Puerto Rico

Corporate - Group taxation

Last reviewed - 04 February 2020

Puerto Rico does not have group taxation rules. In other words, corporations cannot file a consolidated return for Puerto Rico CIT purposes.

Transfer pricing

There are no specific transfer pricing rules in Puerto Rico.

For taxable years commenced after 31 December 2018, the PRIRC was amended to provide that the 51% disallowance with respect to expenses paid or incurred with a related person that is not engaged in trade or business in Puerto Rico may not apply if the taxpayer submits a transfer pricing study prepared pursuant to the provision of Section 482 of the US Internal Revenue Code of 1986 (USIRC), as amended. If the taxpayer does not have operations in the United States, a transfer pricing study issued according to the provisions of the OECD may be accepted.

We would expect for the PRTD to release regulations in this area to properly define the parameters of what will constitute the arm’s-length price with respect to transactions with related parties crossing the borders, using the technical guidelines established by Section 482 of the USIRC, the OECD, and any local Regulations.

Thin capitalisation

There are no specific thin capitalisation rules in Puerto Rico.

Controlled foreign companies (CFCs)

There are no specific CFC rules in Puerto Rico.