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Information on Domestic, Puerto Rico Corporations

posted Apr 19, 2014, 10:42 AM by Isla CPA   [ updated Apr 19, 2014, 10:42 AM ]

Nov. 27, 2013 - In Puerto Rico, corporations (and in many circumstances LLC's) that are formed under the Laws of the Commonwealth of Puerto Rico are considered domestic Corporations for tax purposes.  Forming as a domestic corporation is advantageous for foreign businesses (i.e. US businesses).  This is because domestic Puerto Rico business obligations on US tax comes after certain activities including but not limited to distribution of profits.  A notable complication to the above statement is that if dividends are distributed by a domestic Puerto Rico corporation to nonresidents/foreign corporate entities/partnerships that are not engaged in a Puerto Rico activities the they are subject to a 10% withholding tax.  As always there are rules - and this post definitely contains many simplifications.  Additionally, as always a professional should be consulted and be presented with specific information.













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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness.  You, the reader, should further research your specific individual situation.  In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

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