Any person engaged in trade or business in Puerto Rico,
who on January 1th of any given year owns personal property used in such trade or
business is subject to the personal property tax in the municipality
where it is located, unless otherwise exempt. The tax is computed on the net
book value of taxable property, however, if the book value of the personal property
does not reasonable reflects the fair market value then they must be appraised at
fair market value. The maximum tax rate is 8.83% and varies depending on the municipality
in which the taxable property is located. Taxable property normally includes
cash on hand, inventories, materials and supplies, furniture and fixtures, and machinery
and equipment used in the trade or business. A minimum residual value is assigned
to items which are substantially depreciated. The assessment date is January
1st, although the value of the inventory should be determined on an annual average
Certain personal properties, including intangibles properties, are exempt.
The tax authority, however, takes the position that computer software is not exempt
as an intangible property.
A personal property tax return must be filed on or before May 15 of each year
in the corresponding regional office of the
Collection CenterPO Box 195387
San Juan, Puerto
The personal property tax must be paid on or before May 15 of each year.
If payment is made in full by that time, a 5% discount is allowed.
The law provides corporations a 90-day extension of time to file the return.
The extension must be filed not later than the due of the return together with payment
of the tax. .
If the volume of business (defined as gross receipts) of the corporation exceeds
$3,000,000, the property tax return must be reviewed by a Puerto Rico licensed CPA
and accompanied by financial statements certified by CPA licensed in
Puerto Rico. The financial statements of foreign corporations
engaged in business in Puerto Rico should reflect solely its operations in Puerto Rico.
The audited financial statements and the corresponding opinion of the Certified
Public Accountant on such statements are exclusively the financial statements
of the corporation filing the return and not consolidated or combined statements
with other affiliates, even when the information of the individual corporation subject
to the personal property tax in Puerto Rico is included as supplementary information.
Returns filed with financial statements, which do not comply with the previously
mentioned requirements, shall be considered incomplete and may be deemed not filed.
A trial balance of the corporation's business activities in
Puerto Rico as of the preceding January 1, is required when the corporation
does not have a calendar year closing. The trial balance must be traced to
the corporation's accounting records and shall be accompanied by a sworn statement
of an accountant or person in charge of the business affirming that the trial balance
is in agreement with the books of account of the business.
A surcharge for late payment of the tax is imposed as follows:
- 5% of the unpaid amount for a delay in payment in excess of 30 days, but not
more than 60 days
- 10% of the unpaid amount for a delay in payment in excess of 60 days, but not
more than 90 days.
- 15% of the unpaid amount for a delay in payment in excess of 90 days.
A penalty of 5% per month up to a maximum of 25% is imposed for late filing of
the return, unless it is shown to the satisfaction of the
that the failure to file is due to reasonable cause out of the control of the taxpayer
and not due to willful neglect.