2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART II - Tax Incentives Act of 1998 (§§ 10101 — 10117) › Chapter 905 - Tax Incentives Act of 1998 (§§ 10101 — 10117) › § 10110 - Successor business

(a) General rule. — A successor business may avail itself of the provisions of this part, provided that:
(1) The predecessor business has not ceased operations for more than six (6) consecutive months before filing the exemption application of the successor business, or during the exemption period of the successor business, unless this is due to extraordinary circumstances.
(2) The predecessor business maintains its annual average number of jobs for the three (3) taxable years that end with the close of its taxable year prior to the filing of the exemption application of the successor business, or the applicable part of said period while the decree of the successor business granted under the provisions of this part is in effect, unless, due to extraordinary circumstances, said average cannot be maintained.
(3) The number of jobs of the successor business after its first year of operations is greater than twenty-five percent (25%) of the average annual number of jobs of the predecessor business referred to in clause (2) above.
(4) The successor business does not use the physical facilities, including land, buildings, machinery, equipment, inventory, supplies, trademarks, patents, and marketing outlets, having a value of $25,000.00 or more and which have been previously used by the exempted predecessor business. The foregoing shall not apply to additions to property intended for industrial development, even when said additions constitute physical facilities with a value of $25,000.00 or more and which are being or have been used by the main unit or exempted predecessor business. The above notwithstanding, the Secretary of State may determine, after recommendation of the agencies that issue reports on tax exemption, that the use of the physical facilities or the acquisition of any industrial unit of an exempted predecessor business that is or was in operation will be for the best economic and social interests of Puerto Rico, in view of the nature of said facilities, the number of jobs, the payroll, the investment, the location of the project, or other factors that in his/her judgment merit said determination.
(b) Exceptions. — Notwithstanding the provisions of subsection (a) of this section, the conditions of the same shall be deemed as complied with, when:
(1) The successor business assigns to the exempted predecessor business such a portion of its annual number of jobs as may be necessary so that the annual number of jobs of the exempted predecessor business is maintained at or is equivalent to the annual number of jobs that said exempted predecessor business must maintain. The assignment provided herein shall not be covered by the decree of the successor business, but it shall enjoy the benefits provided under this part, if any, with respect to the portion so assigned which the exempted predecessor business would have enjoyed thereon, as if such a portion had been its own annual production. If the exemption period of the exempted predecessor business has expired, the successor business shall pay the corresponding taxes on such a portion of its annual production assigned to the exempted predecessor business.
(2) The successor business declares as not covered by its decree, for property tax purposes, such a portion of its facilities as may be necessary so that the investment in physical facilities of the exempted predecessor business is maintained at or is equivalent to the total investment in physical facilities at the close of the taxable year of such an exempted predecessor business prior to the filing of the application for exemption of the successor business, minus depreciation thereon and minus any decrease in the investment in physical facilities that may have occurred as of the date the provisions of this clause are applied as a result of an authorization to use the same under the provisions of subsection (a)(4) of this section. In those cases in which the tax exemption period of the exempted predecessor business has not expired, the successor business shall enjoy the benefits provided by this part which the exempted predecessor business would have enjoyed with respect to the portion of its investment in said physical facilities that for the purposes of this clause it declares as not covered by its decree, if the said facilities had been used in producing its industrial development income.
(3) The Secretary of State determines, after recommendation of the agencies that issue reports on tax exemption, that the operation of the successor business is for the best economic and social interests of Puerto Rico, in view of the nature of the physical facilities, the number of jobs, the amount of the payroll, the investment, the location of the project or any other factors that in his/her judgment merit said determination, including the economic situation of the particular exempted business, and waives its full or partial compliance with the provisions of subsection (a) of this section, with authority to condition the operations as may be convenient and necessary for the benefit of the best interests of Puerto Rico.
History —Dec. 2, 1997, No. 135, § 11, eff. Jan. 1, 1998.