This article provides an in-depth overview of Puerto Rico’s corporate tax regime for companies, including key corporate tax rates, brackets, and specific surtaxes as of 2025. All data is based on officially published information relevant to domestic and foreign corporations operating or investing in Puerto Rico.
Corporate Income Tax Structure in Puerto Rico (2025)
Corporate tax in Puerto Rico is assessed on a progressive basis according to taxable corporate income. All amounts are presented in US Dollars (USD). Below is a summary table of the tax brackets applicable to corporations in 2025:
| Taxable Income Range (USD) | Rate (%) |
|---|---|
| $0 – $75,000 | 23.5% |
| $75,001 – $125,000 | 33.5% |
| $125,001 – $175,000 | 34.5% |
| $175,001 – $225,000 | 35.5% |
| $225,001 – $275,000 | 36.5% |
| $275,001 and above | 37.5% |
There is currently no single, flat corporate tax rate in Puerto Rico. Instead, the rate increases incrementally according to the above income bands, making forward planning essential for companies approaching higher thresholds.
Basis of Assessment
The corporate tax is levied on corporate income, and Puerto Rico uses a corporate-based assessment system. Businesses should ensure accurate income calculation to determine which rates and dusters are applicable.
Surtaxes and Additional Corporate Taxes (2025)
Beyond standard corporate tax rates, additional surtaxes or special levies may be relevant in specific situations. These are shown in the following table, reflecting only current, officially published data:
| Description/Condition | Rate (%) |
|---|---|
| Deemed dividend tax for corporations with 50% or more foreign (non-resident) ownership | 10% |
| Improper accumulation of income | 50% |
| Branch profit tax on dividend equivalent amount | 10% |
| Alternative Minimum Tax (AMT) (standard flat rate) | 18.5% |
| Alternative Minimum Tax (AMT) for taxpayers with gross proceeds of $10 million or more | 23% |
| Withholding tax on Puerto Rico-source gross income not effectively connected with Puerto Rico trade/business (non-resident foreign corps) | 29% |
These surtaxes may significantly impact overall corporate tax liability, particularly for multinationals and entities with non-resident shareholders or branches.
Notable Exclusions and Data Gaps
There is no minimum or maximum holding period mentioned in the available tax regime data. Additionally, while official rates are provided for the key brackets and surtaxes, some context around calculation methods or deduction specifics is not covered in this summary.
Practical Examples: Application of Corporate Tax Brackets
To clarify how these progressive rates affect companies, consider the following hypothetical scenarios:
- A domestic corporation earning $60,000 in taxable profit will face a total corporate tax rate of 23.5%, or $14,100.
- For a company with $180,000 in profit, income up to $75,000 is taxed at 23.5%, the next $50,000 at 33.5%, the next $50,000 at 34.5%, and the remaining $5,000 at 35.5%. Each bracket is calculated incrementally.
- Foreign-owned corporations (50%+ by non-residents) distributing deemed dividends face an additional 10% surtax, which applies to the relevant distribution.
Alternative Minimum Tax (AMT) in Puerto Rico
The Alternative Minimum Tax is relevant for corporations using different calculation bases. The standard flat AMT rate is 18.5%, but for companies with gross proceeds equal to or exceeding $10 million, the AMT rises to 23%. Regular and AMT calculations are performed, and the higher resulting tax is applied.
Surtaxes for Improper Accumulation and Branch Profits
A 50% surtax can apply on improperly accumulated income, making it critical for companies to avoid retaining profits beyond legitimate business requirements. Branches of foreign corporations may incur a 10% branch profit tax on dividend-equivalent amounts, targeting profits repatriated to parent entities abroad.
Withholding Tax for Non-Resident Foreign Corporations
Non-resident corporations earning gross income from Puerto Rico sources—when not effectively connected to a local trade or business—face a 29% withholding tax. This rate captures income before remittance to the foreign entity.
Pro Tips for Optimizing Corporate Tax in Puerto Rico (2025)
- Map out projected annual income to forecast which brackets will apply and to plan for incremental increases in effective tax rates as profits rise.
- For entities with cross-border ownership or branch structures, monitor ownership structures closely to anticipate additional surtaxes like the 10% deemed dividend or branch profits taxes.
- Properly document and justify retained earnings to avoid the severe 50% surtax for improper accumulation of income.
- Ensure periodic reviews of your business’s AMT exposure, especially if gross proceeds are likely to cross the $10 million threshold, which triggers a higher AMT flat rate.
- If your corporation receives Puerto Rico-sourced income not connected to a local business, evaluate the impact of the 29% withholding tax on your overall structure and consider alternative arrangements if feasible.
Official Resources
For further guidance and the latest official rules, visit the Puerto Rico Department of Treasury (Departamento de Hacienda).
In summary, Puerto Rico implements a progressive, multiple-bracket corporate tax structure, with rates climbing up to 37.5% for higher profits. Additional surtaxes apply in a variety of cross-border and anti-avoidance contexts, including significant AMT considerations for large companies. Businesses should focus on careful compliance and proactive structuring to manage exposures, leverage available allowances, and minimize risks arising from improper accumulations or unplanned profit distributions.