerto Rico Taxable Services

In 2013 certain cervices became taxable that were previously not taxed. These services include, but are not limited to:

• Banking Account Management Charges/Fees to Commercial Clients
• Car Rentals – Daily Rentals
• Cleaning – Laundry Services
• Cleaning -- Maid Services
• Repair and Maintenance Services – Real Property and Tangible Property
• Security and Protective Services
• Waste Collection Services

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 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.

Puerto Rico Annual Corporation Balance Sheet Reports

In Puerto Rico businesses are required to file with the government Annual Corporation Reports.  The reports must include (but are not limited to) a balance sheet which segregates its Puerto Rico operations so that its Puerto Rico financial position can be discerned.  The balance statements must be prepared pursuant to United States GAAP/GAAS principles and standards.  If the business revenue is $3 Million or greater, then the balance sheet must be audited and stamped by a Puerto Rico CPA.  If it is less, the balance sheet must be prepared under the same principles and standards, but only needs to be prepared with somebody with general accounting knowledge. As always there are more rules and this post contains simplifications.  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 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.

Registering/Authorizing a Business in Puerto Rico

Under Puerto Rico Law, foreign businesses must register with State Department.  The information required in the filings includes but is not limited to: the name of the company, name/jurisdiction/date of organization, physical address of the main office, physical/mailing addresses for its Puerto Rico office, physical/mailing addresses and name of resident agent, names/addresses of officers etc., information on assets/liabilities, and a descriptions of the business. As always there are more rules and this post contains simplifications.  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 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.

Puerto Rico Income Tax Return - Corporations

In Puerto Rico all businesses that are engaged in Puerto Rico business activities must file a corporate income tax return.  In the case where the business has revenue of $3 million or more, tax returns must be accompanied by audited financial statements that are prepared in accordance with United States GAAP/GAAS accounting principles and standards. Returns are due on the fifteenth day of the fourth month following the close of its taxable year.  Extensions are available, but of course, filing an extension does not relieve you of your obligation to pay the taxes due on the 15th day after the fourth month following the close of the taxable year (usually April 15th).  In addition quarterly estimated payments are also required.  As always there are more rules and this post contains simplifications.  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 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.

Foreign Non-Puerto Rico parent Companies with local Subsidiaries

When a parent company that is not engaged in trade or business in Puerto Rico (but does own a subsidiary doing business solely in Puerto Rico), the parent company will be allowed to deduct the expenses directly allocatable to the Puerto Rico business. In addition, an allocation of expenses that does not tie directly to any item of income is allowed as a deduction.  Note: any non-direct allocation expense deduction is subject to a high level of scrutiny. Dividends are have a 10% withholding tax.  In Puerto Rico there is a maximum effective tax burden of 37%  for this configuration of businesses.  The maximum effective tax burden would represent the summing of the withholding tax and the regular tax. As always there are more rules and this post contains simplicications.  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 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.

Information on Domestic, Puerto Rico Corporations

In Puerto Rico, corporations (and in many circumstances LLC's) that are formed under the Laws of the Commonwealth of Puerto Rico are considered domestic Corporations for tax purposes.  Forming as a domestic corporation is advantageous for foreign businesses (i.e. US businesses).  This is because domestic Puerto Rico business obligations on US tax comes after certain activities including but not limited to distribution of profits.  A notable complication to the above statement is that if dividends are distributed by a domestic Puerto Rico corporation to nonresidents/foreign corporate entities/partnerships that are not engaged in a Puerto Rico activities the they are subject to a 10% withholding tax.  As always there are rules - and this post definitely contains many simplifications.  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 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.