2025 Summary of Tax Technical Amendments Signed by the Governor of Puerto Rico

February 11, 2026

During the year 2025, the Governor of Puerto Rico signed the following Tax Acts: Act No. 12 of April 11, 2025 (Act 12), Act 13 of April 11, 2025 (Act 13), Act No. 64-2025 (Act 64), Act No. 65-2025 (Act 65), Act No. 66-2025 (Act 66), Act 67 of July 18, 2025 (Act 67), Act No. 72 of July 20, 2025 (Act 72), Act No. 76 of July 24, 2025 (Act 76), Act No. 77 of July 24, 2025 (Act 77), Act No. 78 of July 27, 2025 (Act 78), Act 90 of August 1, 2025 (Act 90), Act 106 of August 8, 2025 (Act 106), Act No. 177 of December 19, 2025 (Act 177), Act No. 178 of December 19, 2025 (Act 178), Act 179 of December 19, 2025 (Act 179) and Act 180 of December 19, 2025 (Act 180), to introduce various technical amendments to certain provisions of the 2011 Puerto Rico Internal Revenue Code, as amended (PR Code), to the Tax Incentives Acts (Act 60-2019 and similar formerly Acts), to the Real Estate Market Stimulus Act (Act 132-2010), exemption for hospitals under Act 168-1968, and to the Municipal Code (Act 107-2020).

Following is a summary of the technical and administrative amendments by Act:

ACT 12 OF APRIL 11, 2025 – PR Municipal Code Technical Amendment – CRIM – Personal Property

This Act amended Article 7.137 of the PR Municipal Code to establish the new extended due dates to file the required Audited Financial Statements and other documents prepared by Certified Public Accountants as part of the filing of the personal property tax return as follows: a) September 30 for pass-through entities, b) October 15 for regular corporations and individuals and c) December 15 for entities with corporate tax treatment (“C-Corp”) that are holders of a tax decree under the Tax Incentives Code (Act 60-2019) as well as other C-Corp entities with similar incentive acts.

ACT 13 OF APRIL 11, 2025 – PR Code Technical Amendment

This Act amended Section 1051.06 of the PR Code to reinstate the tax credit for donations made to the foundation of “Palacio de Santa Catalina.” The tax credit will be equal to 100% of the donated amount. The taxpayer must keep a certification from the foundation as evidence of the amount donated.

ACT 64 OF JULY 17, 2025 – PR Code Technical Amendments – Non-Profit Organizations

This Act amended Section 1101.01 of the PR Code to expedite the tax exemption applications for non-for-profit entities. See some relevant changes below.

Churches or Ecclesiastical Institutions – The Act introduced as part of the tax exemption for non-profit entities those churches or ecclesiastical institutions organized as juridical entities recognized and defined under Act 164-2009 known as the “General Corporation Law”, insofar as they are operated exclusively for religious purposes and that no part of their net earnings benefit any shareholder or individual. Accordingly, this kind of institution will no longer need to file an application to get the exemption.

Homeowners Association – Act 64 expands the tax exemption of the Homeowner’s Association through the incorporation of mixed operations (residential and commercial), subject to certain requirements.

Non-Profit Organizations under Section 501(c)(3) of the US Internal Revenue Code – The Act 64 now provides the faculty to the Secretary of the Treasury to evaluate an expedited way to grant the Puerto Rico non-profit exemption to those entities that already have the US tax exemption under Section 501(c)(3). The Secretary of the Treasury has been authorized to communicate the process of obtaining the expedited exemption through circular letter or any other general publication.

ACT 65 OF JULY 17, 2025 – PR Code Technical and General Amendments:

This Act amended various Sections and Acts to introduce general amendments, simplify, and uniform due dates for various tax returns, and to introduce the collaborative agreement between the local taxing agencies.

Partnership, Pass-Through and Disregarded Entities: For taxable years beginning after December 31, 2023, a domestic limited liability company may elect to be classified as a disregarded entity, regardless of whether its sole owner is not an individual resident of Puerto Rico.

A foreign entity not considered a corporation, partnership, or trust will be treated as a limited liability company.

The Act introduced the new due date for the pass-through entity income tax returns and its informative to partners to be the last day of the third month following the close of its accounting period, meaning, March 31 for those calendar year entities.

For taxable years beginning after December 31, 2024, a group of related entities engaged in a trade or business in Puerto Rico can elect to file a combined informative return when the foreign owners are themselves pass-through entities. The filing deadline for the combined pass-through entity income tax return will be the same as the deadline for the pass-through entities.

Engaged in Trade or Business in Puerto Rico: The term “engaged in industry or business in Puerto Rico” (ETB) is modified to include the sale of inventory during the tax year, in addition to services rendered in Puerto Rico.

To be treated as ETB, the activities carried out by the person must be considerable, continuous, and regular, considering the nature of the activities within and outside Puerto Rico.

For ETB purposes, Act 65-2025 further clarifies that under the remote worker exclusion, the remote worker’s residence is not considered a fixed place of business. Furthermore, the remote worker will not be considered in determining whether the employer is considered a merchant for sales and use tax purposes.

