2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART III - Other Tax Incentives (§§ 10401 — 10855) › Chapter 955 - Act to Provide Tax Incentives for Investments in Solid Waste Reduction, Disposal, and/or Treatment Facilities (§§ 10711 — 10714) › § 10712 - Tax credit for investment in exempt facilities

(a) Subject to the provisions of subsections (b), (c), and (e) of this section, any investor shall be entitled to a credit for investment in exempt facilities equal to fifty percent (50%) of the eligible investment to be applied in two (2) installments: half of said credit shall be used during the year in which the exempt facility obtained the necessary financing for its total construction, and the balance thereof shall be used in the subsequent year or years, as established by the Secretary in the administrative determination approving the granting of the credit. If an escrow account is opened and then closed because the financing needed for the total construction of the exempt facility was not obtained, the participants shall not be entitled to the credit.
(b) The credit shall be requested to the Authority, which, upon compliance with the procedure to be established by regulations, as provided in § 10713 of this title, shall forward the request to the Department for its final approval before such credit can be claimed or assigned by the investor pursuant to the determination issued by the Department.
(c) Maximum amount of credit.—
(1) The maximum amount of the credit for investment in exempt facilities to be available to investors for each project shall be equal to fifty percent (50%) of the cash contributed by investors to the exempt facilities in exchange for shares or interest in said exempt facilities or five million dollars ($5,000,000), whichever is less.
(2) The maximum amount of credit available shall be distributed among investors in the proportion determined by them. The exempt facility shall notify the distribution of the credit to the Director, the Secretary, and to its stockholders on or before the date provided in the Code to file the income tax return for the year in which the contribution was made, including any extension granted by the Secretary for the filing thereof. The eligible distribution shall be irrevocable and mandatory for the exempt facility and for the investors. In said notice, the investor shall designate a certified public accountant (CPA) authorized to practice in Puerto Rico to certify the costs of the project. The designation of a CPA shall be subject to the approval of the Secretary. None of the CPAs acting as the in-house comptrollers of the developer, investor, or exempt business, or as the bookkeepers thereof shall certify the costs of the project.
(3) The credits approved by the Department shall not exceed five million dollars ($5,000,000) per project, nor fifteen million dollars ($15,000,000) in the aggregate per fiscal year.
(d) Credit carry over.— Any unused credit for investment in exempt facilities in a taxable year may be carried over to subsequent taxable years until depleted.
(e) Adjustment of the basis and credit recovery.—
(1) The basis of any eligible investment shall be reduced by the amount taken as credit for investment in exempt facilities, but shall never be reduced to less than zero.
(2) During each one of the first three (3) years as of the date of the notice regarding the credit distribution as described in subsection (c) of this section, the exempt facility shall submit to the Director and the Secretary an annual report prepared by the CPA and approved by the Secretary itemizing the total of the investment made in the project as of the date of said annual report. The first report shall include a report on previously agreed-upon procedures to certify the cash contributions made to the exempt business and the costs of construction, improvements to the physical facilities, or acquisition of machinery and equipment eligible for such credit. The Director and the Secretary shall reserve the right to determine, after the receipt thereof, whether the investment report and the report on previously agreed-upon procedures are satisfactory. If the same fails to be satisfactory, the exempt business shall be responsible for furnishing the additional information requested.
(3) Once the term of three (3) years from the date of the notice described in subsection (c) of this section has elapsed, the Director shall determine the total investment made by the exempt facility. Should the credit for investment in the exempt facility claimed or assigned by the investors exceed the credit computed by the Director based on the total investment made by the exempt facility in the project, said excess shall be owed as income tax to be paid by the investors in two installments beginning on the first taxable year following the expiration date of the aforementioned three (3)-year term. The Director shall notify the Secretary of the excess credit taken by the investors.
(4) The three (3)-year term provided in clause (3) above may be postponed by the Director through an order issued by him/her, but never for an additional period exceeding two (2) years.
(5) The provisions on the recovery of the credit for investment in reduction, disposal, and/or treatment facilities provided in clause (3) above shall not apply to participants and investors who are not developers.
(f) Assignment of the credit.—
(1) After the date of the notice concerning the distribution of the credit for investment in exempt facilities provided in subsection (c)(2) of this section, the credit provided by this section may be assigned, sold, or otherwise transferred, whether in whole or in part, by an investor to any other person.
(2) The basis of the eligible investment shall be reduced by the value of the assigned credit for investment in exempt facilities.
(3) The investor or participant who has assigned all or part of his/her credit for investment in exempt facilities and the acquirer thereof, shall notify the Secretary of such assignment through a statement to such effect that shall be attached to his/her income tax return for the year in which the assignment of the credit is made. The statement shall contain such information as the Secretary may deem pertinent through regulations promulgated to such effects.
(4) The money or the value of the property received in exchange for the credit for investment in exempt facilities shall be exempt from taxation under the Code for up to an amount equal to the amount of the credit assigned.
(g) Tax on profits in the case of sale.— Any profit in the case of a sale, exchange, or other disposition of an eligible investment shall be deemed to be capital gains and the net long-term capital gains over the net short-term capital losses shall be subject to taxation as provided by the Code.
(h) Term to request credit.-The Authority shall not accept requests for nor grant credits under this section for taxable years beginning after December 31 st, 2015.
History —July 27, 2011, No. 159, § 4; Nov. 17, 2015, No. 187, § 95.