Private Letter Ruling

A private ruling is an official interpretation made by the Puerto Rico Treasury Department (“PRTD”) as to the application of the Puerto Rico Internal Revenue Code, or any other Puerto Rico tax law, to the acts or transactions represented by the taxpayer.

Administrative Determination letters are official communications to the public of the PRTD’s position on certain transactions based on the interpretation of the Puerto Rico Internal Revenue Code (“PR Code”) and its Regulations.

Any taxpayer may request a private ruling or administrative determination letter from the PRTD with regards to acts or transactions. The general procedure for the issuance of a formal response to a taxpayers’ inquiry is outlined in Circular Letter 16-09 (CL 16-09).

Generally, private rulings involve:

• The time, place, manner, and procedures for reporting and paying taxes
• The assessment and collection of taxes
• The abatement, credit, or refund of an over assessment or payment of tax
• The filing of information, composite, or other returns, or
• The requirement of a ruling request in accordance with the PR Code such as:

1. 1. 1. Request for exemptions
      2. Deductions or tax credits
      3. Change in accounting method
      4. Entity classification elections
      5. Any other change, request or election

Private rulings in Puerto Rico are issued only on transactions if the ruling request is submitted prior to the filing of the return where the transaction under question is required to be reported. A private ruling will not be issued under the circumstances outlined in Section II(B)(2) of CL 16-09.

Ruling requests must be accompanied with the corresponding payment of fees upon filing. An incomplete ruling request submitted to the PRTD is subject to a $150 fee for each additional submittal. A separate fee will apply to a change in submittal or each non-related transaction, if applicable. All fees that are charged by the PRTD are defined in Regulation 8693.