2023 Laws of Puerto Rico › TITLE TWENTY-THREE - Public Planning and Development (§§ 1 — 11273) › PART VI - Tourism (§§ 6001 — 6982i) › Chapter 151 - Tourism Development (§§ 6001 — 6326) › Subchapter I - General Provisions (§ 6001) › § 6001 - Definitions

For the purposes of this chapter, the following terms and phrases shall have the meaning stated hereinbelow:
(a) Person.— Shall mean a corporation, partnership, including a partnership that chooses the benefits of §§ 8630—8659 of Title 13; an individual or group of individuals; a trust or an estate.
(b) Hotel.— Shall mean any building, any part of it, or any group of buildings, approved by the Puerto Rico Tourism Company, devoted properly and in good faith to provide lodging for pay to transient guests; it shall consist of not less than fifteen (15) guest rooms. Its facilities shall be operated under the sanitary and efficient conditions and standards accepted by the Puerto Rico Tourism Company.
(c) Puerto Rican Paradores (inns).— Shall mean any hostelry or inn operating under the program sponsored by the Puerto Rico Tourism Company for the establishment of a network of lodging units throughout the Commonwealth of Puerto Rico, which complies with the provisions of the minimum requirements for hostelries and Puerto Rican Paradores regulations, promulgated, established and administered by said Company.
(d) Condohotel.— Means the group of units of a building or group of buildings converted to the condo hotel regime which meet the requirements of a hotel; of which not less than fifteen (15) rooms or apartments are devoted at all times to lodge transient persons by means of an integrated leasing program.
(e) Guest house.— Shall mean any building or part thereof, or group of buildings approved by the Puerto Rico Tourism Company to be operated for tourist purposes; it shall consist of not less than seven (7) rooms for transient guests, and provide administrative personnel twenty-four (24) hours a day, a private bathroom per room and maid service; and may provide the needed rooms as a dwelling for its owners or managers. Said hostelries shall meet the provisions of the regulations of minimum requirements for hostelries and Puerto Rican Paradores, promulgated, established and administered by the Puerto Rico Tourism Company.
(f) Agro-lodgings.— Any lodging facilities established in an agricultural livestock development to lodge visitors passing through, to enjoy contemplating nature and enjoying, participating, in the activities pertaining to agriculture and livestock or artisanry operations, or both. Said facilities shall include a typical cuisine dining room.
(g) Agro-tourism.— Group of activities organized specifically by farmers, complementary to their main activity, to which tourists are invited; and which represent additional paid services.
(h) New business.— Means a business that is not operating at the time of an application for a grant under this chapter is duly filed, and which shall be engaged in a tourist activity using physical facilities that have not been used or which have been used only incidentally in a tourist activity for a thirty-six (36) month period prior to the filing date of the application. In the case of those eligible businesses that shall be using physical facilities that have not been used in a tourist activity for a term of not less than eighteen (18) months prior to filing an application, the Executive Director of the Puerto Rico Tourism Company may relieve them from complying with the abovementioned thirty-six (36) month requirement, when in his/her discretion, it is required in the best interests of Puerto Rico. A new business shall also be considered to be every business that, even if it has been engaged in a tourist activity during the stated thirty-six (36) month period, is acquired for the purpose of submitting the structures that comprise it to a renovation of such extent that its cost exceeds two hundred percent (200%) of the purchase price of said business, provided that said amount is invested in its entirety within the thirty-six (36) month period from the date of its acquisition. A condo hotel shall only qualify as a new business if said units have not been previously used and have been acquired from the developing or building entity.
If as of the effective or starting date of the new Tourism Development Act of 2010, §§ 6341 et seq. of this title, a business has not yet finished a renovation and/or a substantial extension or is yet within the thirty-six (36) month period after the expiration of the initial thirty-six (36) month period referred to in the preceding paragraph, and during said period, said business has continued said renovation and/or substantial extension uninterruptedly, the Director may extend the initial period by an additional term of up to thirty-six (36) months through an order issued by him/her when in his/her discretion, the best interests of Puerto Rico so require; Provided, however, That the total sum of the initial period and the discretionary period granted by the Executive Director may never exceed seventy-two (72) months. None of the provisions of this section may be interpreted as if the Director is being conferred the authority of extending the initial thirty-six (36) month period referred to in the preceding paragraph to a business that, as of the effective or starting date of the new Tourism Development Act of 2010, said initial period and the thirty-six (36) month period following the expiration of such initial period has already elapsed.
(i) Existing business.— Shall mean a business devoted to a tourist related activity at the time a petition for a concession under the protection of this chapter is duly filed, or that does not otherwise qualify as a new business hereinunder, and that undertakes a substantial renovation or expansion of the existing physical facilities to be used in a tourist related activity.
