Esta ley enmienda el Código de Rentas Internas de Puerto Rico de 1994 para establecer un impuesto especial del 20% sobre la remuneración recibida por individuos (residentes o no residentes) por servicios prestados en Puerto Rico relacionados con juegos de baloncesto de la NBA. También exime a los equipos de la NBA del impuesto sobre ingresos, exime de arbitrios a equipos y accesorios introducidos temporalmente para los juegos, exime a los miembros de los equipos del impuesto por ocupación de habitaciones de hotel y exime los juegos de la NBA del impuesto sobre la entrada a eventos públicos.
(Approved September 7, 2004)
To add Section 1012B; add Clauses (48) and (49) to Subsection
(b) of Section 1022; amend Clause (13) of Subsection
(a) Section 141; amend Clause (7) of Subsection
(a) of Section 2032; add Subsections
(g) ,
(h) ,
(i) , and
(j) of Section 2051; and reassign Subclause (N) as Subclause (M) of Clause (3) of Subsection
(a) of Section 2052 of Act No. 120 of October 31, 1994, as amended, known as the "Puerto Rico Internal Revenue Code of 1994," as amended, in order to levy a special twenty (20) percent tax on the total amount of the remuneration received by the United States National Basketball Association, better known as NBA, or associations or entities affiliated thereto, for any resident or nonresident individual for services rendered in Puerto Rico as an employee or independent contractor of said team, association, or entity affiliated thereto, with regard to the holding of basketball games of the United States National Basketball Association, known as NBA in Puerto Rico; to exempt NBA basketball teams from the payment of income tax; to exempt from the payment of excise taxes the accessories, machinery, parts, equipment or any other articles temporarily introduced into Puerto Rico and that are directly related to the holding or broadcasting of the basketball games of the United States National Basketball Association better known by its English acronym as NBA, including: preseason, regular season, and postseason games and any promotional event of the league; to exempt the members of the NBA basketball teams from the payment of hotel-room occupancy taxes; and exempt NBA basketball games from the payment of taxes on admission fees to public events; and for other purposes.
Act No. 120 of October 31, 1994, as amended, known as the "Puerto Rico Internal Revenue Code of 1994," was amended through Act No. 104 of April 10, 2003, to establish that the remuneration received by a resident or nonresident individual, which is paid by a Major League baseball team or by any association or entity affiliated to said teams for services rendered in Puerto Rico with regard to the holding of Major League baseball games in Puerto Rico shall be levied a special twenty (20%) percent tax, in lieu of any other tax levied by the Code.
Furthermore, through said bill, the Code was amended to the following effects: exempt the Major League baseball teams from the payment of income taxes; exempt the Major League baseball games in Puerto Rico from the tax on admission fees to public events; and exempt the accessories, machinery, devices, parts, equipment or any other article that is introduced to Puerto Rico temporarily and that is directly related to the holding or broadcasting of said Major League baseball games in Puerto Rico from the payment of the local excise tax.
For the past years, several exhibition games of the National Basketball Association, better known as NBA, have been held in Puerto Rico. These sport events are of the same significance and bring the same benefits to our economy, thus motivating this Legislature to amend the Internal Revenue Code last year, to reduce the tax burden of organizers and participants of Major League games held in Puerto Rico.
This kind of activity, offers Puerto Rican families the opportunity to enjoy a quality event while fostering the economic growth on our Island. The positive impact, which can only be offered by sports to all societies, is
an essential element for facing the social ills affecting us. This kind of events offer an appropriate environment for the development of family unity that is so needed by our people.
In order to promote the holding of these events, we deem it prudent and necessary to extend these tax benefits to the NBA basketball games held in Puerto Rico.
Section 1.- Section 1012B is hereby added to Act No. 120 of October 31, 1994, as amended, to read as follows: "Section 1012B.- Special Tax on Income Earned by Nonresident Individuals that Participate in Basketball Games of the National Basketball Association, better known as NBA, Held in Puerto Rico.
