January 5, 2018 Puerto Rico's Treasury Department issues guidance on automatic waiver from withholding at source on payments made for services performed in 2018 Puerto Rico's Treasury Department (PRTD) has issued guidance (Informative Bulletin (IB) 18-01) on the automatic waiver from withholding at source on payments made for services performed by taxpayers engaged in trade or business in Puerto Rico in 2018. Additionally, the PRTD extended the effective date of the waivers issued for 2017 from December 31, 2017 to January 31, 2018. Automatic waiver The PRTD commenced sending waiver certificates to taxpayers who qualify for the automatic waiver during the last week of December of 2017. Taxpayers should receive the certificates at the beginning of January 2018. If a taxpayer cannot wait for the certificate to arrive in the mail, the taxpayer may request the certificate in-person at any Service Center, through email or by telephone. To request a certificate in-person, the taxpayer should have a copy of the tax return for the previous tax year. If the person making the request at the Service Center is not the taxpayer, Form 2745, Power and Statement of Representation, should be completed and signed. The taxpayer may also request the certificate through email by sending the request to infosac@hacienda.pr.gov. The email should include: (1) the taxpayer's full name; (2) the Social Security number or employer identification number; and (3) a copy of the tax return for the previous tax year. To make the request by phone, the taxpayer should have the following information available: (1) the taxpayer's full name; (2) the Social Security number or employer identification number; and (3) a valid email address to which the certificate may be sent. Non-automatic waiver Taxpayers who do not qualify for the automatic waiver may request a waiver at a Service Center or by email. In order to do so, taxpayers must comply with the requirements established under Section 1062.03(g) of Puerto Rico's Internal Revenue Code of 2011, as amended (the PR Code) and the criteria set out in Administrative Determination (AD) 17-30. New businesses that may qualify for a withholding waiver under the criteria set out in AD 17-30 may request a waiver at a Service Center by submitting the documents indicated in AD 17-30. In accordance with Circular Letter 17-02 and Informative Bulletin 17-11, the PRTD will not grant waivers to taxpayers who receive payments that are not subject to the 7% withholding as established in paragraphs 1 — 7 and 9 — 14 of part (b) of Section 1062.03 of the PR Code. Implications In general, payments for services rendered by taxpayers who do not qualify for the withholding waiver will be subject to an income tax withholding at source of 7%. ———————————————
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