Esta ley enmienda la Ley de Incentivos Contributivos de Puerto Rico de 1988 para otorgar una tasa especial de impuesto sobre ingresos del 4% o 2% a ciertos negocios exentos que califiquen como unidades de servicio para oficinas centrales o regionales. También provee exención total de impuestos sobre la propiedad mueble e inmueble, patentes y otras contribuciones municipales durante los primeros cinco años de operación, y promueve la exención total de impuestos para la compra de equipo necesario.
(Approved August 29, 2002)
To add paragraph (3) and to re-designate paragraph (3) as paragraph (4) of Section 3; to add a second paragraph and to re-designate a second, third and fourth paragraph as third, fourth and fifth respectively, of subsection
(a) ; to add paragraph (3) and to re-designate paragraphs (3) and (4) as (4) and (5) respectively, of subsection
(b) and to amend the introductory paragraph of subsection
(c) of Section 6 of Act No. 135 of December 2, 1997, as amended, known as "Puerto Rico Tax Incentives Act of 1988", for the purpose of granting a special income tax rate of four (4) percent or two (2) percent to certain exempted businesses that qualify under paragraph (16) of subsection
(i) of Section 2; and to provide full fax exemption on real and personal property, licenses and other municipal taxes during the first five (5) years from the date in which operations begin; and to promote the full tax exemption for purchases of necessary equipment to carry out operations.
In order to achieve stimulate the establishment of business operations that allow us to create jobs, Puerto Rico needs to study the trends of the dynamic economic world in which we are now. The competition of many countries becomes tougher and direct every day, which is why we must identify new economic sectors or niches that will assist us in remaining an attractive industrial and economic option.
Within the continuous search we are undertaking, we have identified a sector that does not presently exist in Puerto Rico and to which we must give the attention it deserves, to wit: the services for central or regional corporate
offices ("headquarters"), to attain that the Latin American or hemispheric center of operations for Latin America are established in Puerto Rico. The service industry for markets outside Puerto Rico is an area that can be greatly developed in the next few years. If we can increase this economic activity in Puerto Rico, we can create a propitious environment for the development of this service industry on a large scale.
However, to attain this objective, it is necessary to offer a tax incentive that makes a great impact, so that these businesses are stimulated to move their Latin American or hemispheric operational centers to our island.
With this objective in mind we propose this legislation, to offer a tax incentive of such magnitude as to be a determining factor for these enterprises to decide to choose Puerto Rico as the place to establish such operations. Presently, these operations are generally established in Miami, Bermuda, or the Bahamas. The incentive herein provided reduces the fixed tax rate on income from a four (4) percent to a two (2) percent, depending on whether the center of operations to be established are for the Latin American or hemispheric market. The Latin American market is understood to be the market covering Central America and South America, while the hemispheric market covers both American continents from Canada to Argentina. Additionally, it offers a one hundred (100) percent exemption on real and personal property as well as municipal licenses and state or municipal taxes during the first five (5) years when the decree is effective.
By virtue of the above, this Legislature establishes the incentives herein provided, which shall redound to the best social and economic interest of our Country.
Section 1.- Paragraph (3) is hereby added and paragraph (3) is redesignated as paragraph (4) of Section 3 of Act No. 135 of December 2, 1997, as amended, to read as follows: "Section 3.- Fixed Tax Rate On Industrial Development Income
(a) Fixed Tax Rate on Industrial Development Income (1) ... (3) Any exempted business, which is a service unit that has a tax exemption decree granted under paragraph (16) of subsection
(i) of Section 2 of this Act, shall be subject to a fixed tax rate of four (4) percent on the industrial development income originating from operations that cover the markets of Central America and South America (the Latin American region) exclusively, or of two (2) percent over the industrial development income originating from operations that cover the markets from North America to South America (hemispheric region) or the world market. To be entitled to the tax rate herein provided, the service unit, in addition to comply with all the requirements in subsections
(d) to
(i) of Section 2 of this Act and with the terms and conditions of its tax exemption decree, it must create and maintain at all times an average employment of fifteen (15) people for rendering the service subject to the special rate provided in this paragraph. These jobs cannot include employees of any other business, if any, carried out or that may be carried out by the service unit, its affiliates, related firms, its shareholders or members nor
employees who render these services for Puerto Rican markets. (4) ...
(b) ..." Section 2.- A second paragraph is hereby added and the second, third, and fourth paragraphs are re-designated as third, fourth and fifth paragraphs respectively of subsection
(a) ; paragraph (3) is hereby added and paragraphs (3) and (4) are re-designated as (4) and (5), respectively, of subsection
(b) ; and the introductory paragraph of subsection
(c) of Section 6 of Act No. 135 of December 2, 1997, as amended, is hereby amended to read as follows: "Section 6.- Exemptions
(a) Exemption on Municipal and Commonwealth on Real and Personal Property Taxes. The real and personal property of the exempted business that holds a decree granted under this Act used for the development, organization, construction, establishment or operation of the activity that motivates the exemption, as well as the property intended for industrial development, shall enjoy a ninety (90) percent of exemption on the municipal and commonwealth property taxes for the corresponding period provided by subsection
(d) of this Section.
The real and personal property of an exempted business that is a service unit under the provisions of paragraph (16) of subsection
(i) of Section 2 of this Act, the operations of which cover the markets of Central America and South America (Latin American region), markets from North America to South America, (hemispheric region), or world markets shall be fully exempted
from the payment of property taxes provided in this subsection during the first five (5) years from the date operations commence, determined pursuant to paragraph (3) of subsection
(i) of this Section. Once this period has expired, the provisions of the previous paragraph shall apply. ...
(b) Exemption from Municipal Licenses, Municipal Excises and other Municipal Taxes. (1) ... (3) The exempt businesses that are service units under paragraph (16) of subsection
(i) of Section 2 of this Act that render their services to markets of Central America and South America (Latin American region), markets from North America to South America (hemispheric region) or to world markets, shall enjoy a one hundred (100) percent exemption on municipal licenses, municipal excise and other municipal taxes during a period of five (5) years from the date when the determined exemption begins, in agreement with paragraph 4 of subsection
(i) of this Section. Once said period has expired, the provisions of paragraph (1) of this subsection shall apply. (4) ... (5) ...
(c) Exemption from Commonwealth Excises - In addition to any other excise exemption granted under subtitle B of the "Puerto Rico Internal Revenue Code", as amended, articles directly or indirectly introduced or acquired by the exempted businesses that are service
units under paragraph (16) subsection
(i) of Section 2 of this Act, whose operations are performed for Central America and South America (Latin American region), markets from North America to South America (hemispheric region) or world markets, and the following articles introduced or acquired directly or indirectly by a business holding a decree granted under this Act. (1) ... . . ."
Section 3.- This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 225 (H.B. 2603) of the $3^{ ext {rd }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to add paragraph (3) and to re-designate paragraph (3) as paragraph (4) of Section 3; to add a second paragraph and to re-designate a second, third and fourth paragraph as third, fourth and fifth respectively, of subsection
(a) ; to add paragraph (3) and to re-designate paragraphs (3) and (4) as (4) and (5) respectively, of subsection
(b) and to amend the introductory paragraph of subsection
(c) of Section 6 of Act No. 135 of December 2, 1997, as amended, known as "Puerto Rico Tax Incentives Act of 1988," etc. has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $6^{ ext {th }}$ of August of 2004.
Elba Rosa Rodríguez-Fuentes Director