Puerto Rico’s taxation comprises taxes paid to the United States federal government and taxes paid to the Commonwealth of Puerto Rico’s government. Payments to the federal government, both personal and corporate, are handled by the Internal Revenue Service (IRS), whereas payments to the Commonwealth government are handled by the Puerto Rico Department of Treasury (Departamento de Hacienda).
Puerto Rico is a US unincorporated territory, and Puerto Ricans are US citizens; however, Puerto Rico is a US insular area rather than a state. As a result, while all citizens of Puerto Rico pay federal taxes, many are exempt from paying federal income taxes. Federal taxes in the United States include customs duties, federal commodity taxes, and federal payroll taxes, in addition to income taxes (Social Security, Medicare, and Unemployment taxes).
Things to Know about Taxation in Puerto Rico
There are a few things to know about tax Puerto Rico if you’re thinking about moving there. For starters, Puerto Rico is a US territory, so its tax laws are similar to those in the mainland United States. However, there are some key differences that you should be aware of.
- Puerto Rico has a lower overall tax burden than the mainland US. This is because Puerto Rico does not have a state income tax. However, it does have higher sales taxes and property taxes.
- Another important difference to be aware of is that Puerto Rico’s tax laws are not as favorable to businesses as those in the mainland US. This is because Puerto Rico has a higher corporate income tax rate and does not offer the same business tax breaks that are available in the US.
- Overall, you should do your research before moving to Puerto Rico so that you understand the ins and outs of the territory’s taxation system. With a little planning, you can minimize your tax burden and make sure you’re in compliance with all applicable laws.
Puerto Rico’s tax system is complex, but it can be navigated with the help of a professional. If you are considering doing business in Puerto Rico, it is important to be aware of the taxes that you will be liable for. With careful planning and advice from a tax expert, you can ensure that you are compliant with Puerto Rico’s tax laws and regulations.