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Net operating losses (NOLs) can be a boon for corporations that experience a down year, allowing them to offset taxable income in other years. But, NOLs come with complex rules and limitations, so it's important to understand your options. This article will answer all your frequently asked questions about NOLs, including what they are, how to calculate them, whether they can be carried back or forward, how to claim them, and what limitations and special rules apply. By the end, you'll have the knowledge you need to use NOLs to your corporation's advantage.

This publication is part of a four-part series. For a discussion on our previous articles in this series, refer to the following links: Puerto Rico Opens its Doors for Disregarded Entities | Grant Thornton Three become One: The New Pass-Through Entity Category | Grant Thornton Puerto Rico Income Tax Deductions for Corporations: A Step-by-Step Guide | Grant Thornton

Small and medium-sized businesses, also known as PyME or PyMEs (for its Spanish translation), represent an important sector of the Puerto Rican economy, as they play a substantial role in generating employment opportunities for the Island and boosting economic growth. According to the Department of Economic Development and Commerce (DEDC) PyMEs Annual Report, in 2019 PyMEs accounted for 91.4% of the total establishments in Puerto Rico, contributing 44.8% of the total jobs in the private sector, and representing 39.2% of the total payroll in Puerto Rico’s private sector during such year.

Small and medium enterprises play a substantial role in the Puerto Rican economy, as they generate many employment opportunities. Following the Government of Puerto Rico’s public policy on finding ways to strengthen this sector, the State Insurance Fund Corporation (SIFC) has introduced an incentive program through Administrative Order 23-04.

Over time, commercial transactions are constantly evolving due to digitalization and globalization of markets. Recent global events, such as the COVID-19 pandemic, further accelerated the transformation from the traditional work model into today's digital workplace. In this same way, governments are constantly adapting their tax rules to further regulate this new business environment according to the new market trends and needs. For example, the South Dakota v. Wayfair case (138 S. Ct. 2080), demonstrates how governments are adapting to technological advances while they continue collecting revenues digitally. This article provides a brief overview of the tax implications of the 2018 Wayfair ruling for Puerto Rican taxpayers, and how this case impacted the Puerto Rico Sales and Use Tax (PR SUT) since its issuance.

Small and medium enterprises play a substantial role in the Puerto Rican economy, as they generate many employment opportunities. Following the Government of Puerto Rico’s public policy on finding ways to strengthen this sector, the State Insurance Fund Corporation (SIFC) has introduced an incentive program through Administrative Order 23-04.

This publication is part of a four-part series – Pass-through Entities, Corporations, and Individuals. For a discussion on our previous articles in this series, refer to the following links: Three become One: The New Pass-Through Entity Category | Grant Thornton Puerto Rico Opens its Doors for Disregarded Entities | Grant Thornton

Tax credits prove to be a highly useful instrument for taxpayers within the Puerto Rico tax system, in terms of tax strategizing and reducing their tax obligations. Although most of the tax credits can only be attained by eligible businesses under the Puerto Rico Incentives Code, the existence of a secondary market can make them within reach of every taxpayer and serve as a valuable tool for tax planning. In this article, we will dive into the realm of tax credits, giving you an overview to capitalize on these advantageous tax provisions benefiting your tax situation.

Every year, the Caribbean region prepares for the hurricane season, which starts on June 1st and ends on November 30th. As the years go by, climate change is becoming more dramatic, and atmospheric events are stronger and more unpredictable. In 2017, Puerto Rico experienced Hurricane Maria and its electricity grid and other utilities became increasingly unstable. Consequently, preparing for this season of the year is essential for the Puerto Rican residents. The Puerto Rico Treasury Department (PRTD), recognized that proper preparation is important, but it can also be costly. As a result, the island’s Internal Revenue Code, as amended (“the Code”), provides certain exemptions that serve as a relief to the financial burden of the taxpayer. This article explains the tax exemption on solar equipment, the non-applicability of the Sales and Use Tax ("SUT") on donations.

It has been months of candid discussion since the enactment of Act 52 of June 30th, 2022, known as the Puerto Rico Public Finances Stabilization Act (hereinafter “Act 52-2022”). Act 52-2022 introduced a potpourri of amendments to tax-related legislation. Amendments impacted the 2011 Puerto Rico Internal Revenue Code (“PR Code”), the Puerto Rico Incentives Code, and the Puerto Rico Municipal Code to position Puerto Rico as an attractive destination to do business. As a significant change presented by Act 52-2022, disregarded entities (“DREs”) were recognized for the first time for PR income tax purposes. As stated in the Statement of Motives of Act 52-2022, this adoption seeks to simplify tax compliance burdens for the PR working class. Subsequently, the PR Treasury Department issued Administrative Determination 22-10 (“DA 22-10”) and Administrative Determination 23-01 (“DA 23-01”), which shed light and provide a set of rules for entities that want to elect or revert its taxable treatment. Many business owners frequently structure their businesses as Limited Liability Companies (“LLCs”). It also aligns Puerto Rico with the tax regimen of the US federal tax code and other US states that have adopted this tax treatment for these entities. One of the most important decisions when creating a business is electing the most suitable business organization form. This decision will impact aspects of your business including taxation, and your personal legal liability. Here in we discuss, in general terms, the most common ways to do business in Puerto Rico (“PR”) using a legal entity and what you should know about the implications that the enactment of Act 52-2022, and related publications, bring with respect to DREs.

On September 27, 2022, the Puerto Rico Department of Treasury (“PRDT”) released Administrative Determination No. 22-08 (“DA”) to establish tax relief measures for taxpayers affected by the aftermath of Hurricane Fiona (“Hurricane)” in Puerto Rico. The PRDT anticipates the challenges taxpayers may face in complying with their tax responsibilities due to interruptions in essential services such as electric power and internet that were caused by the Hurricane. As a result, the PRDT Secretary is exercising its power as vested by the 2011 Puerto Rico Internal Revenue Code, as amended (“the Code”) to extend deadlines for payments of tax as well as the fillings of any returns or statements. The PRDT emphasizes that at the moment, all the services provided by the platform SURI are operating normally. Those taxpayers that are able can make tax debt payments, request automatic payment plans, and request certifications, among others.

Effects of Act 52, 2022 in the Puerto Rico Sales and Use Tax (“SUT”).

In recent years, we have witnessed several campaigns and efforts implemented by the Government of Puerto Rico ("Government") to fight tax evasion.

Taxpayers engaged in trade or business within the jurisdiction of a Puerto Rico municipality, providing any services for profit, selling any goods, or performing any type of business; are generally subject to the payment of municipal license taxes.

As the Opportunity Zones program’s needs evolve, new US legislation is underway to meet the program’s intended results and unleash the full potential for economic development that the Opportunity Zone Program can provide to communities.

Read this to know what to do and where to file.