Esta ley enmienda la Ley de Incentivos Contributivos de 1998 para establecer límites al crédito contributivo por inversión industrial otorgado a inversionistas que adquieren negocios exentos en proceso de cierre. Se fija un crédito máximo por negocio y un límite anual total, otorgando discreción al Secretario de Hacienda para autorizar montos mayores en casos específicos. También se establecen procedimientos para solicitar y recuperar el crédito, y se permite su cesión.
(Approved on October 28, 2002)
To amend subsection
(a) , to add a new subsection
(b) ; to re-designate current subsection
(b) as new subsection
(c) ; to amend current subsection
(c) and to re-designate it as the new subsection
(d) ; to redesignate current subsection
(d) as new subsection
(e) and to amend paragraph (2) of said subsection; to re-designate current subparagraph
(e) as the new subparagraph
(f) and to amend paragraph (1) of said subsection of Section 5A of Act No. 135 of December 2, 1997, as amended, known as the "Tax Incentives Act of 1998," to temper its provisions to the reality of its tax impact.
The "Tax Incentives Act of 1998" offers a tax credit to investors who acquire an exempt business that is in the process of closing operations in Puerto Rico. This measure aims to stimulate the acquisition of exempt businesses in the process of closing operations on the Island, contributing to the retention and the creation of jobs in the industrial sector and to the development of a local entrepreneurial base.
The tax credit amounts to fifty (50) per cent of the amount of the investment made to acquire a business that is in the process of closing. However, the "Investment Tax Incentives Act of 1998" does not establish a limit as to the maximum amount that could be granted to a person, nor a maximum per fiscal year. Given the situation currently faced by Puerto Rico and the United States, the granting of an unlimited credit may have a material impact on the projected revenue of the government. For this
reason, is very important to establish certain limits to the tax credits granted through this legislation.
In order to protect the Government's finances and to safeguard the purposes for which this legislative measure was created, it is necessary to grant discretion to the Secretary of the Department of the Treasury to grant credits in excess of the established limits. In this way the best interests of the Commonwealth of Puerto Rico are served.
Section 1.- To amend subsection
(a) , to add a new subsection
(b) ; to redesignate the current subsection
(b) as new subsection
(c) ; to amend current subsection
(c) and to re-designate it as the new subsection
(d) ; to redesignate current subsection
(d) as the new subsection
(e) and to amend paragraph (2) of said subsection; to re-designate current subparagraph
(e) as the new subparagraph
(f) and to amend paragraph
(l) of said subsection of Section 5A of Act No. 135 of December 2, 1997, as amended, to read as follows:
Section 5A.- Industrial Investment Credit
(a) General rule. Subject to the provisions of subsection
(b) every investor may claim a credit for industrial investment, equal to fifty per cent $(50 %)$ of his eligible investment made after this law's approval, to be taken in two (2) installments: the first half of said credit on the year when the eligible investment is made and the balance of said credit in the following years. Any eligible investment made before the date for filing of the tax return, according to the provisions of Section 1001 et seq. of the Puerto Rico Internal Revenue Code, including any extension granted by the Secretary of the Department of the Treasury for the filing of the
same, shall qualify for this Section's tax credit for which the aforementioned tax return is being filed, provided that it complies with all the requirements of this Section. Said industrial investment credit may be applied against any of the investor's tax provided in Sections 1001 et seq. of the Puerto Rico Internal Revenue Code, including the minimum alternative tax of Section 1017 and the individual's alternative tax of Section 1011
(b) of the Puerto Rico Internal Revenue Code.
(b) Maximum credit amount - The maximum credit amount for industrial investment shall not exceed five million $(5,000,000)$ dollars per exempt business.
The Secretary of the Treasury shall authorize the investment credits claimed by investors up to a limit of fifteen million $(15,000,000)$ dollars per fiscal year. However, to accommodate the Commonwealth of Puerto Rico's best interests, the Executive Director may request that the Secretary of the Department of the Treasury to authorize a higher amount of credits during a fiscal year or in excess of the established limit for a specific business.
(c) ...
(d) Before claiming the credit for industrial investment, investors must request an Administrative Ruling by the Secretary of the Department of the Treasury, so that the latter determines if the investment made, or intended to be made, qualifies for a tax credit. The Secretary of the Department of the Treasury may request, as a condition for his endorsement or approval, that the investor post a bond or another type of warranty, in favor of the
Secretary of the Department of the Treasury, to respond in case the credits are revoked.
(e) Base adjustment and recovery of the credit for industrial investment. (1) ... (2) After the date of the ruling described in subsection
(d) of this Section, the Executive Director shall determine the total investment made in the exempt business. In case that the credit for industrial investment taken by the investors exceeds the credit for industrial investment computed by the Executive Director, based on the total investment made in the exempt business, said excess shall be owed as revenue tax to be paid by the investors in two (2) installments beginning with the first tax year when the Secretary of the Department of the Treasury notifies the owed amount concerning the credit taken in excess. The Executive Director shall notify the Secretary of the Department of the Treasury about the excess of credit taken by the investors. (3) ...
(f) Assignment of credit for industrial investment. (1) After the date of the ruling described in subsection
(d) of this Section, the credit for industrial investment determined in this Section may be assigned, sold or conveyed in any way, totally or partially, by an investor to any other person; (2) ...
Section 2.- Effectiveness. This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 251 (H.B. 2762) of the $4^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to amend subsection
(a) , to add a new subsection
(b) ; to re-designate current subsection
(b) as new subsection
(c) ; to amend current subsection
(c) and to re-designate it as the new subsection
(d) ; to re-designate current subsection
(d) as new subsection
(e) and to amend paragraph (2) of said subsection; to re-designate current subparagraph
(e) as the new subparagraph
(f) and to amend paragraph (1) of said subsection of Section 5A of Act No. 135 of December 2, 1997, as amended, known as the "Tax Incentives Act of 1998," to temper its provisions to the reality of its tax impact, 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