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 D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30551 - General rule

(a) Application of provisions.— The provisions of this subchapter shall apply only to those partnerships that have opted to operate as a special partnership; provided, that they derive at least seventy percent (70%) of their gross income during each taxable year from sources within Puerto Rico, and at least seventy percent (70%) of said income is derived from the operation of one of the following activities:
(1) A construction business;
(2) a land development business;
(3) a business for the substantial rehabilitation of buildings or structures;
(4) a business for the sale of buildings or structures;
(5) a business for the lease of buildings or structures, excluding the lease of residential property to related persons;
(6) a manufacturing business when it generates a substantial number of jobs, it being understood that the criterion to be used shall be the unemployment rate and the personal income, in relation to the workforce available in the municipality where the activity is to be conducted;
(7) a tourist business, including income from the operation of casinos;
(8) an agricultural business;
(9) a business for the export of goods or services to foreign countries;
(10) a business engaged in the production of feature films;
(11) a business for the construction, operation or maintenance of public roads and attached facilities, or
(12) a tax-exempt business under § 10642(d)(1)(E) of this title in connection with property devoted to green energy production, as defined in §§ 10421 et seq. of this title, § 10642(d)(1)(H) or 10642(d)(1)(M) of this title, known as the “Economic Incentives Act for the Development of Puerto Rico”, or any analogous provisions in §§ 10101 et seq. of this title, known as the “Tax Incentives Act of 1998”, or any succeeding law of a similar nature, including the Puerto Rico Green Energy Incentives Act or any law that provides incentives for the generation of energy from sustainable renewable sources or from alternate sources.
(b) Special rules.—
(1) Sale of assets used in eligible activity.— Gross income from the operation of an activity described in clauses (1) through (12) of subsection (a) shall include gains derived from the sale, exchange, or other disposition of property used in the corresponding activity described in subsections (a) and (h) of § 30141 of this title.
(2) Gross income during special partnership organization period.—
(A) General rule.— The gross income of the operation of one of the activities described in clauses (1) through (12) of subsection (a) shall include income derived from the temporary investment of the funds of a special partnership during the period prior to the beginning of operations of the activity that qualifies the special partnership for the benefits of this subchapter. Said period shall not be greater than thirty-six (36) months starting from the organization of the partnership.
(B) Time extension.— In those cases in which the special partnership demonstrates to the satisfaction of the Secretary that it has been impossible to start the operations of the activity that shall qualify it as a special partnership within the period established under paragraph (A) of this clause, the Secretary can grant a time extension for a period that does not exceed eighteen (18) months from the expiration of the original period, for the partnership to begin the eligible activity. The income from the temporary investment of funds from the special partnership during the extended period shall constitute gross income from the operation of one of the activities described in clauses (1) through (12) of subsection (a).
(3) Business engaged in the production of feature films.— In the case of the activity covered under subsection (a)(10) of this section, the partnership shall only need to meet the requirement that at least seventy percent (70%) of its gross income be derived from the operation of such activity.
(4) Special partnerships owned by other special partnerships.— Those partnerships (“investment partnerships”) that, whether directly or indirectly, (through other intermediate special partnerships) own shares in other special partnerships (“lower tier partnerships”) that meet the seventy percent (70%) requirement described in subsection (a) shall qualify as special partnerships, provided that investment partnerships meet, in turn, with said seventy percent (70%) requirement. In determining satisfaction of said requirement, and for that purpose only, the gross income from any source and nature derived by the lower tier partnership during its taxable year shall be treated as gross income of the investment partnership, in a proportion equal to its distributive share in the items described in § 30555(a) of this title. A share in the losses described in § 30122(e)(4)(A) of this title of the lower tier partnership shall be attributed to the investment partnership.
(5) Business engaged in nautical tourism.— Tourist businesses engaged in nautical tourism that enjoys exemption, as provided in the Tourism Development Act of 2010, or any successor law similar in nature, shall only be required to satisfy the requirement that at least seventy percent (70%) of its gross income be derived from the operation of such activity.
(c) Corporations.— For purposes of this subchapter, the term “partnership” includes the term “corporation”, provided that such corporation does not have in effect an option under § 30582 of this title for the corporation’s taxable year. The terms “partners”, “shares”, and “partnership agreement” shall include the terms “stockholders”, “stock”, “articles of incorporation”, and “bylaws”, respectively.
History —Jan. 31, 2011, No. 1, § 1114.01, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 119.