As reported earlier, Puerto Rico has proposed broad tax reform including changes in corporate and individual income tax. The changes for individual income tax include a reduction in the number of individual income tax brackets, and an overall reduction in rates and a greater exemption. The proposed brackets and rates are as follows:
In regard to corporate income tax, it's been proposed that the standard rate be increased to 30%, while the application of the gradual surtaxes be abolished. In addition, the alternative minimum tax rate would be reduced to 25%.
The legislation for the tax reform is currently pending approval, and if enacted could apply as soon as 1 April 2015.
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