Puerto Rico tax law has changed in the recent past to bring a new regime in regard to taxation. From the onset, it is sensible to have an insight to the meaning of tax before engaging on an in depth exploration on the alterations.
Tax may be described as a contribution made by the people of a give country to the government. The government gets its revenue from the taxes collected and uses it in providing services to the citizens. Some of the essential services rendered by the government include construction of roads, improving education and health services. It is compulsory that all citizens are taxed and the amount is determined by the state. These alterations have brought a paradigm shift to the taxation regime.
In Puerto Rico, there has been a change from the previous regime of taxation to a new regime. The modification may be demonstrated as follows. Firstly there is a change in the tax for gross income. The new tax is similar in structure to the formerly municipal tax. The change however is targeting bigger institution especially financial institutions which operate within Puerto Rico. These institutions includes banks, big companies, industries, cooperate institutions, to mention but a few. The modification has brought about a special rate of one percent for financial institutions in gross income to be paid as tax. This provision however excludes some companies from being subjected to the change. This includes companies which are being operated under legislation on tax incentives as well as other companies operated for agricultural purposes.
Secondly, there is also another modification on the measures on other corporate income tax. For instance, insurance companies under the modification are now required to pay tax on their premiums at the rate of one percent. The income tax rate has also been reinstated with the highest being set at 39%.
Another change is on other measures put in place to regulate tax on corporate income. This alteration imposes a new one percent tax rate to insurance companies on insurance premiums. The Medicare advantage plans are however exempted from the insurance premium tax.
In regard to sales and use tax, the changes are placed on business to business services as well as reseller exemption. The following are taxable business to business service. The first one is storage of tangible personal property. The second one is on motor vehicle leasing. The third one is installation and repairs of personal property. The fourth one is on bank charges. The fifth one is on collection services. The sixth one is collection services. The seventh one is on security. The eighth one is on cleaning and laundry services while the last one is on telecommunication services.On reseller, the exemptions have been changed all together. All resellers now are subjected to the payment of sales and use tax on their purchases.
The other alteration worth talking about is tax paid on use and sale. The changes are made in the reseller exemption and also in the services offered by one business to the other business.
The last alteration in Puerto Rico tax law considered in this article is in regard to the other sales and use tax provision. Initially, the institutions of higher learning were exempted from being taxed. However the new alteration only exempt text books, uniforms and other learning materials. Also, equipment acquired by the hospitals and health organizations for the purpose of unit maintenance are also subjected to taxation. Before effecting the changes, these items were not subjected to taxation in the older regime.
Tax may be described as a contribution made by the people of a give country to the government. The government gets its revenue from the taxes collected and uses it in providing services to the citizens. Some of the essential services rendered by the government include construction of roads, improving education and health services. It is compulsory that all citizens are taxed and the amount is determined by the state. These alterations have brought a paradigm shift to the taxation regime.
In Puerto Rico, there has been a change from the previous regime of taxation to a new regime. The modification may be demonstrated as follows. Firstly there is a change in the tax for gross income. The new tax is similar in structure to the formerly municipal tax. The change however is targeting bigger institution especially financial institutions which operate within Puerto Rico. These institutions includes banks, big companies, industries, cooperate institutions, to mention but a few. The modification has brought about a special rate of one percent for financial institutions in gross income to be paid as tax. This provision however excludes some companies from being subjected to the change. This includes companies which are being operated under legislation on tax incentives as well as other companies operated for agricultural purposes.
Secondly, there is also another modification on the measures on other corporate income tax. For instance, insurance companies under the modification are now required to pay tax on their premiums at the rate of one percent. The income tax rate has also been reinstated with the highest being set at 39%.
Another change is on other measures put in place to regulate tax on corporate income. This alteration imposes a new one percent tax rate to insurance companies on insurance premiums. The Medicare advantage plans are however exempted from the insurance premium tax.
In regard to sales and use tax, the changes are placed on business to business services as well as reseller exemption. The following are taxable business to business service. The first one is storage of tangible personal property. The second one is on motor vehicle leasing. The third one is installation and repairs of personal property. The fourth one is on bank charges. The fifth one is on collection services. The sixth one is collection services. The seventh one is on security. The eighth one is on cleaning and laundry services while the last one is on telecommunication services.On reseller, the exemptions have been changed all together. All resellers now are subjected to the payment of sales and use tax on their purchases.
The other alteration worth talking about is tax paid on use and sale. The changes are made in the reseller exemption and also in the services offered by one business to the other business.
The last alteration in Puerto Rico tax law considered in this article is in regard to the other sales and use tax provision. Initially, the institutions of higher learning were exempted from being taxed. However the new alteration only exempt text books, uniforms and other learning materials. Also, equipment acquired by the hospitals and health organizations for the purpose of unit maintenance are also subjected to taxation. Before effecting the changes, these items were not subjected to taxation in the older regime.
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