2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART III - Other Tax Incentives (§§ 10401 — 10855) › Chapter 953 - Economic Incentives Act For The Development Of Puerto Rico (§§ 10641 — 10673) › Subchapter I - Economic Incentives (§§ 10641 — 10661) › § 10652 - Industrial Tax Exemption Office

(a) In general.— The Industrial Tax Exemption Office shall be attached to the Department of Economic Development and Commerce. This Office shall be directed and administered by a Director, who shall be appointed by the Secretary of Development. The Director shall exercise the powers inherent to his/her office, appoint the necessary personnel to discharge its functions and comply with the duties and obligations imposed by this chapter.
(b) Duties of the Director, Certificate of Compliance.— In the evaluation, analysis, consideration, award, renegotiation, and revision of any incentive or benefit granted by this chapter, the Department of Economic Development and Commerce, the Industrial Tax Exemption Office, and the Director thereof shall be required to oversee and ensure compliance with the governing principles set forth in § 10641a of this title, as well as with all other provisions of this chapter. The Director shall be responsible for verifying and ensuring that exempt businesses meet the requirements established in this chapter, particularly those set forth in § 10641a of this title. If exempt business fails to meet one or more of the requirements established in § 10641a of this title due to criteria such as quality, quantity, price, or availability thereof in Puerto Rico, among other factors that, in the judgment of the Director, hinder, impair, or prevent the successful operation of the incentivized activity within reasonable parameters, the Director may issue a certificate attesting to such fact exempting the exempt business in question, in whole or in part, from such requirement. If the exempt business fails to fully meet the requirements of § 10641a of this title, and fails to qualify for any of the exemptions to such provision, the Director shall be responsible for establishing a formula that allows for the quantification of the aforementioned factors, and for the subtraction of the requirement that has not been met from the total percentage of the specific credit, in order to obtain the exact percentage of the benefit in question. The Director shall be required and responsible for preparing a Certificate of Compliance every two years, once the exempt businesses validate, in the judgment of said official, that they have met the requirements of § 10641a of this title and complied with all other provisions of this chapter. Every two years, the Director shall verify the information submitted by the exempt businesses so that the Certificate of Compliance is issued not later than the last day of the third (3 rd) month after the close of the taxable year of the applicant. Upon the filing of an application for a Certificate of Compliance with the Industrial Tax Exemption Office, the Director shall collect the fees for the processing thereof, which shall be payable by certified check, money order, or cashier’s check to the Secretary of the Treasury. The Secretary of Economic Development shall prescribe by regulations the application processing fees. Provided, That said regulations shall be revised every three (3) years after its approval. The Certificate of Compliance shall include, in turn, the following information regarding the exempt business: the name of the business, the cadastre number of the property or properties connected to the business; the merchant registration number; the account connected to the business as required by the Puerto Rico Internal Revenue Code; the employer identification number; and the information required by §§ 1141 et seq. of Title 23, better known as the “Fiscal Information and Permit Control Act”, as applicable. The Certificate of Compliance shall be issued by the Director through the Interagency Validation Portal for the Granting of Incentives for the Economic Development of Puerto Rico to the agencies, public corporations, and municipalities responsible for granting benefits or incentives under this chapter. However, during the period in which the Portal is still not operating, it shall be the duty of the Director to issue the Certificate of Compliance to the agencies, public corporations, and municipalities responsible for granting benefits or incentives under this chapter by following the ordinary process. The filing of the Certificate of Compliance by an exempt business shall be an essential requirement for the agency, public corporation, or municipality to grant the benefit or incentive provided for in this chapter. Actions taken by the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM), or any other government official or body, or public corporation in connection with the qualification process for the granting of the benefits or incentives awarded by virtue of this chapter, shall be limited to the taxation aspects of the granting of the benefit or incentive in question, upon the issuance of a valid Certificate of Compliance as provided in this section. The Director shall be responsible, first and foremost, for overseeing eligibility under any and all provisions of this chapter. However, the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM), or any other government official or body, or public corporation concerned with any of the benefits or incentives granted under this chapter may contact the applicant and the Director should further information be needed to validate the data on the Certificate of Compliance and notify and request the applicant to supply such information in order to rectify the situation. The Secretary of the Department of the Treasury, or the Executive Director of the Municipal Revenues Collection Center may deny the tax incentives or benefits requested if, in their judgment, the information requested has not been supplied. Moreover, the provisions of this chapter shall not preclude in any way the power conferred to the Secretary of the Treasury by virtue of § 33202 of this title, known as the “Puerto Rico Internal Revenue Code of 2011”; and, if necessary, the power to revoke any incentives previously granted by virtue of the Certificate of Compliance, in accordance with the corresponding act; or the power to refer the case to the pertinent agency or public corporation so the appropriate action is taken.
