Question

Mention three different aspects that reflect important changes for individuals who fill out their tax report in Puerto Rico.

Answer 1

Puerto Rico general sales and use rate increased from 7% to 10.5% with an effective total tax rate of 11.5% on many transactions when combined with the municipal sales and use tax of 1% (as of July 1, 2015). Puerto Rico now has the highest sales tax in America. In addition, in the event that the governor determines an insufficiency in collections for the general fund an additional 1% to the central government will be imposed.

All inbound shipments to Puerto Rico are subject to a local excise tax. Merchandise and/or articles arriving from the U.S. that will be sold, consumed, given away, and/or remain in Puerto Rico are subject to a 6.6% Puerto Rico excise tax that is calculated from the commercial invoice value. This is payable upon entry to Puerto Rico.

Puerto Rico has it own tax system. Although it is modeled after the U.S. system, there are differences in law and tax rates.

The Puerto Rico tax system is based on self-assessment. Taxes are paid to the state. In addition, a premium is paid to the Social Security. Individual taxpayers are required to file an annual income tax return when minimum-income thresholds are met. They report taxable income and deductions, compare their final tax liability to any income tax withheld or estimated tax paid, and determine any balance due or overpayment of tax due from the Treasury.