2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 2 - Taxation In General (§§ 161 — 393) › Chapter 33 - Exemptions from Taxes (§§ 191 — 206) › § 194 - Air carriers

(a) Every natural or artificial person engaged as a public carrier in air transportation service is hereby exempted, as to such service, from the payment of all commonwealth, local and municipal taxes, of whatever name or nature, on all real or personal property now owned or hereafter acquired thereby, including all taxes or excises on equipment or supplies, but not including excise on fuels nor the impost that Act No. 82 of June 26, 1959, authorized the Ports Authority to levy on all aviation gasoline, all fuel products for use and consumption in the propelling of air transportation vehicles and all mixtures of gasoline with any combustible product for use and consumption in the propelling of air transportation vehicles, destined to be consumed in air voyages between Puerto Rico and other places or in air voyages within the territorial limits of Puerto Rico.
Likewise any aircraft and the equipment related thereto, leased and owned by a public carrier engaged in air transportation services are hereby exempt from all property taxes, provided it is established to the satisfaction of the Executive Director of the Ports Authority of Puerto Rico that such property is being used for such purpose.
In addition, contractors and subcontractors of public air transportation service carriers shall be exempted from the payment of any tax, levy, duty, license, excise tax, rate or fee imposed by any municipal ordinance on the construction of works to be used by such public carriers within a municipality, without it being understood that said taxes include the municipal license tax imposed on the volume of business of the contractor or subcontractor of the public carriers, during the term authorized for the exemption.
(b) The exemptions provided for in subsection (a) of this section shall in no case be construed as including or covering income tax or premiums payable under the Workmen’s Accident Compensation Act, §§ 1—42 of Title 11.
(c) The Director of the Puerto Rico Ports Authority shall set the service rules to be observed by every public carrier in air transportation services who has availed himself of the benefits of this section, and the exemption period, which shall not exceed ten (10) years. Noncompliance with such rules shall be grounds for the cancellation of the tax exemption after granting a hearing to the affected carrier.
(d) Those public carriers engaged in air transportation who have exhausted their tax exemption term under the provisions of this section shall be entitled to a personal property tax exemption on property related to airplanes and spare parts owned by public carrier for the exclusive use on airplanes owned or leased and on the equipment, parts, materials and ramp supplies.
(e) Those public carriers engaged in air transportation that substantially expand their operations in Puerto Rico shall be entitled to the benefits of the tax exemption provided in subsection (a) for an additional ten (10)-year period on all new real or personal property acquired and used for the expansion of their operations.
It shall be deemed to be a “substantial expansion” when the same produces a minimum increase in jobs, capital investment, number of air routes and number of flights of at least twenty-five percent (25%) above the average of the carrier’s last three (3) years of operations in Puerto Rico. The Secretary of the Treasury shall determine, upon consultation with the Executive Director of the Ports Authority, what constitutes a substantial expansion.
Provided, That when granting and overseeing the exemption established herein, the Executive Director of the Ports Authority and the Secretary of the Treasury shall take into consideration any conflict of interest that could arise between stockholders who are, in turn, public officials.
(f) Any natural or juridical persons engaged as public carriers in the air transportation business who as of January 1, 2002, were benefiting from the tax exemption set forth in subsections (a) or (e) of this section may continue to benefit from the tax exemption set forth in subsection (a) for an additional term of ten (10) years from the approval of this amendment on any personal or real property owned or acquired to be used in the air transportation business. Those natural or juridical persons who were enjoying the benefits of this section as of January 1, 2002, but whose benefits expired prior to the approval of this amendment may enjoy the benefits of the additional term of ten (10) years of tax exemption starting from the expiration of their previous term of tax exemption. Those natural or juridical persons who desire to avail themselves of the benefits of this amendment shall file an election with the Department of Economic Development and Commerce within one hundred eighty (180) days after the approval of this amendment in which they commit themselves to maintain operations in Puerto Rico and to comply with an employment requirement of not less than seventy-five percent (75%) of their average employment in calendar year 2002; Provided, That the Secretary of the Department of Economic Development and Commerce may modify, for a term of not more than eighteen (18) months, said employment requirement, taking into account the particular circumstances of the airline industry and other factors that adversely affect said industry, such as variations in the seasonal demand, weather conditions, strikes or labor situations or other acts beyond the control of the airline.
