Any person engaged in trade or business in Puerto Rico,
who on January 1th of any given year owns personal property used in such trade
or business is subject to the personal property tax in the municipality where it
is located, unless otherwise exempt. The tax is computed on the net book value
of taxable property, however, if the book value of the personal property does
not reasonable reflects the fair market value then they must be appraised at
fair market value. The maximum tax rate is 8.83% and varies depending on the
municipality in which the taxable property is located. Taxable property normally
includes cash on hand, inventories, materials and supplies, furniture and
fixtures, and machinery and equipment used in the trade or business. A minimum
residual value is assigned to items which are substantially depreciated. The
assessment date is January 1st, although the value of the inventory should be
determined on an annual average basis.
Certain personal properties, including intangibles properties, are exempt.
The tax authority, however, takes the position that computer software is not
exempt as an intangible property.
A personal property tax return must be filed on or before May 15 of each year
in the corresponding regional office of the Municipal Revenue Collector Center or with:
CenterPO Box 195387
San Juan, Puerto Rico
The personal property tax must be paid on or before May 15 of each year. If
payment is made in full by that time, a 5% discount is allowed.
The law provides corporations a 90-day extension of time to file the return.
The extension must be filed not later than the due of the return together with
payment of the tax. .
If the volume of business (defined as gross receipts) of the corporation
exceeds $3,000,000, the property tax return must be reviewed by a Puerto Rico
licensed CPA and accompanied by financial statements certified by CPA licensed
in Puerto Rico. The financial statements of
foreign corporations engaged in business in Puerto Rico should reflect solely
its operations in Puerto Rico.
The audited financial statements and the corresponding opinion of the
Certified Public Accountant on such statements are exclusively the financial
statements of the corporation filing the return and not consolidated or combined
statements with other affiliates, even when the information of the individual
corporation subject to the personal property tax in Puerto Rico is included as
Returns filed with financial statements, which do not comply with the
previously mentioned requirements, shall be considered incomplete and may be
deemed not filed.
A trial balance of the corporation's business activities in Puerto Rico as of the preceding January 1, is required
when the corporation does not have a calendar year closing. The trial balance
must be traced to the corporation's accounting records and shall be accompanied
by a sworn statement of an accountant or person in charge of the business
affirming that the trial balance is in agreement with the books of account of
A surcharge for late payment of the tax is imposed as follows:
- 5% of the unpaid amount for a delay in payment in excess of 30 days, but
not more than 60 days
- 10% of the unpaid amount for a delay in payment in excess of 60 days,
but not more than 90 days.
- 15% of the unpaid amount for a delay in payment in excess of 90 days.
A penalty of 5% per month up to a maximum of 25% is imposed for late filing
of the return, unless it is shown to the satisfaction of the Municipal Revenue Collector Center that the failure to file is due to
reasonable cause out of the control of the taxpayer and not due to willful