reforma contributiva - camarapr.org€¦ · reforma contributiva tax rates – regular and amt •...
TRANSCRIPT
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REFORMACONTRIBUTIVA
LaCámara deComercio dePuertoRicoysu Comité deAsuntos Contributivos presentan elForo:
Aspectos Relevantes: Corporaciones, Sociedades y Ciertos Otros
Rosa M. Rodríguez, Directora EjecutivaErnst and Young Puerto Rico LLC
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REFORMACONTRIBUTIVA
Thispresentationisprovidedsolelyforthepurposeofenhancingknowledgeontaxmatters.Itdoesnotprovidetaxadvicetoanytaxpayerbecauseitdoesnottakeintoaccountanyspecifictaxpayer’sfactsandcircumstances.
Theseslidesareforeducationalpurposesonlyandarenotintended,andshouldnotbereliedupon,asaccountingadvice.
TheviewsexpressedbythepresentersarenotnecessarilythoseofErnst&YoungLLP.
Thispresentationis©2018Ernst&YoungLLP.AllRightsReserved.
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.EY refers to the global organization, and may refer to one or more, of the member firms, of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US.
Disclaimer
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REFORMACONTRIBUTIVATaxrates– RegularandAMT• fortaxableyearscommencingafterDecember31,2018:
- reductiononcorporateregulartaxrates:- normaltaxisreducedto18.5%- surtax:nochanges- maximumtaxrate(normalandsurtax)wouldbe37.5%
- alternativeminimumtax- thegreaterof$500or18.5%ofthealternativeminimumnetincome- inthecaseoftaxpayerswithvolumeofbusinessof$3millionormorethetaxratewillbe23%- newlimitationsareimposedregardingdeductibleexpensestodeterminethenetincomesubjecttoalternativeminimumtax- optiontoclaimalltheordinaryandnecessaryexpensesiftaxpayersubmitsauditedfinancialstatements,AgreedUponProcedures(AUP)orComplianceAttestationReportsbyaCPAwithlicensetopracticeinPR
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REFORMACONTRIBUTIVA
TaxratesandOtherRegularandAMTRules• fortaxableyearscommencingafterDecember31,2018:
- alternativeminimumtax- newlimitationsareimposedregardingdeductibleexpensestodeterminethenetincomesubjecttoalternativeminimumtax- optiontoclaimalltheordinaryandnecessaryexpensesiftaxpayer
submitsauditedfinancialstatements- $3Millionormore- AgreedUponProcedures(AUP)orComplianceAttestationReports–
lessthan$1Million,or$1butlessthan$3Million- AllcasesthereportmustbeissuedbyaCPAwithaPuertoRicovalid
license
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REFORMACONTRIBUTIVAAlternativeMinimumNetIncomeDeductionsallowedtodeterminethenetincomesubjecttoalternativeminimumtax– TaxyearscommencingafterDecember31,2018• AMTnetincome–
• Onlycertaindeductionsallowed• GrossincomeperSection1031.01lessalloweddeductions
• AMTnetincomedeterminedonthesamebasisasthenetincomeforregulartaxpurposes• Onlyifauditedfinancialstatements,ortheAUPorCAreportasapplicableare
submittedwiththereturn• Secretarymustestablishbyregulationoradministrativeguidancethemannerin
whichthesenewruleswouldapply• Includingtransitionmeasures
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REFORMACONTRIBUTIVA
AlternativeMinimumNetIncomeDeductionsallowedtodeterminethenetincomesubjecttoalternativeminimumtax– TaxyearscommencingafterDecember31,2018
• 125%deductionforsalariespaidandreportedontheW-2's• amountofpaymentsforservicesdirectlyrelatedtothetradeorbusinessreported
oninformativereturns(withorwithoutwithholding),includes:• Rent• Telecom• Internetaccess
• contributionstohealthoraccidentplans
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REFORMACONTRIBUTIVAAlternativeMinimumNetIncomeDeductionsallowedtodeterminethenetincomesubjecttoalternativeminimumtax– TaxyearscommencingafterDecember31,2018
• Waterandelectricityservicesdirectlyrelatedtotheoperationofthetradeorbusiness
• Amounts paid inthe tax year directly related tothe operation ofthe trade orBusiness,andproperly reported inthe informative returns- advertising- promotion- Marketing
• Amountspaidinthetaxyearandpropertly reportedintheinformativereturnsfor:Property,contingencyandpublicliability(responsibility)insurance
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REFORMACONTRIBUTIVAAlternativeMinimumNetIncomeDeductionsallowedtodeterminethenetincomesubjecttoalternativeminimumtax- TaxyearscommencingafterDecember31,2018
