Recently, Puerto Rico has amended Section 1033.17(a)(17) of the Puerto Rican Internal Revenue Code of 2011 regarding intercompany expense allocation.
Previously there was a disallowance of 51% of intercompany charges. According to the amendment, taxpayers may be able to fully deduct intercompany charges in Puerto Rico if they submit a transfer pricing study with their income tax returns, with due date 15 April 2020 for the fiscal year ending 31 December 2019. Furthermore, the transfer pricing study must follow the United States transfer pricing regulations if there are operations with the United States. If not, then transfer pricing study can follow OECD guidelines.
