The recently approved tax reform Act 257-2018 introduces several changes to the tax system of Puerto Rico.
One of these changes expands dramatically the use of the certified public accountant (CPA) to support the Department of the Treasury in its compliance and enforcement efforts. An individual or corporation may need what is known as an agreed-upon-procedures report (AUP) or a compliance audit report (CAR). The situations in which an individual or entity may need the services of a CPA are the following:
To claim the same expenses that are deducted to determine the regular tax in the calculation of alternative minimum tax (AMT) or alternative basic tax (ABT).
To obtain a waiver of income tax withholding in business services with a volume of $ 1 million dollars or more.
To be included along with the exemption application for a non-profit entity
Although these changes are applicable for tax years beginning after December 31, 2018, it is important these are discussed with a CPA to determine and evaluate the costs and benefits of the preparation of these reports.