Pharma and Life Sciences Tax News: Vol: 12, No. 3

February 2013
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Pharma and Life Sciences Tax News: Vol: 12, No. 3

At a glance

Companies with manufacturing operations in Puerto Rico (PR) are subject to an excise tax on goods or services provided to offshore-related entities under Act 154 of the Internal Revenue Code. The excise tax is imposed in lieu of the PR income tax that otherwise would apply as a result of the source rule.

Puerto Rico bill sets four-percent excise tax rate on offshore manufacturers for 2013-2017

7 February 2013

Companies with manufacturing operations in Puerto Rico (PR) are subject to an excise tax on goods or services provided to offshore-related entities under Act 154 (the Act). The statute, which was enacted in 2010, generally modifies the PR Internal Revenue Code by (i) adopting a new source-of-income rule and (ii) imposing a temporary (i.e., six-year) excise tax on purchases by offshore companies from related PR sellers whose gross receipts exceed $75 million for any of the three preceding tax years. The excise tax is imposed in lieu of the PR income tax that otherwise would apply as a result of the source rule.