• depreciationdeductionunderstraightline• interest,othertaxes,baddebts,contributionstoanemployeetrust,annuity
orcompensationunderadeferredpaymentplan,charitablecontributions,agriculturalincome,butonlyifaredirectlyrelatedtotheoperationofthetradeorbusiness
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REFORMACONTRIBUTIVA
Summary of AMT deductions-Deductible expenses Requirement
Salaries(125%deduction) W-2Servicesdirectlyrelatedtothetradeorbusiness InformativereturnContributionstohealth oraccidentplans -Rent,telecommunications, internet InformativereturnWaterandelectricityservices -
Advertising,promotion andmarketing- directlyrelatedthetradeorbusiness Informativereturn
Property,contingencyandpublicliabilityinsurance Informativereturn
Depreciationdeductionunder straightline -Interest,othertaxes,baddebts,contributionstoemployeetrusts ordeferredpaymentplan,charitablecontributions,agriculturalincome– directlyrelatedtothetradeorbusiness
-
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REFORMACONTRIBUTIVA
Optionalcomputationforcorporationsthatprovideservices
• Corporationsmayopttopayanoptionaltax• Sourceofincomeissubstantiallyfromtherenderingofservices• Effectivedate:
• fortaxableyearscommencingafterDecember31,2018• Secretaryhastheauthoritytopostponetotaxyears2020forward
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REFORMACONTRIBUTIVA
Gross Income Tax rate
Up to $100,000 6%Between$100,001-$200,000 10%Between$200,001-$300,000 13%Between$300,001-$400,000 15%
Between$300,001-$500,000 17%Over$500,000 20%
Optionalcomputationforcorporationsthatprovideservices-AppliesfortaxableyearcommencingafterDecember31,2018
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REFORMACONTRIBUTIVAOptionalcomputationforcorporationsthatprovideservicesRequirements– allthree(3)mustbemet:
- Totalgrossincomeisderivedsubstantiallyfromservicesrendered- Totalgrossincomewasreportedoninformativereturns- Totalgrossincomewassubjecttowithholdingatsourceorthepaymentofestimatedtaxes
• Iftheoptionalcomputationiselected• Applicabletaxratewouldbeappliedtothegrossincome• Taxpayerwillnotbeabletoclaimanyexpensesordeductions• Waivedfromtherequirementtosubmitauditedfinancialstatements,orAUPorACreportsasapplicable
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REFORMACONTRIBUTIVA
Corporate tax returns
• Onlyonesignaturewillberequired• Ifthetotaltaxongrossincomewaspaidbywithholdingatsourcenotaxreturnwillberequiredtobefiled
• InthecaseofLargeTaxpayers- returnneedstobecertifiedasreviewedorpreparedbyaCertifiedPublicAccountantwithlicensetopracticetheprofessioninPuertoRico
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REFORMACONTRIBUTIVA
Corporate tax returns
• Extensiontofile• TaxyearsthatcommencedafterDecember31,2016– 6months• Thiswouldalsobeapplicabletocorporationofindividuals,partnershipsandspecialpartnerships
• Filingofthereturn• Secretaryhasauthoritytorequiremandatoryelectronicfiling
• Paymentofthetax• Secretaryhasauthoritytorequiremandatoryelectronicpayment
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REFORMACONTRIBUTIVA
Group ofrelated entities – Section 1010.05Changesinthedefinitionusingtheconceptof“entities”insteadof“corporations”• Addsnewdefinition:Entity• Entityisdefinedaseveryindustryorbusinesscarriedonbya:
• corporation,limitedliabilitycorporation(LLC)orpartnershiptaxedasacorporation
• LLCorpartnershipsubjecttotaxationasapartnership• corporation,LLCorpartnershipsubjecttotaxationasaspecialpartnership• corporationorLLCsubjecttotaxationasacorporationofindividuals• Corporation,LLC,partnershiporanyothertypeofforeignentitythatifengagedinbusinessinPR,wouldfallonanyoftheabovecategories
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REFORMACONTRIBUTIVA
DefinitionsLimitedLiabilityCompany(LLC)
• ProvidesforLLCseries• Statutoryrule– partnershiptaxationifconsidereddisregardedorpartnerssubjecttotaxation• WouldonlyrequirethepartnershipmandatorystatustoforeignLLCs
• Newdefinition– Tradeorbusinesswouldnotinclude• Tradinginsecurities:residentindependentagentorforitsownaccount
• Residentindependentagentrule-OnlyapplicableifnoofficeorotherfixedplaceofbusinessinPRinthetaxyear
• Othernewdefinitions:PROMESA,mathematicalerror,amongothers
