Vázquez signs law to reduce tax rate for some Puerto Rico residents
Gov. Wanda Vázquez signed into law a bill presenting several amendments to the Puerto Rico Tax Reform passed last year that will benefit taxpayers, entrepreneurs and seniors.
Law 40-2020, grants an additional 3% reduction for taxpayers whose gross income does not exceed $100,000; eliminates the tax on the provision of services rendered to other businesses and designated professional services, known as B2B, on 85% of taxpayers, increasing from $200,000 to $300,000 the business volume that will be tax exempt; and eliminates the special 1.5% tax for professional and advisory services provided to the government in excess of $300,000.
In addition, it provides that the Credit for Low-Income Seniors over 65 and the Compensation Credit for Low-Income Retirees of Section 1052.02 — known as the Senior Credit — of the Puerto Rico Internal Revenue Code be paid within 30 days from of when the taxpayer files the application.
At the end of last year, a new tax model was approved through Law 257-2018, which, among other things, reduced the tax burden on individuals and corporations, eliminated the B2B tax on the provision of services to 77% of taxpayers and reduced the sales and use tax (IVU in Spanish) on prepared foods from 11.5% to 7%.
“The elimination of the tax on the provision of B2B services is expanded with this law to help 85% of taxpayers, offering the exemption to businesses with business volume of up to $300,000,” the governor said.
Meanwhile, in a separate statement, Vázquez announced the Treasury Department’s administrative order to extend the temporary exemption of the IVU on prepared foods until May 3, from the original April 19 expiration established in Administrative Determination 20-08.
Treasury Secretary Francisco Parés said the agency will be “evaluating the possibility of extending it for a longer time depending on the circumstances at the expiration date of this period.”