(c) Sworn statements required by the Industrial Tax Exemption Office.— The Tax Exemption Office shall require tax exemption decrees applicants to submit sworn statements attesting to the facts stated, required, or appropriate in order to determine whether the operations or the intended operations of the applicant qualify under the provisions of this chapter.
As of January 1st, 2016, and every two years thereafter, applicants for new decrees issued by virtue of this chapter shall be required to include a sworn statement along with statistical and pertinent information that validates the following:
(1) The number of jobs created or retained compared to the number of jobs the applicant committed to create under the decree;
(2) the percentage (%) of its operational needs that is acquired from raw materials from Puerto Rico and, if applicable, to indicate what percentage of its operational needs is acquired from raw material outside of Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such acquisition;
(3) the percentage (%) of its operational needs that is acquired from products manufactured in Puerto Rico and, if applicable, to indicate what percentage of its operational needs is acquired from products manufactured outside of Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such acquisition;
(4) the percentage (%) of materials used for the construction of facilities or for extensions thereof, acquired from companies with a presence in Puerto Rico and, if applicable, what percentage of such materials is acquired from businesses without presence in Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such acquisition;
(5) the percentage (%) of agricultural products from Puerto Rico that are acquired and, if applicable, to indicate what percentage of foreign agricultural products is acquired, and state in detail and to the satisfaction of the Director, the analysis made to justify such acquisition;
(6) the percentage (%) of land surveyed, production of construction plans, as well as engineering and architectural design services, and other related services contracted with companies or professionals with a presence in Puerto Rico and, if applicable, to indicate what percentage of such services is contracted from businesses or professionals without presence in Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such contracting;
(7) the percentage (%) of financial, environmental, technological, scientific, management, marketing, human resources, information technology, and auditing consulting services contracted with businesses or professionals with a presence in Puerto Rico and, if applicable, to indicate what percentage of such services is contracted from businesses or professionals without presence in Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such contracting;
(8) the percentage (%) of its commercial activity that employs banking services from banking institutions with a presence in Puerto Rico and, if applicable, to indicate what percentage of its commercial activity employs services from banking institutions without presence in Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such use;
(9) the percentage (%) of the advertising, public relations, commercial art, and graphic design services that are contracted with companies or professionals with a presence in Puerto Rico and, if applicable, to indicate what percentage of such services is contracted from businesses or professionals without presence in Puerto Rico, and state in detail and to the satisfaction of the Director, the analysis made to justify such contracting;
(10) the percentage (%) of security or facility maintenance services that are contracted with businesses with a presence in Puerto Rico and, if applicable, to indicate what percentage of such services is contracted from businesses without presence in Puerto Rico, and to state in detail and to the satisfaction of the Director, the analysis made to justify such contracting.
(d) Penalties.— Any person who commits or attempts to commit, pro se or on behalf of another person, any false or fraudulent representation in relation to any application for or grant of a tax exemption, or a violation of the provisions relative to preceding or succeeding tax-exempt businesses, shall be deemed to be guilty of a third-degree felony and upon conviction, shall be punished by the penalty provided for this type of crime in the Puerto Rico Penal Code of 2004, §§ 4629 et seq. of Title 33.
Furthermore, it is hereby provided that, in these cases, the exemption decree shall be revoked retroactively and that the grantee and/or its stockholders shall be responsible for all the taxes from which they were partially or totally exempted under this chapter.
(e) Special account.— The fees, charges and penalties prescribed in subsection (d) of this section shall be covered into a special account created to that effect in the Department of the Treasury, with the purpose of defraying the regular operating expenses of the Tax Exemption Office. Prior to using the resources deposited into the special account, the Tax Exemption Office shall annually submit, for the approval of the Office of Management and Budget of the Government, an expense budget chargeable to the funds of the special account. The resources of the special account destined for defraying regular operating expenses of the Tax Exemption Office may be complemented with appropriations originating from the General Fund of Puerto Rico whenever necessary.
(f) The Tax Exemption Office shall establish the necessary systems to facilitate the electronic transmission and filing of applications for exemption and related documents, in order to expedite the inter-agency consideration of the applications for exemption and the processes in general.
(g) The Tax Exemption Office shall establish the necessary systems to facilitate the electronic transmission and filing of applications for exemption and related documents, in order to expedite the consideration of the applications for exemption, the validation that the agreements reached under the decrees have been honored, and that the requirements thereof have been met; as well as to expedite the processes in general.
History —May 28, 2008, No. 73, art. 1, § 12, eff. July 1, 2008; Nov. 17, 2015, No. 187, § 85; Dec. 28, 2016, No. 208, § 22.