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REFORMACONTRIBUTIVA
LargeTaxpayers
• $50millionormore- volumeofbusinessdeterminedusingtheaggregateamountofallthemembersofthegroupofrelatedentities
• NotLargeTaxpayeranymore– taxpayercanrequestfromtheSecretarytobeexcludedfromtheLargeTaxpayerscategory• Requestmustbemadethroughfilingofanadministrative
determination
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REFORMACONTRIBUTIVADeductions-deductionsingeneral
- depreciation- businesseswithvolumeofbusinessof$3MMorlessmaycompute
thedeductionusinganusefullifeof2yearsforfixedassets,exceptforrealproperty,automobiles,amongothers(taxyearsafter12/31/2018)
- Automobiles- Expensesafter12/31/2017,allowsthedeductionforactualexpensesincurredfortheuseandmaintenance,subjecttoalimitthatwillbeestablished- AmounttobeestablishedbySecretaryshouldneverbelessthan
theonepublishedbytheUSInternalRevenueService
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REFORMACONTRIBUTIVADeductions-deductionsingeneral
- charitablecontributionsmadebycorporations- Taxableyearsbeginningafter12/31/2018- deductionwillonlybeallowedifmadetononforprofitentitiescertifiedbytheSecretary,thatprovideservicestoresidentsofPuertoRico
-Netoperatinglosses(carryover&deduction)- Taxableyearsbeginningafter12/31/2018- 90%ofgrossincome
limitationisreestablished- Eliminatesreferencestolimitationsaboutrelatedpartyexpenses
(51%/49%)
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REFORMACONTRIBUTIVA
Deductions-deductionsingeneral- Netoperatinglosses- corporatepartnerthatowns50%ormoreoftheinterestinapartnershiporspecialpartnership(seemsthatcouldbeapplicablefortaxyear2018dependingwhenthebillissigned)
- NotallowedtoclaimtheNOLdeductionagainstthedistributableshareincomeofsuchpartnership/specialpartnership
- NotallowedtouseitscurrentNOLtooffsetthedistributableshareincome
- Lossesfromotherpartnershiporspecialpartnershipsagainstshouldcontinuebeingallowedsubjecttotaxbasisandotherpertinentrules
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REFORMACONTRIBUTIVADeductions-deductionsingeneral
- lossespassthroughentities- reducesthelimitationto90%oftheshareofnetincomeinpassthroughentitiesfortaxyearsbeginningafter12/31/2018
- employmentofyoungcollegestudents/recentgraduates- establishes150%- 200%deductionsonsalariespaidtocollege
studentsandrecentlygraduatedindividuals- capitallosses– reinstates90%limitationfortaxyearscommencingafter
December31,2018
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REFORMACONTRIBUTIVA
Deductions• nondeductibleitems
- meals&entertainmentexpensesReducesto25%thedeductibleportion-taxyearscommencingafter12/31/2018
- travelandlodgingexpensesNottoexceed50%- taxyearscommencingafter12/31/2018
- paymentsandrelatedlegalexpensesforsexualharassmentNotdeductible- taxableyearscommencingafter12/31/2018- applicabletoagreementswithanondisclosureclause
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REFORMACONTRIBUTIVADeductions• nondeductibleitems
- 51%disallowanceofrelatedpartycostsandexpenses- Eliminateslimitationfortaxableyearscommencingafter12/31/2018- requirestransferpricingstudythatincludesanalysisoftheoperationscarriedoutinPR- preparedinconformitywiththeprovisionsoftheUSIRCSection482- ReferencetobeingrevisedbytheUSIRS- ControlledgroupinwhichnomemberhasoperationsintheUS-transferpricingstudyinconformitywithOECDwouldbeallowed
- Secretaryshallissueregulationoradministrativeguidance-toestablisheffectiveness/validityofthetransferpricingstudy
- Secretaryisauthorizednottoacceptthosestudiesthatarenotincompliancewiththerules
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REFORMACONTRIBUTIVA
Sourceofincomerules- Saleofinterestinapartnership• Saleofaninterestinapartnership
• PartnershipthatgeneratesincomefromsourceswithinPR• 2011PRIRC– sourcefromplaceoforganizationorresidenceofseller• PRsourcesincome- totheextentthatthepartnershipwouldhave
generatedPuertoRicosourceincomehaditsoldalltheassetsatfairmarketvalue(FMV),regardlessof• residenceofthepartner,and• ruletomakedeterminationatthepartner,shareholderormember
• Transactionsafter12/31/2018
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REFORMACONTRIBUTIVAWithholdingatsource– nonresidentindividualsSaleofinterestinapartnership• Specialruletonon-residentpersons
