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) › § 10104a - Industrial investment credit

(a) General rule. — Subject to the provisions of subsection (b) of this section, every investor may claim a credit for industrial investment, equal to fifty percent (50%) of his eligible investment made after this law’s approval, to be taken in two (2) installments: the first half of said credit on the year when the eligible investment is made and the balance of said credit in the following years. Any eligible investment made before the date for filing of the tax return, according to the provisions of Sections 1001 et seq. of the Puerto Rico Internal Revenue Code, including any extension granted by the Secretary of the Department of the Treasury for the filing of the same, shall qualify for this section’s tax credit for which the aforementioned tax return is being filed, provided that it complies with all the requirements of this section. Said industrial investment credit may be applied against any of the investor’s tax provided in Sections 1001 et seq. of the Puerto Rico Internal Revenue Code, including the minimum alternative tax of Section 1017, and the individual’s alternative tax of Section 1011(b) of the Puerto Rico Internal Revenue Code.
(b) Maximum credit amount. — The maximum credit amount for industrial investment shall not exceed five million (5,000,000) dollars per exempt business.
The Secretary of the Treasury shall authorize the investment credits claimed by investors up to a limit of fifteen million (15,000,000) dollars per fiscal year. However, to accommodate the Commonwealth of Puerto Rico’s best interests, the Executive Director may request that the Secretary of the Department of the Treasury authorize a higher amount of credits during a fiscal year or in excess of the established limit for a specific business.
(c) Credit carryover. — Any industrial investment credit not used during a taxable year may be carried over to subsequent taxable years until used in its entirety.
(d) Before claiming the credit for industrial investment, investors must request an administrative ruling by the Secretary of the Department of the Treasury, so that the latter determines if the investment made, or intended to be made, qualifies for a tax credit. The Secretary of the Department of the Treasury may request, as a condition for his endorsement or approval, that the investor post a bond or another type of warranty, in favor of the Secretary of the Department of the Treasury, to respond in case the credits are revoked.
(e) Base adjustment and recovery of the credit for industrial investment. —
(1) The base of any eligible investment shall be reduced by the amount taken as industrial investment credit, but may never be reduced to less than zero.
(2) After the date of the ruling described in subsection (d) of this section, the Executive Director shall determine the total investment made in the exempt business. In case that the credit for industrial investment taken by the investors exceeds the credit for industrial investment computed by the Executive Director, based on the total investment made in the exempt business, said excess shall be owed as revenue tax to be paid by the investors in two (2) installments beginning with the first tax year when the Secretary of the Department of the Treasury notifies the owed amount concerning the credit taken in excess. The Executive Director shall notify the Secretary of the Department of the Treasury about the excess of credit taken by the investors.
(3) If any exempted business which gives rise to the industrial investment credit ceases its operations as such before a ten- (10) year term, which shall begin as of the date of the eligible investment, the investor shall owe, in terms of income taxes, an amount equal to the industrial investment credit claimed by said investor, multiplied by a fraction whose denominator shall be ten (10) and whose numerator shall be the balance of the ten- (10) year term as required by this subsection. The amount owed on account of income taxes shall be paid in two (2) installments, beginning the first taxable year following the date in which the industrial activity ceases.
(f) Assignment of credit for industrial investment. —
(1) After the date of the ruling described in subsection (d) of this section, the credit for industrial investment determined in this section may be assigned, sold or conveyed in any way, totally or partially, by an investor to any other person.
(2) The base of the eligible investment shall be reduced by the worth of the industrial investment credit thus assigned, sold, or otherwise transferred.
(3) Any investor who has assigned its industrial investment credit in whole or in part, and the assignee to the industrial investment credit, shall notify the Secretary of such assignment through a statement to such an effect enclosed in their income tax returns for the year in which the assignment of the industrial investment credit is made. Said statement shall contain the information deemed pertinent by the Secretary as established by regulations promulgated to such an effect.
(4) The money or the value of the property received in exchange for the industrial investment credit shall be exempt from taxation under Sections 8006 et seq. of this title and from any municipal and excise taxes up to an amount equal to the total amount of the industrial investment credit assigned.
(5) Buyers of industrial investment credit shall be exempt from taxation under Sections 1001 et seq. of the Puerto Rico Internal Revenue Code concerning the difference between the amount paid to acquire said credit and the worth of said credit.
History —Dec. 2, 1997, No. 135, added as § 5A on Aug. 17, 2001, No. 109, § 2; Oct. 28, 2002, No. 251, § 1.