Puerto Rico Treasury Dept. unveils new tool to manage, monitor tax credits
Starting today, a new digital platform will be available through the Puerto Rico Treasury Department’s Unified Internal Revenue System (SURI, in Spanish), known as the Tax Credit Manager (MCC, in Spanish), which will facilitate managing and monitoring tax credits, agency Secretary Francisco Parés announced.
“In the Department we continue to improve our oversight processes and with this tool it will be easier to identify non-compliers and increase recruitment,” he said. “These new [revenue] collections will be used to reduce the tax burden of those who do comply with their obligations.”
This is the first time the Treasury Department will have a centralized system, which will cover all the credits granted, eliminating individualized administration by each government agency, he added.
The agencies that oversee tax credits are the Department of Economic Development and Commerce (DDEC, in Spanish), the Puerto Rico Tourism Company and the Treasury Department.
The tax credits claimed against income tax represent an average of $270 million to $280 million annually, according to the 2023 Tax Expenditure Report.
Through the MCC, Treasury will have an updated record of the tax credits granted by the government of Puerto Rico. The digital tool will also facilitate its administration and oversight, Parés said.
The Department will also be able to monitor the tax credit from its granting until its eventual claim in the income tax return.
“From now on, we’re going to work with more precise information on the fiscal impact of the tax credits and we will have updated data to carry out periodic reviews of the performance indicators of each credit,” he said.
The tax credits that the MCC will oversee are credits for investment and do not include incentives that are claimed in the individual return, such as the work credit, the senior credit or for tax withheld, among others.
Taxpayers may register credits granted by other regulatory agencies, request tax credits from the Treasury Department, submit evidence of self-determined credits on the return, notify their sale and handle claims against income tax, among other actions.
“This is a very important technological advance for the Department and for the government in general. We’re going to facilitate our work and that of the taxpayers at the same time, creating a file to keep the transactions related to their tax credits,” Parés said.
Pre- and Post-MCC Credits
Meanwhile, Parés explained that any tax credit granted prior to Jan. 1, 2023, will be considered a “Pre-MCC Credit” and will not be recorded in the new system. These credits will have certain transition rules, which include a period of three taxable years after the date of the MCC’s implementation, for claiming them against income tax.
The first taxable year of the transition period is 2023, so the “Pre-MCC Credits” may be claimed until taxable year 2025. Any balance available and not used at the end of the three-year period may not be claimed or carried over to subsequent consecutive years, he explained.
On the other hand, credits granted as of Jan. 1, 2023, the date of the MCC’s implementation, will be considered “Post-MCC Credits” and to be able to claim them in the return, they must be registered in the MCC system.
To facilitate the implementation of the tool, Treasury established a holding period from Jan. 1-17, 2023, during which regulatory agencies could receive and evaluate new tax credit applications, but not issue certifications.