DOING BUSINESS IN PUERTO RICO (we can provide tax services and audited Financials)

Taking Advantage of Tax Savings

1.       Act 20 and Act 22 decrees applications filed by a local attorney (recommended)

2.       Date of commencement of operations – important – set in Act 20 documents

3.       Register with Municipality within 30 days of Commencement of Operations; will need rental agreement and other documents

4.       Register with SURI (Department of Treasury)

5.       Hire ADP for payroll if applicable; they will register with Department of Labor and file all payroll reports in PR and US

Taxes for Act 20 companies and Act 22 individuals

Act 20 Company Income Tax:

The rate is 4% on net income

1.       Must make quarterly estimated payments by April 15; June 15, September 15 and December 15

2.       File either tax return or extension by April 15; extension is for only 3 months unless the Company is a partner in a US partnership in which case extension is 6 months

3.       If revenues are >$3 million, audited financials must accompany the tax return (by a qualified in PR CPA – we are qualified)

Act 20 Company Municipality License tax (‘Patente’):

Rate is 0.5%*40%=0.2% of revenue (Dorado provides additional 50% discount)

1.       This tax is calculated based on estimated revenues (estimated based on annualized first month(s) of operations) and is prepaid every six months (aka ‘semesters’) in advance based on fiscal year July 1, 2019 -June 30, 2020.  So, Semester 1 is July 2019 – December 2019, and Semester 2 is January 2020 – June 2020.

2.       The total tax for Semesters 1 and 2 above can be prepaid all at once by April 20, 2019 to receive 5% discount.

3.       By April 20 each entity files Volume of Business (VOB) declaration over income of the preceding calendar year.  That is used to calculate the taxes owed for the subsequent Semesters 1 and 2.

4.       Very steep penalties for paying late, or for filing late even after prepaying the whole amount timely.

Annual Report with DDEC/OITE

1.       Relatively simple, but time consuming because requires notarized signature

2.       $300 filing fee

3.       File 30 days after income tax filing deadline

Property Tax Return with CRIM

1.       File if the Company owns any assets – buildings, equipment, furniture, etc.

2.       Pay estimate tax if over threshold

Act 22 Individuals

1.       Taxed over worldwide income; credit for taxes paid elsewhere

2.       Tax free income: capital gains, dividends, interest

3.       Must also file US tax return if non-Puerto Rico income is over threshold; recommended to always file regardless of level of income

4.       File Puerto Rico tax return by April 15; must be electronically filed unless under exceptions

5.       Must pay estimated taxes quarterly

6.       Must file 1040SS with the US for any SE income