• Buyerrequiredtodowithholdingof15%ontheportionofthegainthatisconsideredfromPRsources
• Buyerrequiredtododeposittaxandfileannualreturnwithrespecttowithholdingmade• Buyernotallowedtoclaimdeductionifdepositandannualinformative
filingarenotmade• Totheextentdeductibleasordinaryandnecessaryexpenses(most
likelynotthecaseinapurchasefromanon-PRresident)• Transactionsafter12/31/2018
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REFORMACONTRIBUTIVA
Sourceofincomerules– Personalservicestogovernmentalentities
• PuertoRicosourceincome- ServicesrenderedtoanyagencyorinstrumentalityoftheGovernmentofPR,publiccorporation,legislature,judicature,municipalitiesoreanyotherentitycreatedbystateorFederallaws• FundingfromGeneralFund• EveniftheservicesarerenderedfromoutsidePR• Effectivedate:asofthedateofsignature
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REFORMACONTRIBUTIVA
Distributablesharetopartners– limitationonallowanceoflosses
• Specialruletopartner’sadjustedbasis– Indeterminingthepartner’sdistributableshareinthelossesofapartnership• shouldincludethepartner’sdistributableshareofthecharitable
contributionsmadebythepartnership• donationofpropertywithfairmarketvalueinexcessofitsadjusted
basis- onlytheadjustedbasismaybeconsidered• partner’sdistributableshareinFTCs
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REFORMACONTRIBUTIVA
Continuationofpartnership
• saleorexchangeof50%ormoreofthetotalinterestinapartnership'sprofitsandcapitalwouldnotbeconsideredaterminationofthepartnership
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REFORMACONTRIBUTIVAAuditedFinancialStatements(AFS)Requirements
VolumeofBusiness 2011PRIRCHB1544
TaxYear2018 Commencingafter12/31/2018
Lessthan$1,000,000 NoAFSrequired. NoAFSrequired.
VoluntarysubmissionofAUPorCAnottobesubjecttoABTandAMTlimitations. CPAwithvalidlicenseinPR.
Equalorgreaterthan$1,000,000butlessthan$3,000,000
NoAFSrequired;optionaltoobtain7%fullwaiver(corporations)orpartialwaiver(other).
NoAFSrequired;optionaltoobtain7%fullwaiver(entities)orpartialwaiver(other).
VoluntarysubmissionofAUPorCAnottobesubjecttoABTandAMTlimitations.CPAwithvalidlicenseinPR.
Equalorgreaterthan$3,000,000 AFSrequired. AFSrequired. AFSrequired.Also,willnotbe
subjecttoABTandAMTlimitations.
AUP– Agreeduponproceduresreport;CA– ComplianceAttestationReport
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REFORMACONTRIBUTIVAAuditedFinancialStatements(AFS)Requirements– Consolidatedorcombined
VolumeofBusiness 2011PRIRCHB1544
TaxYear2018 Commencingafter12/31/2018
Equalorgreaterthan$3,000,000(relatedentitiesandpersons)
Members- lessthan$1,000,000,noAFSrequired.
Members- lessthan$1,000,000,noAFSrequired. AUPorCArequired.
Members- equalorgreaterthan$1,000,000,stand-aloneAFSrequiredlistinginthenotesallrelatedentitiesETBinPuertoRico.
Members- equalorgreaterthan$1,000,000,stand-aloneAFSrequiredlistinginthenotesallrelatedentitiesETBinPuertoRico.
Members- equalorgreaterthan$1,000,000,stand-aloneAFSrequiredlistinginthenotesallrelatedentitiesETBinPuertoRico.
ETB– Engagedintradeorbusiness
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REFORMACONTRIBUTIVA
AuditedFinancialStatements– Notforprofit
• non-for-profitcorporationswithunrelatedbusinessincomeof$3,000,000ormorewillberequiredtosubmitauditedfinancialstatementsfortaxableyearsbeginningafterDecember31,2018
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REFORMACONTRIBUTIVA
SupplementalInformation(SI)
• Generally,sameruleswouldapply• Secretarywouldestablishbyregulationandadministrative
guidancethedatetosubmittheSIwhichshouldbeadateaftertheduedateoffilingthereturn,includingextensions
• SecretaryisalsoauthorizedtoestablishtherequirementsfortheSIschedulestogetherwiththePRCPAStateSociety
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REFORMACONTRIBUTIVA
UncertainTaxPosition(UTP)
• Everyentityrequiredtosubmitauditedfinancialstatementsmustincludeastatementwiththereturn
• StatementmustincludedetailofUTPspursuanttoguidanceinaccountingforincometaxesstandards
• Secretarytoestablishcontentofthestatement• TaxyearsthatcommenceafterDecember31,2018
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Gracias
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