(g) In the evaluation, analysis, consideration, award, renegotiation, and revision of any incentives or benefits granted under this section, the Ports Authority of Puerto Rico and the Executive Director thereof shall be required to oversee and ensure compliance with all the provisions of this section. The Executive Director shall be the sole official responsible for verifying and ensuring that public carriers who render air transportation services meet the eligibility requirements set forth in this section.
The Executive Director shall be required and responsible for preparing a Certificate of Compliance every two years, once public carriers who render air transportation services validate, in the judgment of said official, that said public carriers have met the requirements set forth herein. The Executive Director shall verify the information submitted by the public carriers engaged in air transportation services every two years so that the Certificate of Compliance is issued no later than the fifteenth (15 th) day of the second (2 nd) month after the close of the taxable year of the applicant.
The Certificate of Compliance shall include, in turn, the following information regarding the public carrier engaged in air transportation services: the name of the business, the cadastre number of the property or properties connected to the business; the merchant registration number; the account connected to the business as required by the Puerto Rico Internal Revenue Code; the employer identification number; and the information required by §§ 1141 et seq. of Title 23, better known as the “Fiscal Information and Permit Control Act”, as applicable.
The Certificate of Compliance shall be issued by the Executive Director through the Interagency Validation Portal for the Granting of Incentives for the Economic Development of Puerto Rico to the agencies, public corporations, and municipalities responsible for awarding the benefits or incentives established in this section. However, during the period in which the Portal is still not operating, it shall be the duty of the Executive Director to issue the Certificate of Compliance to the agencies, public corporations, and municipalities responsible for awarding the benefits or incentives established herein following the ordinary process. The filing of a Certificate of Compliance by the public carrier engaged in air transportation services shall be an essential requirement for the agency, public corporation, or municipality to award the benefit or incentive provided for in this section.
Actions taken by the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM), or any other government official or body, or public corporation concerned, in connection with the qualification process for the granting of the benefits or incentives under this section, shall be limited to the taxation aspects of the granting of the benefit or incentive in question, upon the issuance of a valid Certificate of Compliance, as provided in this section. The Executive Director shall be responsible, first and foremost, for overseeing eligibility under any and all provisions of this section. However, the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM), or any other government official or body, or public corporation concerned with any of the benefits or incentives granted under this section may contact the applicant and the Director should further information be needed to validate the data on the Certificate of Compliance, and shall notify and request the applicant to supply such information in order to rectify the situation. The Secretary of the Department of the Treasury or the Executive Director of the Municipal Revenues Collection Center (CRIM) may deny any tax incentives or benefits requested if, in their judgment, the information requested has not been supplied. Moreover, the provisions of this section shall not preclude in any manner the power conferred to the Secretary of the Treasury under § 33202 of this title, known as the “Puerto Rico Internal Revenue Code of 2011”; and, if necessary, the power to revoke any incentives previously granted by virtue of a Certificate of Compliance, in accordance with the corresponding act; or the power to refer the case to the pertinent agency or public corporation for the corresponding action.
Those natural or juridical person who wish to avail themselves of the benefits of this amendment shall accompany the election described in the previous paragraph with a certification from the Executive Director of the Ports Authority stating that they are engaged as public carriers in the air transportation business in Puerto Rico.
History —May 9, 1945, No. 135, p. 456, §§ 1, 2; June 22, 1957, No. 93, p. 438; May 22, 1959, No. 16, p. 73, § 1; June 20, 1966, No. 77, p. 237, §§ 2, 3; June 21, 1968, No. 117, p. 270, § 1; May 7, 1980, No. 31, p. 86, §§ 1, 2; July 3, 1986, No. 66, p. 226, § 1; Sept. 2, 2004, No. 240, §§ 1—3; Nov. 17, 2015, No. 187, § 14; Dec. 28, 2016, No. 208, § 1.