Esta ley enmienda la Ley Núm. 13 de 8 de enero de 2004, conocida como la "Ley Reguladora del Centro Bancario Internacional", para clarificar las reglas de transición aplicables a las entidades bancarias internacionales que no utilizan el año natural como su año fiscal. Establece porcentajes decrecientes para el cálculo del impuesto sobre el ingreso neto derivado de la unidad de entidad bancaria internacional (EBI Unit) que excede el 20% del ingreso neto del banco, con disposiciones específicas para aquellos cuyo año fiscal no coincide con el calendario.
(Approved February 6, 2004)
To amend Section 2 of Act No. 13 of January 8, 2004, to clarify the application of the transition rules in the case of international banking entities that determine their income based on a fiscal year that is not the calendar year, and for other purposes.
Act No. 13 of January 8, 2004, amends Act No. 52 of August 11, 1989, as amended, known as the "International Banking Center Regulatory Act."
The purpose of the abovementioned Act is to ensure that banks that operate an international banking entity as their unit ("EBI Unit") in Puerto Rico shall pay taxes for the net income they derive from the EBI Unit, that is in excess of twenty (20) percent of the net income of the bank itself. The bill provides transition measures in Section 2, establishing a decreasing percentage of forty (40) percent for the first year of effectiveness, thirty (30) percent for the second year, and twenty (20) percent which would apply after taxable years commencing after June 30, 2005.
As it currently stands in its Section 3 ("Effectiveness"), the Act would take effect immediately after its approval, but its provisions would apply to taxable years commencing after July 1, 2003.
In practice, almost all Puerto Rican banks operate with a fiscal year that begins on January 1 of each year, and have had the benefit of knowing about the
consideration and approval of the project prior to the beginning of their next fiscal year. This time has allowed them to plan appropriately and prevent an unmeasurable impact on their financial condition.
However, for any institution whose fiscal year began before January 1, 2004, the application of the act as presently provided has a retroactive effect upon its operations of its current fiscal year, adversely affecting its operational results. This in turn may require the review of reports that have been submitted to the regulating agencies and to the market to reflect the retroactive impact of the change in the Act.
It was not the purpose of Act No. 13 of January 8, 2004, to dislocate the financial planning of the banks for current fiscal years, nor to require adjustments that could be harmful for the institution as well as the market it serves. The negative impact on these institutions may also have repercussion on the stock market of the financial institutions of Puerto Rico, which represent an important sector of our economy.
For all of the above, it is hereby proposed and we recommend that Section 2 be modified with respect to the rules of transition, in order to provide that in the case of international banking institutions that determine their income based on taxable years that are not the calendar year, the applicable percentage during the taxable year commencing after June 30, 2003 and before January 1, 2004, shall be determined on the bases of applying to each one of the months of said taxable year, the annual average resulting from applying the percentage that would have been applied if the taxable year were a calendar year.
The remaining provisions of Act No. 13 of January 8, 2004.
Section 1.- Section 2 of Act No. 13 of January 8, 2004, is hereby amended to read as follows: "Section 2.- Transition Rules.- For taxable years commencing after June 30, 2003, and before July 1, 2006, the reference to the $20 %$ referred to in paragraph
(b) of Section 25 of the International Banking Center Regulatory Act, as amended by this Act, shall be replaced by the following:
(a) In the case of international banking entities whose taxable year is the calendar year: (1) forty (40) percent for any taxable year commencing after June 30, 2003 and before July 1, 2004, and (2) thirty (30) percent for any taxable year commencing after June 30, 2004 and before July 1, 2005; and
(b) In the case of international banking entities whose taxable year is not the calendar year: (1) for any taxable year commencing after June 30, 2003, and before January 1, 2004, the average of:
(i) the number of months of said taxable year prior to January 1, 2004, at one hundred (100) percent, and (ii) The number of months of said taxable year as of January 1, 2004, at forty (40) percent. (2) For any taxable year commencing after December 31, 2003, it shall be governed by the provisions of subsection
(a) ."
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. 58 (H.B. 4312) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to amend Section 2 of Act No. 13 of January 8, 2004, to clarify the application of the transition rules in the case of international banking entities that determine their income based on a fiscal year that is not the calendar year, and for other purposes, has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $10^{ ext {th }}$ of May of 2005.
Luis E. Fusté-Lacourt Director