10% WITHHOLDING EXEMPTION FOR THE YEAR 2022

Since the beginning of 2019, any person engaged in doing business in Puerto Rico and paying for rendered services to another person must deduct and withhold 10% for income tax. 

The Internal Revenue Code also authorizes the Treasury Secretary to grant partial or total exemptions of the 10% Withholding to taxpayers subject to the established terms and conditions.  Therefore, the Treasury Department issues the Certificate of Exemption of the 10% Withholding at Source for Payments of Rendered Services if it determines the person qualifies for such exemption.  At the end of December of each year, the TD automatically sends the exemptions for the forthcoming year (Automatic Exemptions) to taxpayers that qualify.  The Automatic Exemptions may be confirmed through the taxpayer’s account at SURI.

Request for the Withholding Exemption

If the taxpayer does not receive the Automatic Exemption and understands he complies with the criteria, he may request the exemption electronically through his account at SURI. 

Types of taxpayers that may request the Exemption:

1. 1.     Individuals or Legal Entities with a business volume equal to or larger than $1,000,000 but less than $3,000,000
   2.     Individuals or Legal Entities with a business volume equal to or larger than $3,000,000
   3.     Legal entities whose tax responsibilities are up to date
   4.     Legal entities with a net loss on their operations
   5.     Corporations or partnerships that have dragged a substantial amount of net loss on their operations
   6.    Individuals or Legal Entities within the first three (3) years of having begun their businesses or of rendering services: Individuals must fill out Model se 2678, and Legal Entities must fill out Model se 2680
   7.     Individual Corporations or Partnerships whose shareholders or owners are doctors qualified under Law 14-2017 or Law 60-2019.
   8.     Individuals between the ages of 16 to 26 eligible for the $40,000 exemption of the Gross Income (Law 135-2014)
   9.     Individuals between the ages of 16 to 35 starting a New Business (Law 135 – 201)
   10.     Individuals with a Net Loss on operations
   11.     Qualified Doctors under Law 14-2017 or Law 60-2019.