(j) Tourist activity.— Means:
(1) The ownership and administration, or both, of:
(A) Hotels, condo hotels, Puerto Rican paradores, agri-lodgings, timeshares and vacation clubs that hold a license issued by the Company pursuant to the provisions of § 1251 et seq. of Title 31, better known as the “Puerto Rico Timeshare and Vacation Club Act”, Provided, That the ownership of a timeshare and/or vacation club, or both in and of themselves, shall not be deemed to be a tourist activity, unless the owner is a creative developer or a successor developer, as such terms are defined in §§ 1251 et seq. of Title 31, and guest houses, except for the operation of casinos, gambling rooms, and similar activities; or
(B) Theme parks, golf courses operated by or associated with a hotel that is an exempt business under this chapter or any other similar law of an analogous nature, or golf courses operated by or associated with a hotel that is an exempt business, a tourist marina (it being provided, however, that any marinas in the Island-Municipalities of Vieques and Culebra shall be deemed to be tourist marinas for the purposes of this chapter), certified and accredited medical facilities for medical tourism, facilities in port areas for tourism-related purposes, agritourism, and other facilities that, due to the special attractive features deriving from their usefulness as a source of active or passive entertainment or amusement, constitute a stimulus to domestic or foreign tourists, provided that the Director determines that such operation is necessary and convenient for the development of tourism in Puerto Rico; or
(2) The operation of a business devoted to leasing to an exempt business under this chapter, of property devoted to an activity covered under clauses (1) and (3) of this subsection, except that none of the provisions herein shall apply to contracts known as financial lease contracts.
(3) The development and administration of natural resources that are useful as a source of active or passive entertainment or amusement, including, but not limited to, caves, forests, natural reserves, lakes, and canyons, provided that the Director determines that such development and administration is necessary and convenient for the development of tourism in Puerto Rico.
(k) Property devoted to a tourist-related activity.— Shall mean:
(1) Real property, including land and improvements devoted to the operation of a tourist related activity, and
(2) any set of machinery, furniture, fixed personal property, and equipment that is necessary or convenient for an exempt business in the operation of a tourist-related activity, including equipment to generate electric power through alternate energy sources such as wind, solar light, and water, among others.
(l) Eligible business.— Shall mean any new or existing business devoted to a tourist related activity, that is not covered by a tax exemption decree granted under §§ 10001 et seq., 10012 et seq., and 10024 et seq. of Title 13 or §§ 693 et seq. of this title or that, being covered, waives such decree or exemption resolution in favor of a grant under the present chapter.
(m) Exempt business.— Shall mean an eligible business that has received a grant under this chapter.
(n) Tourist development income.— Shall mean the income of an exempt business from the operation of a tourist related activity, and the income from the reinvestment in Puerto Rico of the profits of an exempt business obtained from a tourist related activity, provided said reinvestment is in a tourist related activity. If the exempt business is a hotel, condohotel, parador (inn) or guest house, income subject to exemption shall include income from:
(1) The rental of rooms and charges for tourist related services.
(2) The sale of food and beverages.
(3) The operation of retail stores within the physical facilities, but only if said retail stores are owned and operated by the exempt business.
(4) The operation of golf courses and other sports and recreational facilities that are part of the tourist related activity of the eligible business.
(5) The leasing of commercial space within the hotel, condohotel, parador (inn) or guest house, for the operation of businesses that provide useful services to the transient guest.
(o) Investor.— Shall mean any person who makes an eligible investment. When the person who makes the eligible investment is a fund, the participants thereof and not the fund shall be deemed to be the investors.
(p) “Eligible investment” means:
(1) The amount in cash that has been contributed to an exempt business or an eligible business that subsequently has been granted an exemption under this chapter to be used in a tourist activity in exchange of:
(A) Corporate shares if it is an exempted business of a corporation, or
(B) the share, or the increase in shares of a partnership or enterprise under common control, or
(C) a unit in a condohotel; provided that said unit is devoted to the integral leasing program of the condohotel for a period of ten (10) years and for eleven (11) months of each calendar year and the investor has absolute fee simple of the unit.
(2) The value of the land contributed to an exempted business, or an eligible business that is subsequently granted an exemption under this chapter to be used in a tourist activity in exchange for:
(A) Shares in the corporation if the exempted business is a corporation, or
(B) the share, or the increase in the shares in a common partnership or enterprise, if the business is an exempted partnership or business. The value of the contributed land shall be its fair market value, reduced by the balance of the mortgages that encumber the land at the moment of the contribution. The fair market value shall be determined on the basis of an appraisal of said land by one (1) or more professional appraisers duly licensed in Puerto Rico. The Director shall approve the appraised net worth of the land before it is dedicated to the exempted business.
(3) Cash contributions made by a fund to a public corporation of the Commonwealth of Puerto Rico or any of its subsidiaries, in exchange for:
(A) The stock of or shares in an exempted business, or in an eligible business that subsequently receives the grant of an exemption under this chapter, held by said corporations or subsidiaries, or
(B) the subordinate debt held by an exempted business, or an eligible business that subsequently receives the grant of an exemption under this chapter, with said corporations or subsidiaries.