Alternative Minimum Tax: Eliminates the requirement for fiscal year-end and/or accrual method of accounting taxpayers to file with the income tax return the expense reconciliation statement to claim certain payments for AMT. Instead, taxpayers are required to prepare and maintain in their records such reconciliations.

Recognition of Gain or Loss: Foreign entities must file a Ruling Request within 183 days of filing a change of entity classification election.

Accounting Methods: For taxable years beginning after December 31, 2024, businesses with an average annual gross income of $10 million or less over the prior three years, may use the cash method of accounting. Taxpayers who used the accrual method in their last tax year before January 1, 2025, may change to the cash method of accounting without requiring approval from the Secretary of the Treasury.

Trusts: For taxable years beginning after December 31, 2024, Revocable Trust or Grantor Trust informative income tax returns must be filed no later than the last day of the third month following the close of the trust’s tax year.

PR Code Administrative Matters:

Foreign Financial Accounts: Act 65-2025 provides that the $10,000 threshold for completing Schedule CFF of the income tax return will apply per taxpayer. United States accounts are not considered Foreign Financial Accounts.

Dissolution or Liquidation Sworn Statement: For taxable years beginning after December 31, 2023, the notification required under the PR Code on dissolutions or liquidations of entities shall not apply as a result of a change in entity classification under Section 1078.02.

Informative Return on Transactions Made by Electronic Means: Act 65-2025 expanded the requirement to issue informative returns to entities engaged in electronic payment processing through a platform or for activities within a network.

It clarifies that a “participating merchant” is a person engaged in trade or business and a merchant for sales and use tax purposes, which accepts payments through debit or credit cards or through another entity for processing via the internet, mobile applications, or communication networks. It includes any type of commercial activity.

The term “payments for activity within any network or means” refers to transactions processed, paid for or made for the benefit of a participating merchant for activities carried out on a portal, webpage, social network, platform to produce, generate and/or transmit content by any means, or any other activity of a similar nature, which generates income of any type, and of which said income is paid by a bank or payment processing entity to said participating merchant.

Processing fees charged by the payment processing entity must be reported in the informative return.

Informative Return on Advertising, Insurance Premiums, Telecommunications Services, Internet Access, Bank Charges, and Cable or Satellite Television (Form 480.7E): For taxable years beginning after December 31, 2024, financial institutions that receive payments for bank charges or payment processing, payroll processing or any other charge from other merchant, will be required to file an informative return pursuant to section 1063.16 of the PR Code.

Amended Returns or Declarations: Amended tax returns will not be accepted if the taxpayer is currently under audit or investigation, or the return was already audited/investigated, and a tax debt has been assessed.

Failure to Pay Estimated Tax by Corporations: The Act incorporates for Exempt Businesses the estimated tax calculation subject to the ten (10%) percent estimated income tax penalty.

Rehabilitation and Voluntary Disclosure Programs: Surcharges and penalties may be condoned to a taxpayer under a rehabilitation and voluntary disclosure program.

Unified System of Internal Revenue (SURI): The Act introduced a collaborative agreement between the Puerto Rico Treasury Department and other governmental agencies (Department of Labor and Department of Tourism) to centralize payments through SURI. Additional details will be shared through general publication.

General Corporations Act

Annual Corporation Report: For taxable years beginning after December 31, 2024, domestic and foreign corporations are no longer required to file the annual corporation report with the Puerto Rico State Department. The annual fee continues to be required.

Puerto Rico Municipal Code

Personal Property Tax Return: The Act clarifies that personal property tax returns must be accompanied by audited financial statements following the rules established under the PR Code Section 1061.15.

Volume of Business Declaration: The due date to file the volume of business declaration of corporations with a grant of tax exemption will be five (5) business days after the June 15 income tax due date.

Tax Incentives Act

Exempt Annual Report: For taxable years beginning after December 31, 2024, businesses with grant of tax exemption pursuant to Act 60-2019, or any other previous law of similar nature, must electronically file and pay the exempt annual report and its compliance report electronically together with the income tax return filed with the Puerto Rico Treasury Department. The Secretary of the Treasury may postpone this requirement or provide further details through general publication. Update: The Secretary of Treasury issued the Administrative Determination 26-01 to postpone the effectiveness of this requirement to be for years commenced after December 31, 2025.

Secretary of Treasury issued the Administrative Determination 26-01 to postpone the effectiveness of this requirement to be for years commenced after December 31, 2025.

ACT 66 OF JULY 17, 2025

Act 132-2010, known as “Real Estate Market Stimulus Act” has been amended to extend its income tax exemption over the rental income generated for Eligible Lessors until taxable year ending December 31, 2040. The Act also clarifies that lease operations for short-term rental subject to the tourism’s room tax will not qualify under this exemption.

ACT 67 OF JULY 18, 2025

This Act amended various Sections of the Tax Incentive Code (Act 60-2019) to clarify various tax aspects of the agriculture industry and its Bona-Fide Farmers (“BFF”). The changes now clarify that BFFs may get the Bona Fide Certificate from the Agriculture Department and enjoy the exemption benefits during the certificate’s period without the need to request a formal Tax Decree under the Tax Incentives Code (Act 60-2019). Alternatively, BFF’s will always have the option to request a Tax Decree under the Tax Incentives Code.

