The Treasury Department (PRTD) issued Regulation 8444 on the additional tax on gross receipts (ATGR) which is applicable to companies engaged in trade or business within Puerto Rico as part of the AMT computation.
According to this Regulation, in order to request a waiver from the ATGR, the taxpayer must show that the ATGR results in undue hardship because the ATGR is a significant amount when compared to the taxpayer's gross profit margin during a 4-year base period (i.e., the 4 years before the tax year in which the waiver request is made). Accordingly, to be eligible for the waiver, the ATGR must be more than 7.5% of the taxpayer's gross profit margin for the 4-year base period. Once the 7.5% threshold is met, the Secretary of the PRTD may determine the reduced ATGR tax rate for the 2 tax years covered by the waiver.
Additionally, Regulation 8444 extends the due date for requesting the ATGR waiver for taxable year 2013 until 28 February 2014.
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