Since the beginning of 2019, any person engaged in doing business in Puerto Rico and that pays 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 coming year (Automatic Exemptions) to taxpayers that qualify. The Automatic Exemptions may be confirmed through the TD’s systems.
Due to the fact that the TD is working with the integration and conversion of the data of the income tax accounts of individuals and corporations to its new digital tool, SURI, for this year only it will issue the Automatic Exemptions using different criteria. This will guarantee taxpayers a simpler, more efficient process. The process is expected to be concluded on February 10, 2020.
For this purpose, the TD issued its Internal Revenue Circular Letter No. 19-15 (CC RI 19-15) to inform on the process for the issuing of the Automatic Exemptions as well as to establish the steps to follow for applying for the 2020 Exemptions.
For 2020 only, the Automatic Exemptions will be issued to all taxpayers that were granted an Exemption in 2019, provided that at the end of December they have filed on time their tax returns and/or SUT declarations and any other tax due, and that do not have any outstanding tax debts. The Automatic Exemption will be available on their account.
Process for the Request and Issuance of the Exemptions of New Businesses for 2020
For 2020, taxpayers that qualify as a professional service business during the first three years of rendering services may request the exemption through the following means:
- Electronically: Sending the request through
- In Person: By visiting any of the Taxpayer Service Centers.
The Exemption will be sent to the taxpayer’s account through SURI.
Process for the Request and Issuance of the Partial or Total Exemptions for 2020
Those taxpayers that do not receive the Automatic Exemption for 2020 and understand that they comply with the criteria, may request their Exemption using the following means:
- Electronically: Sending the request through
- In Person: By visiting any of the Taxpayer Service Centers.
- Telephone: Calling “Hacienda Responde” at (787) 622-0123.
How to Access and Print the Automatic Exemption, New Business Exemption or the 2020 Exemption
For 2020, all Exemptions, including the Automatic and New Business Exemptions, will be issued only through the taxpayer’s account at SURI. To open and print the Exemption, access your SURI account, click on the Mail link, select the View Mail option and select either the Partial Exemption Certificate or the Total Exemption Certificate.
