Legislation in Puerto Rico makes changes to the individual tax rules generally effective for tax years beginning in 2019.
House Bill 1544, signed by the governor and enacted as Act 257-2018, introduces various amendments to the 2011 Puerto Rico Internal Revenue Code, as amended, relating to the taxation of individuals.
The new tax law provides that for tax years beginning after December 31, 2018, the following items will be excluded from gross income:
There are also changes to rules in relation to the exemption amount for certain interest income. Interest earned on amounts of deposits held at cooperatives, savings associations, commercial banks and mutual funds is reduced to $100 (down from $2,000). The exemption for interest on certain securities and mortgages was repealed.
Adjusted alternative basic income tax (ABT) rates are adjusted as follows:
Net income subject to ABT:
|In excess of $25,000 but not more than $50,000||1%|
|In excess of $50,000 but not more than $75,000||3%|
|In excess of $75,000 but not more than $150,000||5%|
|In excess of $150,000 but not more than $250,000||10%|
|In excess of $250,000||24%|
Self-employed individuals whose income is derived substantially from rendering services may elect to pay an optional tax on gross income instead of the income tax otherwise imposed by the tax law on net income, as follows:
|Not greater than $100,000||6%|
|In excess of $100,000 but not more than $200,000||10%|
|In excess of $200,000 but not more than $300,000||13%|
|In excess of $300,000 but not more than $400,000||15%|
|In excess of $400,000 but not more than $500,000||17%|
|In excess of $500,000||20%|
Puerto Rico’s Treasury Secretary has discretion to postpone the effective date for tax years after December 31, 2019.
For more information, contact a KPMG tax professional in Puerto Rico:
Rolando Lopez | +1 (787) 622-5340 | firstname.lastname@example.org
Carlos Molina | +1 (787) 622-5311 | email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.