A 10% withholding tax applies to payments above $500 during each calendar year to professionals involved in a trade or business or generate income in Puerto Rico for services rendered in Puerto Rico. The withholding agent remits the tax to the Puerto Rico Department of Treasury each month. A quarterly tax return is due on April 30 (Q1), July 31 (Q2), October 31 (Q3), and January 31 (Q4). The $500 late file penalty is waived if amounts were not required to be withheld during a quarter.

Any individual or entity in Puerto Rico may request a total or partial waiver certificate.

Payments for services rendered outside of Puerto Rico are not subject to withholding but the payer must self-impose a business-to-business tax of 4%. Certain exemptions may apply.