Puerto Rico Treasury Department, Hacienda (building)

Puerto Rico Treasury Secretary Francisco Parés Alicea reported that the General Fund's net revenues for March 2020 reached $1,038.1 million (over $1 billion).

The official stated that by the end of March 2021, the General Fund's accumulated revenues for the current fiscal year reached nearly $7.8 billion, or $307 million more compared to the nearly $7.5 billion generated by the same period during Fiscal Year (FY) 2020, or a 4.1 perent increase.

"It should be noted that in mid-March 2020, a state of emergency was decreed by Executive Order and a lockdown was established as a result of COVID-19. This situation had an impact on collection levels and economic activity in the last quarter of FY 2019-2020, particularly during the months of April to June," the secretary said in a missive.

In the particular case of the March 2021 period, revenue for the month was $184.6 million, or 21.6 percent higher than that collected in March 2020.

"Regarding the fiscal forecast, the collections for March exceeded the estimated revenues by $59.4 million, or 6.1 percent. As for the fiscal period accumulated from July to March, the collections were $1.242 million over the projections, or 19.0 percent. That said, we must mention that the Fiscal Plan certified on April 23, 2021 by the [Financial Oversight and Management Board], contemplates revisions to the projection of the current fiscal year, as well as the income projections for the next fiscal year that begins in July 2021," he added.

For the month of March, the main tax lines responsible for the observed increase were taxes on consumption. Among these, the Sales & Use Tax (IVU, by its Spanish acronym), the Motor Vehicle Excise Tax, the federal refund on excise taxes on rum shipments and the Alcoholic Beverage Excise Tax.

Sales & Use Tax

In March, IVU collections exceeded March 2020 revenues by $85.4 million, or 57.3 percent. Throughout the current fiscal year, the performance of this tax has resulted in collections of $393.8 million more for the General Fund than that received in FY 2020, or an additional 30.2 percent.

Excise Taxes

In respect to the main lines of excise taxes, which are those collected by alcoholic beverages, cigarettes, motor vehicles, among others, during the accumulated period from July to March, they reflected a growth compared to the same period of the previous year of 5.3 percent, 15.9 percent, 34.8 percent, and 47.9 percent, respectively.

Among these, motor vehicle excise taxes stand out, which have consistently exceeded the monthly collections of the previous fiscal year and represented $113.6 million above the level of collections registered in March 2020. The total number of units subject to motor vehicle taxes rose during the accumulated period to March to 110,533, which compared to the same 9-month period in FY 2020, represented an additional 41 percent.

Another tax line that reflected a significant increase compared to fiscal year 2020 is “Other General Fund Income." This includes subcategories of income among which are: interest, dividends, property taxes, licenses, miscellaneous income, partnerships, and other excise taxes.

Societies and Other Excise Taxes

Income for societies totaled $252.3 million during the July to March period, which compared to the same fiscal period accumulated in 2020, represents an additional $238.4 million. The increase in this line is associated with changes introduced to the Puerto Rico Internal Revenue Code that allow certain entities to take advantage of the optional computation for income tax purposes. In this way, the society assumes the responsibility that would otherwise fall on the partner members of the entity.

In the category of "Other Excise Taxes," the amount collected during this fiscal period accumulated to March exceeded the collections for the same period by $87.7 million, or an additional 48 percent.

Individuals

"The income of individuals during the accumulated period to March of the current fiscal year, exceeds by $91.6 million what was collected during the same period in 2020 or by 6.1 percent," Parés stated.

Corporations

In the corporate income tax segment, the collections for FY 2020 were $612.5 million, or 31.7 percent higher than this year. However, of the total of $1,321.9 million (over $1.3 billion) accumulated as of March in FY 2021, $211 million belong to deferred payments for the pandemic pertaining to FY 2020.

Moreover, during the accumulated period of 2020 there are $488 million of non-recurring income. When making the corresponding adjustments (non-recurring income and deferrals), the amount collected as of March in this fiscal year is $335.6 million lower than in FY 2020, or 23.2 percent less.

In addition, as a consequence of the changes in the Incentive Code, in which an option was offered to certain companies to pay taxes instead of their partners, there was a shift between the contribution previously paid by said corporate partners and the payment that from this option rests with society. The increase recorded in these over the accumulated period to March is $238.4 million.

Act 154-2010

"Regarding the tax of foreign entities under Act 154-2010, the income for the accumulated period to March is $114 million below the collections at the same date last fiscal year, which represented 9 percent less. In March, the proceeds were lower than the payments made by these entities in 2020 by $33 million," the secretary said.

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