top of page
Search
  • The San Juan Daily Star

21 controlled foreign corporations agree to operate under new tax regime


Treasury Secretary Francisco Parés Alicea

By The Star Staff


Twenty-one controlled foreign corporations have agreed to operate in the new year under the new tax regime determined by Act 52-2022, Treasury Secretary Francisco Parés Alicea announced Tuesday.


Gov. Pedro Pierluisi Urrutia earlier this year enacted Act 52 of June 30, 2022, which allows companies to elect for a 10.5% tax on industrial development income from sales of goods and services instead of the 4% excise tax on foreign corporations, which the latest federal foreign tax credit rules do not consider creditable against the payment of federal taxes. In addition to changing the excise tax regime, Act 52-2022 amends the incentives laws and other statutes, including the Puerto Rico Internal Revenue Code. Businesses electing for the 10.5% tax rate must ask the island Department of Economic Development and Commerce to amend their tax exemption decree to reflect the new tax regime under which the 10.5% tax rate will apply.


“Some 21 groups of entities covered by Act 154-2010, will operate under a new income tax regime as of January 2023, in most cases,” Parés Alicea said. “These entities will pay a tax rate of 10.5% on their industrial development income and a similar rate for royalties associated with the sale of their products.”


The Treasury chief noted that the group of entities that completed the transition is larger than had been anticipated.


“In total, there were 37 groups of entities operating under the 4% tax,” he said. “In November we had nine entities requesting the change and six interested parties. We are closing the year with 21 amended decrees.”


The remaining 16 entities could make their transition at any time, if they so determine, because the law does not establish a specific date for doing so. Meanwhile, they will remain under the 4% tax regime.


Parés Alicea said the effort and the conversations will continue with the representatives of the entities that are still evaluating the new tax regime.


The Treasury Department will also continue to monitor the effect of the transition on collections, he said.

72 views0 comments
bottom of page