Act 25 of 29 April 2017 (Act 25) was enacted to establish new sales and use tax requirements for companies without physical presence in Puerto Rico and dedicated in their ordinary course of business to the sales of personal property by internet and mail. Act 25 provides new reporting requirements to non-resident merchants engaged in internet retail sales.
On 7 March 2017, the Puerto Rico Fiscal Agency and Financial Advisory Authority (PRFAFAA) issued Administrative Order AO-2017-01. The PRFAFAA ordered the creation of a committee to evaluate and approve new tax credits. A suspension of the issuance of new tax credits is ordered, and the use of tax credits that have been granted is limited to four years. There should be more guidance in the near future.
As a result of AO-2017-01, the Secretary of the Treasury issued Circular Letter 17-07 to establish a process of reporting tax credits in order to make an inventory of all tax credits granted and available as of April 2017. Holders of tax credits were required to file an Informative Return of Tax Credits (Form 480.71) on or before 15 May 2017. Any credit not reported in the informative return would be lost by the taxpayer.
On 28 March 2016, US District Judge Jose Antonio Fusté ('the Judge') of the United States (US) District Court of Puerto Rico ('the Court') declared invalid, under both federal and statutory laws, the provisions of Sections 1022.03(b)(2) and (d) of the Puerto Rico Internal Revenue Code of 2011 ('the Code'), which impose the alternative minimum tax (AMT) on inter-company/branch charges and on inter-company purchases.
The court order ('the Order') stated that the injunction shall go into effect immediately, and that the Secretary and all of his subordinates must stop all levying, collection, and enforcement of the AMT on inter-company/branch charges and inter-company purchases, including estimated payments pursuant to the applicable section of the Code. The order was sustained by the First Circuit of the United States Court of Appeals on 24 August 2016.
Pursuant to the Order, the Puerto Rico Treasury Department (PRTD) issued Administrative Determination Number 16-11 (AD 16-11) in an effort to clarify the applicability of the AMT for the taxable year 2016 and to establish a procedure to claim credits for AMT paid in excess, if any, for tax year 2015 in those cases where taxpayers were subject to income tax on the second component of AMT.