2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 2 - Taxation In General (§§ 161 — 393) › Chapter 35 - Industrial Tax Exemption (§§ 221-226 — 256-256k) › Subchapter V - Maritime Freight Transportation (§§ 254 — 254h) › § 254b - Distribution

(a) The distribution of dividends or profits by a corporation or partnership availing itself of the provisions of this subchapter, which has not enjoyed or is not enjoying industrial tax exemption and which on the date of commencing exempted shipping operations has accumulated a taxable surplus, shall be considered as made from the undistributed balance of said surplus, but after the latter is exhausted by virtue of such distribution, the provisions of subsection (c) of this section shall be applicable.
(b) The distribution of dividends or profits by a corporation or partnership which has enjoyed or is enjoying industrial tax exemption shall be considered as made from the surplus accumulated during the period in which it has enjoyed or is enjoying industrial tax exemption and shall be governed by the provisions of the laws under which they have been so far governed. After such surplus is exhausted, the provisions of subsection (c) of this section shall be applicable.
(c) Except for the provisions of subsections (a) and (b) of this section, the distribution of dividends or profits by a corporation or partnership availing itself of the provisions of this subchapter shall be considered as deriving from the gains or profits most recently accumulated and shall be exempt in the same proportion in which the income was exempt, to the following persons:
(1) Persons residing in Puerto Rico, or
(2) persons not residing in Puerto Rico who are not under obligation to pay in any jurisdiction outside Puerto Rico any tax on their income deriving from any source in Puerto Rico;
(3) persons not residing in Puerto Rico who, on account of the laws of the country where they reside, cannot take, as a deduction from income or as a credit against the tax payable in said country on the dividends or profits derived from a corporation or partnership exempted under this subchapter, the tax which would be imposed to them in Puerto Rico on such dividends or profits, or
(4) persons not residing in Puerto Rico who, on account of the laws of the country where they reside, can only take partially, as a deduction from income or as a credit against the tax payable in said country on the dividends or profits derived from a corporation or partnership exempted under this subchapter, the tax which would be imposed to them in Puerto Rico on such dividends or profits; Provided, That the exemption provided in this section shall apply only to such portion of the income tax which may be imposed in Puerto Rico on dividends or profits as may not be deductible from the income or creditable against the tax to be paid in such country on such dividends or profits.
Any person desiring to avail himself of the provisions of clauses (3) and (4) of this subsection, shall present to the Secretary of the Treasury of the Commonwealth of Puerto Rico a certified or authenticated copy, in Spanish or English, of the laws or regulations in force in the country where he resides, indicating specifically the provisions of such laws or regulations as are applicable to his case, with any other information or evidence showing that said person qualifies under the above clauses (3) and (4) of this subsection.
History —June 28, 1966, No. 126, p. 395, § 3.