Government Incentives Due to the COVID-19 Pandemic

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In the midst of the raging pandemic that Puerto Rico and the rest of the world finds itself in, everyone is a victim, from the elderly and ill, to the brave healthcare workers on the frontlines, to the millions being laid off and left at home with nothing to do, to the owners of small businesses who can’t afford the loss in profits that the pandemic has ushered in. As the world unites to fight this threat to humanity, governments are launching financial aid packages for self-employed individuals and businesses out of an income due to COVID-19. Puerto Rico has recently announced the authorization of an emergency reserve fund to help those financially affected by COVID-19.

In addition to bonuses for healthcare workers and grants for businesses, the emergency fund has earmarked $50 million to purchase medical supplies, $100 million to help municipalities offset lost revenues for the next two months, and $240 to foster online education, including procuring tablets for students and teachers.

Incentives for Healthcare and Emergency Personnel

The government’s priority is those valiantly fighting on the frontlines—the nurses, doctors, and other emergency personnel. The Puerto Rican government has approved $237 million in one-time bonuses to reward emergency workers for their brave sacrifices. Nurses in both the public and private sectors, as well as emergency personnel, will receive bonuses of up to $4,000 for their hard work. Bonuses of up to $3,500 are available for police, firemen, and correctional officers, and health technicians are eligible for bonuses of up to $2,500.

Incentives for Businesses

If profits at your Export Services company are dwindling due to the forced closure in the midst of this pandemic, you may be eligible for a grant. The government has approved $160 million in one-time direct payments for small and medium-sized businesses whose work and income has been interrupted by COVID-19.

To be eligible for the $1,500 grant, a business must qualify as a small or medium-sized business that employs no more than 50 workers and has a business volume of no more than $10 million. Businesses that have received federal assistance are eligible. Each business is eligible for one grant, regardless of the number of owners. The business must have a merchant’s registration certificate (Certificado de Registro de Comerciante) valid as of March 15, 2020. Anyone whose merchant’s registration certificate was expired on March 15 is still eligible to apply if they update their merchant’s registration certificate and confirm that they have not ceased operations, among other requirements. Furthermore, the owner cannot have also applied for the $500 self-employed grant. Once the merchant enters the bank account number and routing number and accepts the DDEC’s terms and conditions, the DDEC will transfer the amount via direct deposit to the indicated account. If the merchant provides incorrect information, the DDEC retains the right to request the return of the grant.

To apply for the grant, merchants should visit the incentives page on the DDEC website. They should register a profile with the name on their merchant’s registration and their email address and agree to the terms and conditions. Then, they must upload their merchant’s registration certificate, after which they will receive a confirmation number and an approval or denial email. Merchants who would like more information should contact empresario@ddec.pr.gov.

Incentives for Self-Employed Individuals

Similarly, self-employed individuals are eligible for a $500 grant. Starting Monday, March 30, 2020, self-employed individuals may apply for this grant, as long as they are registered merchants on SURI and held a valid merchant’s registration certificate on March 15, 2020. Anyone whose merchant’s registration certificate was expired on March 15 is still eligible to apply if they update their merchant’s registration certificate and confirm that they have not ceased operations, among other requirements.

To apply, individuals should enter their bank account and routing number on their SURI profile. The application is available from the “Economic Incentives” link in the “Alerts” section. The deadline to apply is May 1, 2020. For additional information, individuals can send a message on SURI or email redes@hacienda.pr.gov.

Unemployment Benefits

Full-time and part-time employees of any company registered and insured by the Department of Labor and Human Resources of Puerto Rico who are not receiving their wages due to COVID-19 are eligible for unemployment benefits. To qualify, one must be an employee—independent contractors are not eligible. Independent contractors may, however, qualify for the one-time grant for self-employed individuals.

SBA Economic Injury Disaster Loan Program

The United States is dedicated to offering assistance to small businesses and nonprofits that are struggling during the COVID-19 pandemic, whether they are in one of the 50 states or one of the territories. That means Puerto Rico small businesses and nonprofits are eligible to apply for the loans, which are available for up to $2 million. For small businesses, the interest rate is 3.75% or the lowest applicable rate. The repayment terms for the loan vary based on the circumstances of the business but may last up to 30 years.

Businesses may apply on the U.S. Small Business Administration (SBA) website, selecting “Economic Injury” as the reason for requesting assistance. Applicants must include relevant supporting documents, such as tax returns or financial statements, that demonstrate the need for financial assistance.

Changes to the Tax Schedule and other important updates

To assist businesses struggling financially in these difficult times, the Puerto Rican government has announced extensions for tax deadlines and other important updates.

Tax Returns, Forms, and Payments

The new monthly due date for the sales and use tax return (Form SC 2915) is two months following the month the payments are associated with:

  • February payments: Due April 20
  • March payments: Due May 20
  • April payments: Due June 20
  • May payments: Due July 20

Income tax returns that were previously due by April 15, 2020, are now due by July 15, 2020. This new due date also applies to requests for extensions. Failure to submit income tax installments in the first two quarters of calendar year 2020 will not result in penalties, and the amounts may be included in the payments in the third and fourth installments.

The due date for 2019 informative returns, as well as the annual LLC filings, have been extended to May 15, 2020.

Any other returns that would ordinarily be due in March or April are now due on the same date in June. Similarly, any other returns that would ordinarily be due in May or June are now due on the same date in July.

10% Withholding at Source

If the service provider wishes, withholding agents are permitted to waive the 10% withholding requirement that would otherwise be applicable to payments made to service providers between March 23 and June 30, 2020. These waived withholdings must be indicated on the informative return for service provided (Form 480.6 SP).

SUT on the Import and Purchase of Taxable Items for Resale

Qualified resellers with an active Reseller Certificate will automatically be granted a temporary SUT exemption certificate that waives all SUT taxes on any imports and purchases of otherwise taxable items for resale made between April 6 and June 30. The reseller must present the applicable certificates when making eligible purchases.

Use of Tax Credit to Pay Other Taxes

Businesses may request that the Puerto Rico Treasury apply any tax credits or refunds the business has for income taxes, excise taxes, alcoholic beverages, and SUT for the import and purchase of taxable items for resale against other tax obligations the business may have.

Installment Payment Agreements

If a taxpayer is unable to pay the amount due on their 2019 tax return, they may request an installment payment agreement with the Puerto Rico Treasury. Only taxpayers that file their tax return by the modified due date and have no outstanding debts with the Treasury will be qualified to enter into an installment payment agreement. Any taxpayer that requests an extension will not be eligible. The taxpayer must pay the amount due in full by March 31, 2021.

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