Temporary Tax On Foreign Corporations - Martino-Luna Attorneys and Counselors At Law
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- Taxation of Foreign & Non US Citizens Taxpayers
- Sourcing Rules of Puerto Rico BONA FIDE Residents Receiving Income from U.S. Employer
- Temporary Tax On Foreign Corporations
- Withholding Rules Of Income And/Or Compensation Under The Current Provision Of The Puerto Rico Internal Revenue Code
- Summary of the Proposed Tax Reform Project Through Senate Bill 1888 and House Bill 3028
News > Tax Articles and News
Temporary Tax On Foreign Corporations
Last week, the governor of the Commonwealth of Puerto Rico, jointly with the Puerto Rico Legislature announced a new tax reform project, as well as a new tax code that is going to be approved in the next few weeks, or maybe in a month or so. Further, as part of the tax reform project, there is a project of law, P.C. 2526, that was passed and approved by both the Commonwealth’s House of Representatives and Senate, and is under the Governors consideration for signature, which imposes a temporary tax on foreign corporations.
Pursuant to P.C. 2526, there will be a temporary tax on foreign corporations that manufacture products, and or services, to be offered outside of the island, because most of these foreign entities does not pay taxes on their goods produce in PR and sold in outside markets.
The temporary imposition to foreign corporations will be a six year tax with the following rates: 4% 1st year, 3.75% 2nd year, 2.75 3rd year, 2.50 4th year, 2.25 5th year and 1% 6th year. Tax will apply to the acquisition of personal property and services by a non resident individual or entity (corporations, partnerships, etc.), that have current offices or business operations in the island. Further, the tax will be paid to local Treasury Department every 3 months in a special return that Treasury will publish after approval of the Act.
Nonetheless, the imposition will be applicable to foreign corporations that generate more than $75 million dollars a year. The temporary tax will reach certain foreign entities that expatriate their earnings to the United States or to other foreign jurisdictions. Currently the foreign entities that will be affected by the temporary imposition are mostly pharmaceuticals and technology creation organizations.
