2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1013 - Other Special Taxpayers (§§ 30501 — 30622) › Subchapter A - Insurance Companies (§§ 30501 — 30512) › § 30507 - Insurance companies other than life or mutual

(a) Tax imposed. — There shall be imposed, collected, and paid for each taxable year upon net income subject to normal tax and upon net income subject to surtax of any insurance company, other than a life or mutual insurance company, the same tax rates imposed upon other corporations as provided in §§ 30071(b) and 30072(b) of this title. For purposes of this section, “net income subject to normal tax” means net income as defined in subsection (c)(2), minus the deduction provided in § 30139(a) of this title and “net income subject to surtax” means net income subject to normal tax as defined in this subsection, minus the deduction set forth in § 30072(d) of this title.
(b) Tax imposed on amount equivalent to dividend. — In addition to the tax imposed by subsection (a), there shall be imposed, collected, and paid for each taxable year upon every insurance company subject to taxes under subsection (a), the tax provided in § 30442 of this title. The Secretary shall prescribe by regulations the rules to be followed in the application of the provisions of § 30442 of this title to an insurance company subject to taxation under subsection (a).
(c) Definitions. — In the case of an insurance company subject to taxes imposed under this Section:
(1) Gross income. — “Gross income” means the sum total of:
(A) The combined gross amount earned during the taxable year from investment income and from underwriting income, as provided in this subsection, computed on the basis of the underwriting and investment exhibit of the annual statement approved by the National Convention of Insurance Commissioners, and
(B) the gain during the taxable year from the sale or other disposition of property;
(2) Net income. — “Net income” means the gross income, as defined in clause (1), less the deductions allowed by subsection (d).
(3) Investment income. — “Investment income” means the gross amount of income earned during the taxable year from interest, dividends, and rents, adding all interest, dividends, and rents due and accrued during the taxable year, to which all interest, dividends, and rents due and accrued at the end of the taxable year shall be added, deducting all interest, dividends, and rents due and accrued at the end of the preceding taxable year.
(4) Underwriting income. — “Underwriting income” means the premiums earned on insurance contracts during the taxable year, less losses and expenses incurred;
(5) Premiums earned. — “Premiums earned on insurance contracts during the taxable year” means the amount of gross premiums written on insurance contracts, determining any losses paid during the taxable year, deducting return premiums and premiums paid for reinsurance. To the result thus obtained, unearned premiums on outstanding business at the end of the preceding taxable year shall be added and unearned premiums on outstanding business at the end of the taxable year shall be deducted.
(6) Losses incurred. — “Losses incurred” means losses incurred during the taxable year on insurance contracts, determining losses paid during the taxable year, adding salvage and reinsurance recovered and outstanding at the end of the preceding taxable year, and deducting salvage and reinsurance recovered and outstanding at the end of the taxable year. To the result thus obtained, all unpaid losses outstanding at the end of the taxable year shall be added and unpaid losses outstanding at the end of the preceding taxable year shall be deducted.
(7) Expenses incurred. — “Expenses incurred” means all expenses shown on the annual statement approved by the National Convention of Insurance Commissioners, determined by adding to all expenses paid during the taxable year, the expenses unpaid at the end of said year, and deducting expenses unpaid at the end of the preceding taxable year. For purposes of computing the net income subject to taxes imposed under this section, from expenses incurred, as defined in this paragraph, all expenses incurred which are not allowed as deductions under subsection (d) shall be deducted.
(d) Deductions allowed. — In computing the net income of an insurance company subject to the tax imposed by this section, the following deductions shall be allowed:
(1) All ordinary and necessary expenses incurred, as provided in § 30121 of this title;
(2) all interest, as provided in § 30123 of this title;
(3) taxes, as provided in § 30124 of this title;
(4) losses incurred, as defined in subsection (c)(6) of this section;
(5) bad debts in the nature of agency balances and bill receivable ascertained to be worthless;
(6) the amount of interest earned during the taxable year which under § 30102(a)(3) of this title is exempt from taxation;
(7) Depreciation. — a reasonable allowance for the exhaustion, wear and tear of property, as provided in §§ 30127 and 30182 of this title, and
(8) contributions to an employee trust or annuity plan or deferred compensation plan.
(e) Deductions disallowed. — With regard to subsection (d)(6):
(1) No deduction shall be allowed for an amount otherwise allowable which under the rules of § 30137(a)(5) of this title is attributable to interest described in subsection (d)(6).
(2) No deduction shall be allowed for that part of the interest expense which is attributable to interest described in subsection (d)(6). That part of the interest expense that is attributable to interest described in subsection (d)(6) shall be that amount which bears the same proportion to such interest expense as the average daily adjusted basis of the indebtedness generating the interest described in subsection (d)(6) bears to the daily adjusted basis of all assets of the taxpayer.
(f) Deductions of foreign corporations. — In the case of a foreign corporation, the deductions allowed in this section shall be allowed to the extent provided in subchapter I.
(g) Limitation. — None of the provisions of this section shall be construed to permit the same item to be deducted more than once.
(h) Alternative minimum tax. — Insurance companies to which the tax imposed by this section is applicable shall be subject to the provisions relative to the alternative minimum tax for corporations.
History —Jan. 31, 2011, No. 1, § 1111.07, retroactive to Jan. 1, 2011.