ACT 72 OF JULY 20, 2025 – PR Code Technical Amendments – Sales and Use Tax

This Act amends Section 6080.14 of the PR Code to establish the conceptual framework for the collaborative agreement between the Department of the Treasury and the municipalities to standardize the collection of sales and use tax and simplify compliance for taxpayers by consolidating the filing and payment of such tax through the Unified Internal Revenue System (SURI”); and for other related purposes. Voluntarily, the municipalities may reach agreements with the Secretary of the Treasury to adopt SURI, or any other platform agreed, for the administration and filing of the Municipal Monthly Sales and Use Tax Return.

ACT 76 OF JULY 24, 2025 – Amendment to Act 168 of June 30, 1968 – Tax Exemptions to Hospitals:

Hospital units that as of January 1, 2025, have been subject to the tax benefits provided by Law 168 of June 30, 1968, may continue to enjoy the same for an additional period of 10 years. This additional 10-year period will take effect from the date a request for this purpose is submitted to the Secretary of Treasury, in addition to certain certifications and requirements that the Secretary may eventually impose.

ACT 77 OF JULY 24, 2025 – PR Code Technical Amendment – Deduction for Donation

This Act creates a new “Puerto Rico Symphony Orchestra Corporation Act” under which a public corporation will be established aimed at promoting the development of music and the arts. As part of this Act, the PR Code has been amended with the purpose of granting a special deduction of 100% to individuals, corporations, and partnerships for sponsorships, payments, or donations made to the Puerto Rico Symphony Orchestra Corporation.

ACT 78 OF JULY 16, 2025 – Puerto Rico Municipal Code Act 107-2020

This Act amended Article 7.092 of the Puerto Rico Municipal Code to exempt the prescribed medicines from the personal property tax imposition.

ACT 90 OF AUGUST 1, 2025 – Puerto Rico Municipal Code Act 107-2020

This Act amended Article 7.200 and 7.207 of the Puerto Rico Municipal Code to increase from 6 to 8 months the extended period to file the Municipal Volume of Business Declaration for those entities taxing as corporations with a valid tax decree under the Tax Incentives Act. Also, the term “Volume of Business” has been amended to incorporate that any gross income from municipal contracts shall be considered income from the industry or business of the contracting municipality, regardless of the municipality in which the taxpayer has an office, warehouse, branch, or place of business.

ACT 106 OF AUGUST 8, 2025 – Puerto Rico Permit Process Reform Act

This Act amended various Articles of the Act 161-2009 Puerto Rico Permit Process Reform Act to include an expedite process of auto certification for the PYMES get the Use Permit. Also, allows that any work to be carried out by any government entity to repair or rebuild infrastructure affected by a natural event will be considered “exempt” for the purposes of construction permits.

ACT 177 OF DECEMBER 19, 2025 – PR Code Technical Amendment – Individuals

This Act introduces a new Section 1081.07 to the PR Code to create savings accounts for the care and wellness of disabled persons. The PR Code limits the contributions in a year to a maximum of $5,000. To the extent such contributions are exclusively used to pay the qualified disabled expenses (lodging, transportation, health, prevention, wellness, among others), then, the contributions will not represent taxable gross income for the beneficiary (disabled person).

ACT 178 OF DECEMBER 19, 2025 – PR Code Technical Amendment – Individuals

This Act amended Sections 1033.15 and 1081.05 of the PR Code to increase the deduction in connection with contributions to the educational contribution account (mainly for dependents) from $500 to $1,000 for taxable year 2025.

ACT 179 OF DECEMBER 19, 2025 – PR Code Technical Amendment – Individuals

This Act amended Section 1033.15 of the PR Code to establish that the new contribution limits and deductions in connection with contributions to the individual retirement accounts will be equal to those followed by the US Tax Code Section 219(b)(5)(C) for singles and Section 219(b)(5)(a) for married taxpayers. For 2025, the maximum deduction for single taxpayers will be $7,000. Spousal IRA is allowed when married filing jointly and working spouse’s taxable compensation covers both contributions. Maximum deduction

will vary depending on certain limitations in terms of compensation or additional contributions made to another deferred plans/pensions.

ACT 180 OF DECEMBER 19, 2025 – PR Tax Incentives Act Amendment

This Act amended Section 6060.05 of Act 60-2019 known as PR Tax Incentives Act to clarify certain aspects of over the taxability of gain on the sale of a principal residence. Among the clarifications, the gain on the sale of the principal residence in Puerto Rico will be exempt from income taxes to the extent certain requirements are met, except for those individuals under the benefits of Act 22-2012. Also, the gain over the sale of principal residence that was initially inherited is also covered by the exemption, under certain circumstances.

Effectiveness

These Acts were effective immediately after the Governor’s signature, except when specifically provided otherwise, as mentioned above.

Informative Bulletin

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