2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1004 - Tax Rates (§§ 30061 — 30090) › Subchapter C - Preferred Rate Taxes (§§ 30081 — 30090) › § 30086 - Special tax over dividend distribution of certain corporations

(a) Imposition of tax.— There shall be imposed, collected and paid, in lieu of any other taxes imposed by this part, on the total amount received by any eligible person (as said term is defined in subsection (d)), derived from any eligible distribution (as said term is defined in subsection (c)) of dividends:
(1) Of a domestic corporation, or
(2) of dividends of a foreign corporation when not less than eighty percent (80%) of its gross income derived during the three (3) taxable year period ending with the close of the taxable year prior to the declaration of such dividends, constitutes income that is actually related to the operation of a trade or business in Puerto Rico, the special tax provided in subsection (b), without taking into consideration any deduction or credit provided by this part. This section shall not apply to the amounts distributed in a total or partial liquidation of a corporation.
(b) Special tax.— The special tax provided in subsection (a) shall be ten percent (10%) of the total amount received by every eligible person derived from any eligible distribution made by a corporation.
(c) Definition of eligible distribution.— For purposes of this section, the term “eligible distribution of dividends” means any distribution made by a corporation described in subsection (a), to an eligible person, be it in money or in property, from its earnings or profits accumulated after February 28, 1913. In the case of an eligible person who is a resident of Puerto Rico or a citizen of the United States, the term “eligible distribution of dividends” shall include the distributive share or proportional share, as the case may be, of said eligible person in such portion of the net income of a partnership, special partnership or corporation of individuals from eligible distributions.
Notwithstanding the above, the term “eligible distribution of dividends” shall not include the distributions totally or partially exempt by paragraphs (A), (B), (C), and (D) of subsection (b)(4) of § 30102 of this title, or by §§ 10641 et seq. of this title, better known as the “Economic Incentives Act for the Development of Puerto Rico”, or any other preceding or subsequent similar law, and that portion of the distribution received by a nonresident of Puerto Rico which is deemed to be from sources outside Puerto Rico under § 30152 of this title. Eligible distributions shall not include those made by corporations under §§ 30581—30590 of this title, except with respect to a distribution described in § 30586(c)(1) of this title, or those effected by real estate investment trusts exempt under the provisions of § 30471(a)(8)(F) of this title or § 30401 of this title.
(d) Definition of eligible person.— For purposes of this section, the term “eligible person” means any individual, resident or nonresident, trust or estate.
(e) Requirement to deduct and withhold at the source and pay or deposit the tax imposed by this section.—
(1) Requirement to deduct and withhold.— Every person, notwithstanding the capacity in which the person is acting, that has control, receipt, custody, disposition or payment of eligible distributions described in subsection (c) shall deduct and withhold from said distributions an amount equal to ten percent (10%) of the total amount of each distribution of dividends of corporations. A partnership, special partnership or a corporation of individuals receiving an eligible distribution shall be the person required to meet the requirements of this subsection. For these purposes, the distributive share or proportional share of an eligible person in the net income of a partnership, special partnership or corporation of individuals derived from eligible distributions shall be treated as if received by said eligible person at the same time that the distribution is received by the partnership, special partnership or corporation of individuals.
(2) Requirement to pay or deposit deducted or withheld taxes.— Every person required to deduct and withhold any tax under the provisions of this section, under regulations prescribed by the Secretary in accordance with this subtitle, and to remit the payment of said tax to the Government of Puerto Rico, shall pay the amount of tax so deducted and withheld in the Internal Revenue Tax Collection Offices of Puerto Rico, the Treasury Department, or shall deposit the same in any of the banking institutions designated as depositories of public funds that have been authorized by the Secretary to receive said tax. The tax shall be paid or deposited on or before the fifteenth day of the month following the date in which the eligible distribution was made.
(3) Liability for the tax.— Every person required to deduct and withhold any tax under the provisions of this section shall be liable to the Secretary for the payment of said tax and shall not be liable to any other person for the amount of any of these payments.
