Ley 43 del 2007

(N. B. 3296) (Approved May 15, 2007)

AN ACT

To add Section 2519 to Act No. 120 of October 31, 1994, as amended, to extend the exemption on vessels used to render towing or bunkering services; and for other purposes.

STATEMENT OF MOTIVES

Having recognized the need to broaden the tax base, achieve more equity, stimulate the development of economic activity while discouraging illegal tax evasion activity, and with the intention of modifying and improving the capacity to collect taxes and supervision thereof, this Legislature has worked intensely during the past year on a fiscal and tax reform law that allows both the better supervision of tax collections and better controls over the use of public funds.

Act No. 117, known as the "Taxpayers Justice Act," was enacted on July 4, 2006, as the result product of the joint efforts of the Legislature and the Executive. Said law amended the "Puerto Rico Internal Revenue Code of 1994," (hereinafter the "Code"), to substantially eliminate the general excise tax (known as the 6.6% excise tax) and to introduce a broad base tax on sales and use (hereinafter the "IVU"). Together with these pioneering changes, Act No. 117 introduced a series of additional amendments to the Code so as to provide tax benefits for low income taxpayers, as well as other tax and procedural provisions in order to adjust them to the "IVU."

As a result of this effort, an extensive law that encompassed both substantive and comprehensive provisions of the "Code" was the produced. This arduous task was carried out within a relatively brief term and under intense public scrutiny. A

---

similar situation took place with the drafting of the "Code," to which, once adopted and during the implementation process thereof, a necessary series of technical amendments was added, in order to guarantee its correct and fair implementation, thus avoiding any incongruence caused by technical errors or omissions.

Thus, after the approval of Act No. 117, this Legislature identified certain provisions of said law that require amendments, for the purpose of extending the exemption from the sales and use tax ("IVU") on vessels used to render towing or bunkering services, with the purpose of not affecting the cost of such services and to uphold competitiveness in the maritime transportation sector.

BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO:

Section 1.- A new Section 2519 is hereby added to Act No. 120 of October 31, 1994, as amended, to read as follows: "Section 2519.- Exemption on vessels used to render towing or bunkering services

All vessels used to render towing services, whether within or beyond territorial waters shall be exempted from the tax.

Furthermore, tugboats and barges used to supply fuel to other vessels ("bunkering"), shall be exempt. For purposes of this exemption, the service may be rendered both within or beyond territorial waters."

Section 2.- Effectiveness - This Act shall take effect immediately after its approval.

---

CERTIFICATION

I hereby certify to the Secretary of State that the following Act No. 43 (H.B. 3296) of the $5^{ ext {th }}$ Session of the $15^{ ext {th }}$ Legislature of Puerto Rico:

AN ACT to add Section 2519 to Act No. 120 of October 31, 1994, as amended, to extend the exemption on vessels used to render towing or bunkering services; and for other purposes, has been translated from Spanish to English and that the English version is correct.

In San Juan, Puerto Rico, today $30^{ ext {th }}$ of August of 2007.

Francisco J. Domenech Director