(4) Eligible investments shall only be deemed to be any such investments in which all funds are used solely and exclusively for the acquisition of land, construction, and habilitation of the facilities of a new business or for the substantial extension or renovation of the facilities of an existing business, as defined in this chapter. Any other investment, whose funds are not directly and entirely used for the acquisition, construction, habilitation, or substantial extension or renovation of the facilities of an eligible business, shall be excluded from the definition of eligible investment of this chapter. Except in those cases in which, in the discretion of the Director, the best interests of Puerto Rico require otherwise, eligible investments shall only be deemed to be those investments made after the holding of the pre-application conference.
In the event that one of the contributions described in clauses (1) or (2) of this subsection is made, said contribution shall be deemed as an eligible investment only if said investment is made in the primary issue of the stock or shares. In the case of condohotels, the cash contribution shall be deemed as an eligible investment only if the unit has never been used before, and is acquired from the entity that developed or constructed it.
In those cases that the developer of a tourist project deems that:
(A) The eligible business will need to incur cash expenditures before the closing date of the financing for the tourist project.
(B) Said expenses qualify for the calculation of the total cost of the tourist project for the purposes of § 6004 of this title and its regulations.
(C) The contributions to pay for said expenses shall be identified in the books of the exempted business as a debt of the exempted business until the financing for the project is closed. Said contributions shall be deemed as eligible investments if at the time of the closing of the financing, the principal of the debt, excluding the accrued interest, is condoned. Said condoning shall be deemed as a contribution in cash to a change of shares or stock in the exempted business, provided that the director accedes that said contributions be deemed as an eligible investment through the concession of an exemption for the exempted business or an administrative determination to such effects.
(q) Tourist development income distribution.— Shall mean any distribution of dividends or profits of an exempt business or a distribution in liquidation of an exempt business, which consists of income from tourist development.
(r) Fund.— Shall mean any trust, corporation or partnership, including a partnership that has made a choice under Supplement P of the Income Tax Act, which operates as an investment entity in accordance with the purposes, and meets the requirements established herein.
(s) Participant.— Shall mean the person who makes the investment in securities of a fund in the primary issue. A developer shall not be a participant of any fund that makes an eligible investment in the exempt business developed by the developer.
(t) Primary issue or offering.— Shall mean the first time that a security, share or stock is made available to the public. Those heirs acquiring shares, stock or securities in a fund as a result of being heirs of an estate whose originator acquired said shares, stock or securities in a fund in its primary issue, shall also be deemed as acquirers of said shares, stock or securities of a fund in its primary issue. Likewise, the investors who acquire stock in a corporation or a subscriber’s shares in a partnership or a public or public-private corporation of the Government of Puerto Rico, that acquired said stock or shares in its initial offer to complete the balance of the capital investment required to close the financing for a tourist project, shall also be deemed as acquired in their primary issue for credits provided in subsections (a) and (e) of § 6013 of this title.
(u) Securities of a fund.— Shall mean the securities, capital shares or stock in a fund.
(v) Casino or gaming room.— Shall mean a gaming room exploited through a franchise issued pursuant to the terms of §§ 71 et seq. of Title 15.
(w) Developer.— Shall mean the investor or any other person who is affiliated with, is possessed by or directly or indirectly controlled by said investor, who is directly or indirectly responsible for, or is a participant of, the construction, development or management of the tourist related project or exempt business.
(x) Tourist related project.— Shall mean the physical facilities that will be devoted to a tourist related activity of an exempt business.
(y) Office of Industrial Tax Exemption.— Shall mean the office established in accordance with the provisions of §§ 10038 et seq. of Title 13.
(z) Industrial Incentives Act.— Means §§ 10001 et seq., §§ 10012 et seq. and §§ 10024 et seq. of Title 13.
(aa) Excise Tax Act.— Shall mean §§ 9001 et seq. of Title 13.
(bb) Income Tax Act.— Shall mean §§ 8006 et seq. of Title 13.
(cc) Municipal License Tax Act.— Sections 651 et seq. of Title 21.
(dd) Tourist Incentives Act of 1983.— Shall mean §§ 693 et seq. of this title.
(ee) Grant.— Shall mean the decree issued pursuant to § 6017(c) of this title through which the director notifies his/her approval of a duly filed petition and the conditions imposed thereto.
(ff) Puerto Rico Tourism Company.— Shall mean the public corporation established under §§ 671 et seq. of this title.
(gg) Governor.— Shall mean the Governor of Puerto Rico.
(hh) Secretary.— Shall mean the Secretary of the Treasury of Puerto Rico.
(ii) Director.— Shall mean the Executive Director of the Puerto Rico Tourism Company.
(jj) Commissioner.— Shall mean the Commissioner of Financial Institutions, pursuant to the provisions of §§ 7001 et seq. of Title 7.
Any other term used in this chapter without having it been expressly defined herein shall have the same meaning it has in §§ 8006 et seq. of Title 13.
History —Sept. 10, 1993, No. 78, § 2; Jan. 8, 1994, No. 3, § 1; Sept. 27, 1994, No. 114, § 1; Dec. 20, 1997, No. 179, § 1; Sept. 2, 2003, No. 231, §§ 1, 2; Aug. 9, 2008, No. 241, § 1; Aug. 12, 2008, No. 249, § 11; July 10, 2010, No. 74, § 18.