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) › § 10649 - Commonwealth excise taxes and sales and use tax

(a) In addition to any other exemption from excise taxes or from the sales and use tax granted under Subtitles B and BB, respectively, of the Puerto Rico Internal Revenue Code, a total exemption from said taxes shall be granted, during the exemption period provided in § 10650 of this title, the following articles directly or indirectly introduced or acquired by a business that holds a decree granted under this chapter.
(1) Any raw material that is to be used in Puerto Rico to manufacture finished products, except for hydraulic concrete, crude oil, partially manufactured products, finished oil products, and finished products from any other hydrocarbon mixture. For the purposes of this subsection and the applicable provisions of Subtitles B and BB of the Puerto Rico Internal Revenue Code, the term “raw material” shall include:
(A) Any product in its natural form, derived from agriculture or from extractive industries.
(B) Any by-product, residual product, or partially manufactured or finished product.
(C) Sugar by the bushel or in units of fifty (50) pounds or more, to be used exclusively in the manufacturing of products.
(2) The machinery, equipment and accessories thereof used exclusively in the manufacturing process or in the construction or repair of ships, inside or outside the premises of a manufacturing plant, machinery, trucks, or forklifts used exclusively and permanently to transport the raw material within the circuit of the tax-exempt business, machinery, equipment and accessories used to carry out the manufacturing process, or which the tax-exempt business is under the obligation to acquire as required under federal or Commonwealth law or regulations, for the operation of an industrial unit.
The preceding notwithstanding, the exemption shall not cover the machinery, devices, equipment or vehicles used in whole or in part in the administrative or commercial phase of the tax-exempt business, except in those cases in which these are also used in at least ninety percent (90%) of the manufacturing process, or in the construction or repair of ships, in which case, these shall be deemed to be used exclusively in said manufacturing process.
(3) Any machinery and equipment that a tax-exempt business that holds a decree granted under this chapter must use to meet environmental, safety and health demands, shall be totally exempted from the payment of Commonwealth excise taxes and of the sales and use tax.
(4) The machinery, equipment, parts and accessories used in laboratories of an experimental or a referential nature.
(5) The machinery, equipment, parts and accessories used in the preliminary region exploration phase geared toward the mineralogical development of Puerto Rico, and the graving docks or shipyards for the construction or repair of ships.
(6) The fuel used by the business exempted under this chapter, in the co-generation of electric power for its own use of for use by its affiliates.
(7) Chemical materials used by a tax-exempt business in the treatment of used waters.
(8) Energy-efficient equipment, duly certified by the Energy Affairs Administration.
(b) Exceptions. — The following used and consumption articles used by the tax-exempt business that holds a decree granted under this chapter, regardless of the area or premises in which these are located or of their use, shall not be deemed to be raw material, machinery or equipment for the purposes of clauses (1), (2) and (3) of subsection (a) of this section:
(1) Any construction material and pre-fabricated structures;
(2) any electrical material and water pipes fixed into the structures;
(3) the lubricants, fats, waxes and paints not relative to the manufacturing process;
(4) the lighting posts and lighting fixtures installed in parking areas, and
(5) treatment plants and electric substations.
History —May 28, 2008, No. 73, art. 1, § 9, eff. July 1, 2008.