(a) Imposition of Tax.- There shall be levied, collected and paid in lieu of any other taxes levied by this Subtitle, a special twenty (20) percent tax on the total amount received by any resident or nonresident individual (including, but without it being deemed as a limitation, players, managers, and technical personnel) as remuneration received by an NBA basketball team or any association or entity affiliated to said teams (including, but without it being deemed as a limitation, the Office of the Commissioner of the National Basketball Association, NBA TV, NBA Latin America, Inc., Women's National Basketball Association, better known as WNBA, or the National Basketball Development League, better known as NBDL, and their successor entities) for personal services rendered in Puerto Rico as an employee or independent contractor of said team, association or affiliated entity with regard to the holding of
NBA basketball games in Puerto Rico. For these purposes, the amount of the remuneration attributable to personal services rendered in Puerto Rico shall be determined on the basis of the proportion between the number of days of service in Puerto Rico and the total number of calendar days covered in the remuneration agreement of said individual with the NBA basketball team, the association or affiliated entity that includes the days of service in Puerto Rico.
(b) Obligation to Deduct and Withhold at Source and to Pay and Deposit the Tax Levied by this Section.- Every person regardless of the capacity in which he/she is acting, who has control, receipt, custody, disposition or payment of the amounts of remuneration described in subsection
(a) of this Section, shall deduct and withhold said twenty (20) percent tax and shall pay the amount of said tax thus deducted and withheld at the Internal Revenue Collections Offices of Puerto Rico, or deposit it in any of the banking institutions designated as depositaries of public funds that have been authorized by the Secretary to receive said tax. The tax shall be paid or deposited not later than the fifteenth day of the month following the date on which the payment subject to the twenty (20) percent withholding levied by this subsection was made. The amounts subject to the deduction and withholding levied by this subsection shall not be subject to the provisions of Section 1147.
(c) Failure to Withhold.- If the withholding agent, in violation of the provisions of subsection
(b) , fails to withhold the twenty (20) percent levied by said subsection
(b) , the amount that
should have been deducted and withheld (unless the receiver of the income pays the tax to the Secretary) shall be collected from the withholding agent, following the same procedure that would be used if it were a tax owed by the withholding agent. The person who receives the payment shall be required to pay the tax not withheld through the filing of a return within the term provided in Section 1053 and the payment of the tax pursuant to the provisions of Section 1056. Notwithstanding the payment of the tax by the receiver, the withholding agent shall be subject to the penalties provided in subsection
(f) of this Section.
(d) Tax Liability.- Every person who is bound to deduct and withhold the twenty (20) percent tax levied by this Section shall be liable to the Secretary for the payment of said tax and shall not be liable to any other person whatsoever for the amount of any payment thereof.
(e) Return.- Every person who is bound to deduct and withhold the twenty (20) percent tax levied by this Section shall file a return with regard to the same not later than February 28 of the year following the year in which the payment was made. Said return shall be filed with the Secretary and shall contain such information and be prepared in such form as established by the Secretary through Regulations. Every person who files the return required by this subsection shall not be compelled to file the declaratory statement required by subsection
(j) of Section 1147.
(f) Penalty.- For the provisions regarding penalties and additions to the tax, see Section 6060 of Subtitle F of this Code."
Section 2.- Clauses (48) and (49) are hereby added to subsection
(b) of Section 1022 of Act No. 120 of October 31, 1994, as amended, to read as follows: "Section 1022. - Gross Income
(a) ...
(b) Exclusions from Gross Income.- The following items shall not be included in the gross income and shall be exempted from taxation under this Subtitle: (1) ... ... (48) Remuneration paid by basketball teams of the National Basketball Association better known as NBA, associations, and entities affiliated thereto.- The remuneration received or earned by any resident or nonresident individual from an NBA basketball team, associations, or entities affiliated thereto attributable to personal services rendered in Puerto Rico with regard to the holding of NBA basketball games in Puerto Rico, shall be subject to the twenty (20) percent tax levied by Section 1012B. Nothing provided in this clause shall affect, in any way, the tax levied by said Section 1012B on said remuneration. (49) Income received or earned with regard to the holding of basketball games held in Puerto Rico by National Basketball Association, better known the NBA. - Income of any nature received or earned by NBA basketball teams or associations
or entities affiliated to said teams (including, but without it being understood as a limitation, the Office of the Commissioner of the National Basketball Association, NBA TV, NBA Latin America, Inc., Women's National Basketball Association, better known as WNBA, or the National Basketball Development League and their successor entities) related to the holding of NBA basketball games in Puerto Rico."
