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Over time, commercial transactions are constantly evolving due to digitalization and globalization of markets. Recent global events, such as the COVID-19 pandemic, further accelerated the transformation from the traditional work model into today's digital workplace. In this same way, governments are constantly adapting their tax rules to further regulate this new business environment according to the new market trends and needs. For example, the South Dakota v. Wayfair case (138 S. Ct. 2080), demonstrates how governments are adapting to technological advances while they continue collecting revenues digitally. This article provides a brief overview of the tax implications of the 2018 Wayfair ruling for Puerto Rican taxpayers, and how this case impacted the Puerto Rico Sales and Use Tax (PR SUT) since its issuance.

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Small and medium enterprises play a substantial role in the Puerto Rican economy, as they generate many employment opportunities. Following the Government of Puerto Rico’s public policy on finding ways to strengthen this sector, the State Insurance Fund Corporation (SIFC) has introduced an incentive program through Administrative Order 23-04.

This publication is part of a four-part series – Pass-through Entities, Corporations, and Individuals. For a discussion on our previous articles in this series, refer to the following links: Three become One: The New Pass-Through Entity Category | Grant Thornton Puerto Rico Opens its Doors for Disregarded Entities | Grant Thornton

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Tax credits prove to be a highly useful instrument for taxpayers within the Puerto Rico tax system, in terms of tax strategizing and reducing their tax obligations. Although most of the tax credits can only be attained by eligible businesses under the Puerto Rico Incentives Code, the existence of a secondary market can make them within reach of every taxpayer and serve as a valuable tool for tax planning. In this article, we will dive into the realm of tax credits, giving you an overview to capitalize on these advantageous tax provisions benefiting your tax situation.

Every year, the Caribbean region prepares for the hurricane season, which starts on June 1st and ends on November 30th. As the years go by, climate change is becoming more dramatic, and atmospheric events are stronger and more unpredictable. In 2017, Puerto Rico experienced Hurricane Maria and its electricity grid and other utilities became increasingly unstable. Consequently, preparing for this season of the year is essential for the Puerto Rican residents. The Puerto Rico Treasury Department (PRTD), recognized that proper preparation is important, but it can also be costly. As a result, the island’s Internal Revenue Code, as amended (“the Code”), provides certain exemptions that serve as a relief to the financial burden of the taxpayer. This article explains the tax exemption on solar equipment, the non-applicability of the Sales and Use Tax ("SUT") on donations.

Environmental, social, and governance (ESG) has emerged as much more than an ecological responsibility subject. Environmental awareness has been around the neighborhood for over 60 years, but it wasn’t until 2004 that ESG was widely promoted by the United Nations Organization (UN) with its report, “Who Cares Win”. The report was the result of a joint initiative among financial institutions in nine (9) countries that had been invited by the United Nations to develop guidelines and recommendations on how to better integrate environmental, social, and corporate governance issues in asset management, securities brokerage services, and associated research functions.

Are you happy that your number of YouTube subscribers is growing or that your followers in your Insta account are multiplying? If your income tax return does not reflect this growth, you may be liable for tax evasion. As any other taxpayer, Youtubers, Influencers, and Bloggers are required to declare their income received from these activities in their individual income tax returns. Staying compliant with your income tax responsibilities should be a top priority. Especially nowadays, as the Puerto Rico Department of Treasury (“PRDT”) has increased its scrutiny in this area and has been noticeably public about it. In this article, we take a closer look at tax rules for influencers in Puerto Rico (“PR”) and the implications they may face for failing to comply with your income tax responsibilities.

On June 30, 2022, the Puerto Rico Governor signed Act 52-2022, which modified the 2011 Puerto Rico Internal Revenue Code, as amended (the “Code”), among other matters. Specifically, Act 52-2022 introduced into the Puerto Rican tax system the figure of Disregarded Entities and revolutionized the concept of Pass-Through Entities. Under the new rules, Partnerships, Corporations of Individuals and Special Partnerships will now be treated under the umbrella of Pass-Through Entities.

