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Puerto Rico’s Auditing and Financial Reporting Requirements for Corporations and Limited Liability Companies

In an effort to maintain transparency and accountability in financial reporting, the Puerto Rican government has established strict auditing and filing requirements for corporations and limited liability companies operating within its jurisdiction.

Audited Financial Statements

Corporations with a volume of business exceeding $10 million are required to file audited financial statements along with their Puerto Rico income tax returns. Those with a volume of business between $1 million and $10 million may opt to file an Agreed Upon Procedures (AUP) report or compliance attestation, while those with a volume of business below $1 million may voluntarily file such reports.

Limited liability companies (LLCs) are subject to similar requirements, with the added caveat that they need not file financial information with the Puerto Rico State Department.

Bookkeeping and Record-Keeping

In general, corporations and LLCs should maintain their books and records in Puerto Rico. However, property tax returns may allow for alternative reporting methods, such as submitting an AUP report instead of audited financial statements.

Licenses and Registration

To operate a business in Puerto Rico, entities must obtain a Federal Employer Identification Number (EIN) from the US Internal Revenue Service (IRS). Additionally, they are required to register with the SURI platform, which facilitates sales and use tax, excise taxes, and income tax compliance. Other licenses and certifications may be necessary depending on the specific business activities.

Taxation

The sale of taxable items and services in Puerto Rico is subject to an 11.5% Sales Use Tax (SUT), while most transactions between merchants are taxed at a rate of 4%. A 11.5% use tax applies to imported goods, payable by the importer of record.

  • Exempt transactions must be documented with a Certificate of Exempt Purchases.
  • Failure to do so can result in fines.

Conclusion

Puerto Rico’s auditing and financial reporting requirements are designed to ensure transparency and accountability in financial reporting for corporations and limited liability companies operating within its jurisdiction. Understanding these requirements is crucial for businesses seeking to operate successfully in the territory.