Businesses in Puerto Rico are normally subject to payment of municipal license taxes. For non-financial businesses, such tax may be as high as 0.5% (1/2 of 1%) of the volume of business (defined as gross receipts) received or accrued during the year. The maximum rate for a for-financial business is 1.5% on income from interest, rents, fees, profits, etc.
The municipal volume of business statements must be filed on or before the five (5) working days following April 15 of each year. These must reflect the volume of business obtained during the accounting year preceding the filing of the return. If the tax is paid at the time of filing the return in April, a discount of 5% is allowed.
The municipal license tax is payable in two installments due on July 15 and January 15 following the filing date.
If the taxpayer operates in more than one municipality, a breakdown of the volume of business by municipality must be prepared and attached to the forms. A separate form must be filed at each municipality in which business is conducted.
The Municipal License Tax Act imposes penalties for failure to file a complete tax return unless it is shown that such failure is due to reasonable causes and not willful neglect. Merchant is subject to a five percent (5%) penalty of the amount of the municipal license taxes due. If this is not corrected within 30 days, an additional 5% for each additional 30 days or fraction will be added thereof during which such failure continues, not to exceed 25% in the aggregate.