It has been months of candid discussion since the enactment of Act 52 of June 30th, 2022, known as the Puerto Rico Public Finances Stabilization Act (hereinafter “Act 52-2022”). Act 52-2022 introduced a potpourri of amendments to tax-related legislation. Amendments impacted the 2011 Puerto Rico Internal Revenue Code (“PR Code”), the Puerto Rico Incentives Code, and the Puerto Rico Municipal Code to position Puerto Rico as an attractive destination to do business. As a significant change presented by Act 52-2022, disregarded entities (“DREs”) were recognized for the first time for PR income tax purposes. As stated in the Statement of Motives of Act 52-2022, this adoption seeks to simplify tax compliance burdens for the PR working class. Subsequently, the PR Treasury Department issued Administrative Determination 22-10 (“DA 22-10”) and Administrative Determination 23-01 (“DA 23-01”), which shed light and provide a set of rules for entities that want to elect or revert its taxable treatment. Many business owners frequently structure their businesses as Limited Liability Companies (“LLCs”). It also aligns Puerto Rico with the tax regimen of the US federal tax code and other US states that have adopted this tax treatment for these entities. One of the most important decisions when creating a business is electing the most suitable business organization form. This decision will impact aspects of your business including taxation, and your personal legal liability. Here in we discuss, in general terms, the most common ways to do business in Puerto Rico (“PR”) using a legal entity and what you should know about the implications that the enactment of Act 52-2022, and related publications, bring with respect to DREs.

On June 30th, 2022, the Governor of Puerto Rico signed into law Act 52-2022, known as the Puerto Rico Public Finances Stabilization Act (hereinafter “Act 52”). This new law introduced multiple amendments to the 2011 Puerto Rico Internal Revenue Code (hereinafter “PR Code”), Puerto Rico Incentives Code (hereinafter “Act 60”), Puerto Rico Municipal Code, Act 73-2008, Act 135-1997, and other laws. Act 52 pursues to simplify the tax system, strengthen the fiscalization of tax incentives and tax credits, and position the island as an attractive destination to invest and start a business. This article is focused on the most significant amendments contained within Act 52 related to Act 60 and its Regulations.

Employees contracted before January 26, 2017 Every employee having worked at least 700 hours in the twelve-month period commencing October 1 and ending September 30 is entitled to receive a mandatory Christmas Bonus. The bonus is 6% of the employee’s wages up to a maximum employee individual wage of $10,000. Accordingly, the maximum bonus payable will be $600. In the case of those employers with 12 or less employees, the applicable rate is 3% of the employee wages up to a maximum of $10,000 ($300) Employees contracted after January 26, 2017 Every employee having worked at least 700 hours in the twelve-month period commencing October 1 and ending September 30 is entitled to receive a mandatory Christmas Bonus. In case, that the employer employs 21 or more employees for 26 weeks within the coverage period, will be required to pay to each employee a bonus equal to 3% of the total salary earned up to a maximum bonus of $600.

On September 27, 2022, the Puerto Rico Department of Treasury (“PRDT”) released Administrative Determination No. 22-08 (“DA”) to establish tax relief measures for taxpayers affected by the aftermath of Hurricane Fiona (“Hurricane)” in Puerto Rico. The PRDT anticipates the challenges taxpayers may face in complying with their tax responsibilities due to interruptions in essential services such as electric power and internet that were caused by the Hurricane. As a result, the PRDT Secretary is exercising its power as vested by the 2011 Puerto Rico Internal Revenue Code, as amended (“the Code”) to extend deadlines for payments of tax as well as the fillings of any returns or statements. The PRDT emphasizes that at the moment, all the services provided by the platform SURI are operating normally. Those taxpayers that are able can make tax debt payments, request automatic payment plans, and request certifications, among others.

Due to the effects caused in Puerto Rico by Hurricane Fiona, the State Insurance Fund Corporation (CFSE) has decided to extend the deadline for employers to comply with the payment of their policies.

The afternoon of September 18, 2020, Hurricane Fiona made its landfall in the Southwest coast of Puerto Rico bringing with it 85 mph winds and a large amount of rain. This event caused many rivers to overflow their banks, causing emergencies around the Island. Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area.