P.R. Laws tit. 13, § 30255
(a) Financial statements.-Any business, including an individual business, corporation, partnership, special partnership, limited liability company, corporation of individuals, insurance company, registered investment company, special employee-owned corporation, association, cooperative, real estate investment trust or any other entity engaged in a trade or business or in the generation of income in Puerto Rico, shall submit financial statements enclosed with its income tax return subject to the following requirements:
(1) When the business volume during a taxable year is equal to or higher than one million dollars ($1,000,000), but lower than three million dollars ($3,000,000), the business may opt to submit the financial statements required by this section enclosed with an auditor’s report issued by a certified public accountant with license to practice in Puerto Rico, which statements shall be in accordance with the Generally Accepted Auditing Standards of the United States of America (hereinafter, US GAAS). Any business that is up to date with its tax liability and that opts to enclose financial statements with the auditor’s report under this clause shall be entitled to be exempt by the Secretary, in whole or in part, as provided in § 30273(g) of this title, from the withholding at source provided in §30273 of this title on payments received for services rendered.
(2) When the business volume during a taxable year is equal to or higher than three million dollars ($3,000,000), the business shall submit the financial statements required by this section enclosed with an auditor’s report issued by a certified public accountant with license to practice in Puerto Rico. Said auditor’s report shall state that the financial statements have been prepared in accordance with the Generally Accepted Auditing Standards of the United States of America (hereinafter US GAAS), however, it shall not be necessary, for the certified public accountant to issue an unqualified opinion. Qualified opinions shall be allowed as defined by US GAAS, provided, that the qualified report is not due to restrictions within the scope of the audit imposed by the business. No disclaimer report due to restrictions within the scope of the audit imposed by the business shall be allowed. No adverse opinion reports shall be allowed.
(3) Any group of related entities, as defined by § 30045(a) of this title, constituted by entities engaged in trade or business in Puerto Rico shall submit the financial statements required in clauses (1) and (2) as consolidated or combined financial statements, in accordance with the Generally Accepted Accounting Principles of the United States (US GAAP). However, such consolidated or combined financial statements shall include an attachment showing in columns the financial situation and the results of the operations of each one of the affiliate entities that constitute the group of related entities. The Secretary may prescribe by regulations, circular letter, administrative determination or general communication, such conditions as he deems appropriate to waive the requirement to file consolidated or combined financial statements and, in lieu thereof, require separate financial statements by entity; provided, that the information of the related entities engaged in trade or business in Puerto Rico be included in the notes, along with an attachment showing in columns, the financial situation and the results of the operations of each one of the affiliate entities that constitute the group of related entities.
(4) In the case of foreign entities engaged in trade or business in Puerto Rico subject to the provisions of this section, an auditing report showing financial statements as supplementary information shall not be allowed to meet this requirement, since such financial statements have not been prepared in accordance with auditing standards that allow for a separate opinion on the operations in Puerto Rico. An auditor’s report only stating that the entity was subject to a consolidated audit shall not be allowed either. Foreign entities that have branches engaged in trade or business in Puerto Rico may issue financial statements including the results from the operations carried out in Puerto Rico and shall not be required to issue consolidated or combined financial statements, but including in the notes of such financial statements information of related entities also engaged in trade or business in Puerto Rico, in which case an attachment showing in columns, the financial situation and the results of the operations of each one of the affiliate entities engaged in trade or business in Puerto Rico. In case they opt to issue consolidated or combined financial statements, they shall meet the requirement set forth in this section; provided that the financial statements required under this section show the result of the total operations of the foreign entity, together with an attachment showing in separate columns the financial situation and the results of the operations of the home office and the branch, including columns with the consolidated totals and the entries of write-offs between the branch and the home office.
(5) The audit requirement shall not apply to nonprofit corporations or persons engaged in trade or business in Puerto Rico, whose business volume does not exceed three million dollars ($3,000,000) during the taxable year.
(b) For purposes of this section, the term “volume of business” means gross income, as defined in § 30101 of this title except that, in the case gains or income described in § 30101(a)(2)(A) of this title, the total amount derived from the sale of goods or products shall be taken into account without reducing the cost of the goods or products sold. In the case of a group of related entities, as defined in § 30045 of this title, the volume of business shall be determined by adding up the volume of business of each of the entities included in such group.
(c) For purposes of this section, the term “financial statements” means, with respect to any taxable year, a report that includes: an income statement that shows the results of the operation of the business for said taxable year, a balance sheet as of the date of the close of the taxable year in question, a statement of cash flow and a statement of stockholders equity for such year. Such financial statements shall be prepared in accordance with the Generally Accepted Accounting Principles of the United States of America (US GAAP) and be enclosed with notes that constitute a summary of major accounting policies and other corresponding disclosures, according to the disclosure requirements of said accounting principles.
(d) The Secretary shall prescribe by regulations, circular letter, information bulletin, or administrative determination of general character, the applicability and effectiveness of the provisions of this section.
Notice This section has more than one version with varying effective dates. First of two versions of this section.
History —Jan. 31, 2011, No. 1, § 1061.15, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 60; Sept. 30, 2015, No. 159, § 9.