Section 3.- Clause (13) of subsection
(a) of Section 1411 of Act No. 120 of October 31, 1994, as amended, is hereby amended to read as follows: "Section 1411.—Definitions
(a) As used in this Subtitle, provided they are not manifestly incompatible with the purposes thereof: (1) $\ldots$ (2) Withholding Agent - The term withholding agent means any person bound to deduct and withhold any tax, pursuant to the provisions of Section 1012, 1012A, 1012B, 1013, 1142, 1143, $1144,1145,1147,1148,1149$, or 1150 . .." Section 4.- Clause (7) of subsection
(a) of Section 2032 of Act No. 120 of October 31, 1994, as amended, is herby amended to read as follows: "Section 2032.- Exemptions on Articles in Transit and for Export.
(a) The articles included in the cases indicated hereinbelow shall be exempt from the payment of the excise taxes fixed in this Part, provided that the provisions of Section 2022 of this Title are complied with.
(7) Accessories, machinery, parts, equipment or any article introduced in Puerto Rico temporarily and directly related to the holding or transmission of Major League baseball games and of National Basketball Association, better known as NBA basketball games, including preseason, regular season, postseason games and any promotional league event to be played in Puerto Rico, provided said accessories, machinery, parts, equipment or articles are with drawn from Puerto Rico by the person who claimed the exemption, within sixty (60) days following the date of the last game of the Major League or NBA Basketball season held in Puerto Rico."
Section 5.- Section 2051 of Act No. 120 of October 31, 1994, as amended, is hereby amended to read as follows: "Section 2051.- Occupancy of hotel, apartment hotel, guest house and motel rooms.-
(a) ... ...
(g) The tax levied by this Section shall not apply to rooms occupied by the members of a basketball team of the National Basketball Association, better known as NBA, when occupying lodging facilities as a result of the holding of a basketball game of this entity in Puerto Rico, prior to certification to that effect by the Department of the Treasury.
(h) Hotel, apartment hotel, guest house and motel room invoices shall itemize in separate lines the service charges or resort fees and have another items list exclusively for government taxes. It is hereby prohibited to include any guest's lodging expenses in a hotel, apartment hotel, guest house and motel room together with the taxes levied by the Commonwealth of Puerto Rico. The invoice must have the following three lines, which shall read as follows: (1) room rate per night (2) Commonwealth of Puerto Rico taxes (3) Additional hotel, apartment hotel, guest house and motel room charges. The additional charges are exclusively a marketing decision of the lodging and not taxes of the government of the Commonwealth of Puerto Rico.
(i) The Puerto Rico Tourism Company shall be authorized to review the accounting books of inns for the verification of the correct payment of taxes through audits.
(j) The Secretary may impose a sanction that shall not be less than five $($ 5,000)$ thousand dollars nor more than twenty-five $($ 25,000)$ thousand dollars, and/or the revocation of the tax exemption order, upon any hotelier who violates the provisions of this Section of the Act. This prohibition on including expenses in the invoice shall also apply to inns advertising on the Internet."
Section 6.- Subclause (N) is hereby reassigned as subclause (M) of clause (3) of subsection
(a) of Section 2052 of Act No. 120 of October 31, 1994, as amended, to read as follows:
"Section 2052.- Tax on Admission Fees to Public Shows
(a) A ten (10) percent tax shall be levied, collected and paid on the admission fee to any public show held in Puerto Rico. (1) ... (3) Total or Partial Exemptions.- The following public shows shall be exempted, in whole or in part, from the tax fixed in this Section: (A) ... (M) Baseball and basketball games played between United States of America Major League teams and the National Basketball Association, better known as NBA."
Section 7.- Severability Clause. The provisions of this Act shall be deemed separable and the finding of a competent court with regard to the nullity of any of its provisions shall not affect the remaining provisions of this Act.
Section 8.- This Act shall apply to NBA exhibition games held in Puerto Rico before this Act becomes effective.
Section 9.- Effectiveness. This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 253 (H.B. 4807) (Conference) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to add Section 1012B; add Clauses (48) and (49) to Subsection
(b) of Section 1022; amend Clause (13) of Subsection
(a) Section 141; amend Clause (7) of Subsection
(a) of Section 2032; add Subsections
(g) ,
(h) ,
(i) , and
(j) of Section 2051; and reassign Subclause (N) as Subclause (M) of Clause (3) of Subsection
(a) of Section 2052 of Act No. 120 of October 31, 1994, as amended, known as the "Puerto Rico Internal Revenue Code of 1994," as amended, in order to levy a special twenty (20) percent tax on the total amount of the remuneration received by the United States National Basketball Association, better known as NBA, or associations or entities affiliated thereto, etc., has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $25^{ ext {th }}$ of October of 2006.
Francisco J. Domenech Director