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) › § 10647 - Real and personal property taxes

(a) In general. —
(1) The personal property of a tax-exempt business that holds a decree granted under this chapter, used in the development, organization, construction, establishment or operation of the activity covered under the decree, shall enjoy a ninety-percent (90%) exemption on municipal and Commonwealth taxes on personal property during the exemption period established in § 10650 of this title.
(2) The real property of the tax-exempt business that holds a decree granted under this chapter, used in its development, organization, construction, establishment or operation, shall enjoy a ninety-percent (90 %) exemption on municipal or Commonwealth property taxes during the exemption period established in § 10650 of this title.
(3) The real property of a tax-exempt business described in § 10642(h)(12) of this title shall be entirely exempted from property taxes during the first five (5) years as of the date the operations start, to be determined pursuant to the provisions of § 10650 of this title. Once said period has lapsed, the provisions of clause (2) of this subsection shall apply.
(b) Period. — The real property of a tax-exempt business that holds a decree granted under this chapter, shall be entirely exempted during the period authorized under the decree to carry out the construction or establishment of said tax-exempt business and during the first fiscal year of the Government under which the tax-exempt business would have been subject to property taxes for having been in operation as of January 1st prior to the beginning of said fiscal year, were it not for the exemption provided herein. Likewise, the real property of said tax-exempt business which is directly related to any expansion of the tax-exempt business, shall be entirely exempted from property taxes during the period authorized under the decree for carrying out the expansion. Once the total exemption period established in this subsection expires, the partial exemption provided for in this section shall begin to apply.
(c) Assessment. —
(1) The real property taxes shall be assessed, levied, notified and administered as provided under §§ 5001 et seq. of Title 21. The preceding notwithstanding, a tax-exempt business may opt to avail itself of the self-assessment method provided for in clause (2) of this subsection.
(2) Optional self-assessment method. —
(A) A business that is exempted under this chapter or under preceding tax incentives acts, may use the self-assessment method provided for in this clause in order to determine the classification and the real property tax on property which has not been assessed by virtue of the Municipal Property Tax Act, §§ 5001 et seq. of Title 21. In such cases, the tax-exempt business shall comply with the procedures established in the Municipal Property Tax Act, §§ 5001 et seq. of Title 21, provided the same has complied with the notice requirements established under said sections or in the exemption decree.
(B) The self-assessment method provided for in this clause may be used exclusively for that property which shall be properly deemed to be real property by reason of its use and location, which is destined for and is used in the development, organization, construction, establishment or operation of the tax-exempt business. Provided, That the method established herein may not be used to appraise plots of land or structures (including real property permanently affixed to a structure and which exclusively serves said structure, such as lighting equipment).
(C) The appraisal value of the property classified as real property by the tax-exempt business, to be appraised under this clause, shall be equal to thirty-five percent (35%) of the depreciated value in the books of the tax-exempt business. Provided, That said appraised value shall not be less than a certain percent of the cost, computed on the basis of the useful life of the property, as provided below:
Cost
2—5 years 25 %
6—10 years 17 %
11—15 years 15 %
16 years or more 10 %
(D) The tax-exempt business shall also enjoy the exemption established in subsection (a) of this section on the value appraised pursuant to the provisions of paragraph (C) of this clause. Provided, That the provisions of the Municipal Property Tax Act, §§ 5001 et seq. of Title 21, shall apply in terms of the rate, date, and method of payment of this tax as if it were a tax assessed under said sections.
(E) Any tax-exempt business that has opted to use the self-assessment method provided for in this clause, shall file a self-assessed real property tax return on or before May 15 of every year, in which it shall identify the property that is to be deemed to be real property, and shall determine its obligation to pay taxes on real property for the fiscal year of the Government, pursuant to the provisions of paragraph (C) of this clause. Provided, That once the tax-exempt business adopts the assessment method provided for in this clause, the same shall file and pay on the date the first return is to be filed, in addition to the tax corresponding to the current fiscal year, the tax corresponding to the preceding four (4) fiscal years, or to the number of years it has been operating, whichever is less. The tax-exempt business may make the payment corresponding to its tax responsibility for the preceding four (4) fiscal years, or the corresponding number of years, as provided above, in two (2) installments. The first of such payments shall be made when filing the corresponding tax return and the second payment shall be made within six (6) months following the date of filing the first tax return under the option of this method. Within ten (10) work days as of the date on which the tax-exempt business files the tax return provided for in this clause, the Municipal Revenue Collection Center (CRIM, Spanish acronym) shall notify the municipalities concerned of the option of the tax-exempt business to avail itself of the optional self-assessment method.
(F) Once the property classified and appraised under the optional method provided for in this clause is classified and appraised by the Municipal Revenue Collection Center (“CRIM”) pursuant to the provisions of the Municipal Property Tax Act, §§ 5001 et seq. of Title 21, and after having exhausted the review procedures established under said Act, the value of the property of the tax-exempt business shall be that which is established by the CRIM in lieu of the value determined under the self-assessment method provided for in this clause. In such cases, the tax-exempt business shall comply with the procedures established in the Municipal Property Tax Act, §§ 5001 et seq. of Title 21. Provided, That the classification and appraisal made by the CRIM pursuant to the aforementioned act, shall only have a prospective effect, for all legal purposes, for which reason no determination of deficiency shall be made with respect to the method used or the classification of the property as real property for the years in which the optional self-assessment method was used.
(d) The investments that qualify under § 10642(j) of this title shall be entirely exempted from the payment of property taxes.
History —May 28, 2008, No. 73, art. 1, § 7, eff. July 1, 2008.