Ley 107 del 2008
Resumen
Esta ley enmienda el Código de Rentas Internas de 1994 para clarificar la definición de "productos de panadería" a los fines del Impuesto sobre Ventas y Uso (IVU). Excluye específicamente el pan, las galletas y otros productos considerados alimentos por el Programa Federal de Asistencia Nutricional (PAN) de la definición de productos de panadería, eximiéndolos así del IVU. La ley busca aliviar la carga económica sobre los consumidores y fabricantes de alimentos básicos.
Contenido
(No. 107)
(Approved July 11, 2008)
AN ACT
To add a subclause
(i) , to clause (5), of subsection
(a) of Section 2301 of Act No. 120 of October 31, 1994, as amended, known as "Internal Revenue Code of 1994," for the purpose of clarifying the term "bakery products."
STATEMENT OF MOTIVES
Act No. 117 of July 4, 2006 is known as "Taxpayers Justice Act of 2006." This Act, among other things, eliminated the general excise tax on imported goods and established the sales and use tax, better known as "IVU" (Spanish acronym). This Act also established exemptions for products and services, which shall be exempted from payment of said tax, among which are food and food ingredients.
However, and in spite of the intention of the Legislature to exclude food, which was the case in the excise tax system, questions have arisen regarding its definition. The Act specifically establishes that bakery products shall pay taxes, since they would not be considered food or food ingredients. The Act, however, did not define the term "bakery products." For this reason, the Department of Treasury defined this term in its Regulations No. 7249, based on the definition of "Streamlined Sales & Use Tax Agreement." In its definition, the Department of Treasury included as bakery products the staple food of the Puerto Rican family, such as bread, crackers, and other related products.
This situation has caused confusion among consumers and manufacturers, and an increase in costs of food. To this, the recent increase in the cost of the raw material for the elaboration of these products can be added, which worsens the problem and causes a great concern among citizens.
To address this situation, and to prevent taxation on primary food items, and any further harm to the Puerto Rican consumer, the term "bakery product" is clarified through this Act so that it be understood that bread, crackers, and other food shall be exempted from the IVU. This clarification, in addition of being in harmony with the original intention of the Legislature, is based on the definition of food of the Federal Nutrition Assistance Program (PAN, Spanish acronym) which should have been evaluated by the Department of Treasury in lieu of the one on the "Streamlined Sales & Use Tax Agreement."
BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO:
Section 1. - A subclause
(i) is hereby added to clause (5) of subsection
(a) of Section 2301 of Act No. 120 of October 31, 1994, as amended, to read as follows: "SUBTITLE BB - SALES AND USE TAX CHAPTER 1 - DEFINITIONS AND GENERAL PROVISIONS Section 2301. - General Definitions For the purposes of this Subtitle the following terms, words and phrases shall have the general meaning expressed below, except when the context clearly indicates another meaning:
(a) Food and food ingredients.-Substances, be they liquid, concentrated, solid, frozen, dry or dehydrated that are sold to be ingested by
humans and consumed because of their flavor or nutritional value. Food and food ingredients exclude the following: (1) dietary supplements; (2) alcoholic beverages; (3) tobacco and its derivatives; (4) candy, sweets; (5) bakery products;
(i) This term does not include bread, crackers, or any other product considered food by the Federal Nutrition Assistance Program (FNAP), which shall be exempt from IVU. (6) carbonated beverages; and (7) prepared foods.
(b) Prepared foods.- (1) ... (2) ... (3) ...'
Section 2 - This Act shall take effect thirty (30) days after its approval.
CERTIFICATION
I hereby certify to the Secretary of State that the following Act No. 107 (H.B. 4213) (Conference) of the $7^{ ext {th }}$ Session of the $15^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to add a subclause
(i) , to clause (5), of subsection
(a) of Section 2301 of Act No. 120 of October 31, 1994, as amended, known as "Internal Revenue Code of 1994," for the purpose of clarifying the term "bakery products," has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $28^{ ext {th }}$ of August of 2008.
Francisco J. Domenech Director