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On June 14, 2020, the Governor of Puerto Rico signed Act 57-2020, known as the “Complementary Law to Address the Effects of the COVID-19 Emergency on the Puerto Rican Economy” (the “Act”), which comprises a package of measures to reactivate the economy, support businesses and protect workers.

A year into the Covid-19 pandemic, tax rules continue to adapt to embrace the new reality that the pandemic has brought to taxpayers.

As the new Opportunity Zone Fund industry keeps evolving, it is important to check in and update you on what you should be in the know, and what you should be looking forward in the next couple of months.

On December 30, 2020, the Governor of Puerto Rico signed Act 173-2020, to empower the Puerto Rico Treasury Department Secretary to establish a new deadline for the filing of the 2020 Tax Returns.

The year 2021 brought new developments related to the Sales and Use Tax, including new initiatives that will make it easier for the Puerto Rico Treasury Department to look after mail-order sales. The changes started with Act 40-2020 which introduced two new categories of merchants to the Sales and Use Tax parlance, the Marketplace Facilitator, and the Marketplace Seller.

Federal income tax implications of certain capital gains derived by a new bona fide resident of Puerto Rico that previously resided in the United States.

The Puerto Rico Treasury Department and the Internal Revenue Service will investigate and audit certain individuals and entities tax matters.

At Kevane Grant Thornton we are fully authorized by Grant Thornton International to provide clients transfer-pricing services independently from other member firms. Transfer pricing refers to the price ascribed to transactions between entities in two different jurisdictions, such as when a parent company in one country sells goods or services to a subsidiary in another country.

Transfer pricing is the No. 1 international tax area of concern to multinationals, tax authorities are reviewing transfer pricing to tackle profit shifts that could be detrimental to the tax revenue of their countries or jurisdictions.

Commencing on tax year 2019 the Puerto Rico Internal Revenue Code of 2011, as amended (“Code”) provides a tax advantage for entities that incur or pay expenses to related entities that are not engaged in trade or business in Puerto Rico.

The Internal Revenue Service extends compliance relief to QOFs and their investors due to the ongoing COVID-19 pandemic.

The Puerto Rico Department of Treasury (the Department) recently eliminated the requirement to International Banking Entities (IBE) and International Financial Entities (IFE) to submit the Transfer Funds Report for transactions performed outside of Puerto Rico of $5,000 or more.

The Puerto Rico Department of Treasury issued Circular Letter 2021-01 informing the limits applicable for contributions to retirement plans and Circular Letter 2021-02 to establish the eligibility and procedures to be followed by those Puerto Rico eligible individuals interested in claiming the American Opportunity Credit for tax years 2018 and onwards.

Amendments to the Puerto Rico Incentives Code related to the acquisition of residential real estate and changes in the tax incentives for: Export of Goods and Services, Entrepreneurship, and Tax Credits as well as new incentives for recycling and transformation of scrap.

The Puerto Rico Department of State will eliminate fines and penalties to previous 2020 annual reports and annual fees.

Summary of President Joe Biden most relevant campaign tax proposals that could represent major changes going forward regarding Puerto Rico, highlighting important planning considerations.