Filing/Payment Deadline Extension
- Extension of electronic filing period without penalties for the 2019 informative returns due to COVID-19. The period for filing of informative returns corresponding to the 2019 tax year is extended; these informative returns must be completed and filed via SURI no later than April 15, 2020, to avoid penalty assessments.
- Extension of filing period for income tax returns and its corresponding payments.- For pass-through entities and other taxpayers that have income tax returns due during March 2020, the PRTD granted an additional extension of the returns and payments until April 15, 2020 (including the payments due with returns, extensions and estimated income tax due on March 16, 2020).- For taxpayers with income tax returns due on April 15, 2020, the PRTD granted an additional extension of the returns and payments (including the payments due with returns, extensions and estimated income tax) through May 15, 2020.
- Payment plans moratorium. Taxpayers economically affected by COVID-19 and the closure order will not be required to follow the terms of a payment plan between the period March 16, 2020, and April 30, 2020. The PRTD will not be imposing interest and penalties for non-compliance with the payment plans. If there is a notice for interest and penalties, the taxpayer may submit a request to eliminate such charges.
Suspension of Tax Audits
- Extension of administrative terms due to COVID-19.
- An additional 120 days, added to the period established in any notification issued by the PRTD of mathematical error or adjustment in returns
- An additional 90 days added to the expiration date for filing administrative complaints and for the presentation of information or documents required by the PRTD's Office of Administrative Appeals when the expiration date falls on a date from March 12, 2020, and later
- Automatic extension of all administrative hearings to be held from March 16, 2020, until June 15, 2020 (thereafter, taxpayers are to be notified of the new date(s))
- An additional 120 days to allow clearance of any debt-review letter issued on or before March 12, 2020
Business Income Tax
A bill, currently pending consideration by the Puerto Rico Senate would provide for COVID-19-related relief measures.
Tax credit reimbursable to industries or businesses for payroll paid, including expenses related to employer contributions or payroll contribution for the tax years when the emergency declaration occurred and until the emergency or law ends, whichever comes first:
- 100% tax credit
- Applicable for businesses that have not operated as a result of the lockdown
- Eligible businesses suffered a net loss in operations during the tax year(s) directly caused by the COVID-19 emergency\
- Businesses must have not received federal or state subsidy payment for payroll under the CARES Act (Pub. L. No. 116-136)
- 50% tax credit
- Applicable for businesses that have only partially operated as a result of the lockdown
- Eligible businesses suffered a reduction in income of at least 25% of the income reported in the tax year prior to the effective date of the law; if a newly established business (one that conducted business operations for a period of at least six months, but less than one year), it must have experienced a reduction in income of at least 25% of the income reflected in its accounting books since it began operations
- Businesses must have not received federal or state subsidy payment for payroll under the CARES Act
- 50% tax credit for industries considered “essential services”
- Applicable for businesses that have operated during the lockdown
- Eligible businesses had a payroll payment of more than 10% of the total payroll payment made during the tax year prior to the effective date of this law; only excess payroll, directly caused by the COVID-19 emergency, will qualify for the tax credit
- Businesses must have not received a federal or state subsidy payment for payroll under the CARES Act.
The cancellation of debt and the amounts received for any federal subsidy under the CARES Act would be excluded from the gross income for income tax purposes and from the income subject to the municipal license payment.
For the months of April, May, and June, eligible services provided to other merchants would not be subject to 4% sales tax. The Puerto Rico Secretary of the Treasury may extend the exemption for additional periods of three months for the duration of the emergency period.
The tentative minimum $500 contribution to corporations for years beginning after December 31, 2018, will not be enforced until the law’s sunset date.
Special contribution to pay in advance long-term capital gains - Special tax of 10% would be introduced on built-in gains on capital assets that are long-term assets for tax years when the declaration of emergency was declared and until the sunset of the law.
Special tax on dividend distributions or implicit dividend - Special 5% tax on the total amount distributed considered as a dividend or deemed dividend based on the accumulated earnings at the end of the 2019 tax year
- If the taxpayer elects to pay the special tax on the deemed dividend, the resulting tax would not be reduced by any future deficit
- If the taxpayer elects to pay this special tax and then decides to carry back net losses, the taxpayer would be required to recalculate the corporation’s accumulated earnings and profits at the end of the 2019 tax year, and pay the additional resulting tax, if any.
Filing/Payment Deadline Extension
A bill, currently pending consideration by the Puerto Rico Senate would provide for an extension for information returns: for the 2019 tax year, required information returns would be due to be filed on or before May 31, 2020.
A bill, currently pending consideration by the Puerto Rico Senate would amend the loss limitation rules as follow:
- Loss carryback program
- Allow the carryback of losses to the three previous tax years
- Available to taxpayers with volume of business of $10 million or less
- “Large taxpayers” not allowed to carry back losses
- Taxpayers allowed until the filing date of the income tax return following the date that the COVID emergency ends or until the law’s expiration or “sunset” date, whichever comes first, to benefit from the carryback relief provision
- Carryover loss limitations
- The 90% limitation included in Puerto Rico’s tax code section 1033.14(b)(1)(D) would not apply.