(4) Tax return.— Every person required to deduct and withhold any tax under the provisions of this section shall file a return in connection to the same on or before February 28 of the following year. Said return shall be filed with the Secretary and shall have that information and shall be made in such manner as prescribed by the Secretary by regulation.
(5) Failure to withhold.— If the withholding agent, in violation of the provisions of this section, fails to make the withholding referred to in clause (1) of this subsection, the amount which should have been deducted and withheld (unless the recipient of the eligible distribution pays the tax to the Secretary) shall be collected from the withholding agent following the same procedure that would be used if it were a tax owed by the withholding agent.
(6) Penalty.— See § 33111 of this title for provisions related to penalties and additions to the tax.
(f) Non-deductibility of the tax when computing net income.— The tax deducted, withheld, and paid under this section shall not be allowed as a deduction to the withholding agent nor to the recipient of the eligible distribution when computing net income for purposes of any income tax.
(g) If the amount of any tax imposed by this section or any part thereof is not paid on or before its due date, the total unpaid amount of the tax shall be assessed, collected and paid in the same manner as any other tax imposed by this part, and the provisions regarding interest, surcharges, and penalties established in §§ 33001 et seq. of this title shall apply.
(h) Liability of the eligible person.— Any liable eligible person, as stated in clauses (1), (2) and (3) of this subsection, shall be liable for the special tax imposed by this section with respect to any eligible distribution received, to be deducted, withheld at the source and paid to the Secretary within the date prescribed by this subtitle. If with respect to any distribution, the special tax provided by this section or any portion thereof, is not paid within the period prescribed by this part, said distribution shall not be considered an eligible distribution subject to the payment of the special tax provided in this section to the liable eligible person stated in clauses (1), (2) and (3) of this subsection, unless it is shown that said failure is due to a reasonable cause, and not to a willful disregard. The fact that a distribution is considered as non-eligible by reason of the provisions of this subsection, shall have no effect, in any way of releasing or exonerating the withholding agent from the requirements and liabilities provided in this section: For purposes of this subsection, the term “liable eligible person” includes:
(1) The directors of a corporation in office when the withheld tax was not timely paid to Treasury;
(2) any shareholder that owns more than fifty percent (50%) of the total combined voting power of all classes of voting stocks in a corporation, or
(3) a partner in any type of partnership or joint venture.
(i) Exceptions.—
(1) Option.— The provisions pertaining to the special tax imposed by this section shall apply to every eligible distribution, except those which the eligible person opts for them not to apply. The option shall be exercised pursuant to the regulations promulgated by the Secretary. When the taxpayer exercises the option so that the provisions pertaining to the special tax imposed by this section are not applicable, this shall not have the effect, in any way, of releasing or exonerating the withholding agent from the duties of making the corresponding withholding under the provisions of § 30278 of this title. The option shall be final and irrevocable.
(2) Option in the return.— The Secretary shall allow the taxpayer to include the dividend as net income subject to taxation and receive a credit for the tax withheld pursuant to this section, as provided under regulations.
(3) Excess of withheld tax.— In the event that the tax withheld in accordance with subsection (e) is greater [than] the tax resulting from the application of the preferred tax rate provided in subsection (b), the net income subject to such preferred tax rate may be applied to such excess as a credit against the regular tax.
(4) Transitory provisions.— Any eligible distribution made by a corporation or partnership during the period comprising from July 1, 2006 to December 31, 2006, shall be subject to a special tax rate of five percent (5%) of the total amount received by any eligible person, in lieu of the special tax established by subsection (b) and was not regularly distributed to the stockholders or partners of such entities may be kept in the books of the corporation or partnership in question in order to comply with any sort of contractual, commercial or statutory commitment of said entities, to be taken into account at the time any sort of distribution is to be made by the Board of Directors or managing partners or directors of said corporations or partnerships, and subject to the discretion of the former, in terms of the source or origin of the money to be distributed in the future by any of said entities.
History —Jan. 31, 2011, No. 1, § 1023.06, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 15.