2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART I - Industrial Incentives (§§ 10001 — 10052) › Chapter 904 - Puerto Rico Tax Incentives Act of 1987 (§§ 10038 — 10052) › § 10047 - Administration; tax exemption grants

(a) Office of Industrial Tax Exemption. — The Office of Industrial Tax Exemption, attached to the Department of State, is hereby created. This Office shall be directed and administered by a Director who shall be appointed by the Secretary of State with the consent of the Governor. The Director shall exercise the powers, carry out the duties and fulfill the obligations imposed on him/her by this chapter and shall appoint the personnel needed to carry out its provisions. The Department of State shall provide the necessary administrative support to carry out its functions.
(b) Sworn statements required by the Office. — The Office of Industrial Tax Exemption shall require every applicant for tax exemption to submit such sworn statements as shall be necessary concerning the required or appropriate facts to determine if the applicant’s operations or proposed operations qualify under the provisions of this chapter.
(c) Hearings. — The Director may hold such public and/or administrative hearings that he/she may deem necessary and shall require that applicants for tax exemption present such evidence that justifies the exemption requested.
The Director, or any Special Examiner of the Office so designated by the Secretary of State, may receive the evidence presented regarding any application for tax exemption and shall have the power to summon witnesses and take their statements concerning the alleged facts or those facts which are otherwise related to the tax exemption requested and may administer oaths to any persons testifying before him/her and submit a report to the Secretary of State regarding the evidence presented, together with his/her recommendations on the case.
(d) Penalties. — Any person who shall make, or attempts to make, on his own behalf or on behalf of any other person, any false or fraudulent statement regarding any tax exemption application or grant or any violation of the provisions regarding predecessor or successor exempted businesses shall be deemed guilty of a felony and, upon conviction, shall be punished by a fine of not more than ten thousand dollars ($10,000.00) or imprisonment for a term of not more than five (5) years or both penalties, including costs, at the discretion of the court.
(e) Tax exemption applications; fees to be collected; review of tax rates. — Any person who has established or intends to establish an eligible business in Puerto Rico shall apply to the Secretary of State for the benefits provided by this chapter by filing the corresponding duly-sworn application with the Office of Industrial Tax Exemption.
Upon filing said application, the Director shall collect the following fees for the applications filed and said fees shall be paid by certified check, postal money order or bank draft payable to the Secretary of the Treasury:
(1) For filing original cases, five hundred (500) dollars.
(2) For filing renegotiated cases, consolidations, requests for special dispensations and for additional exemptions and transfers of shares and control of businesses, three thousand (3,000) dollars.
(3) For filing requests for amendments and extensions of a different nature, three hundred (300) dollars.
(4) For filing or issuing any certificate, sworn statement or any document for which different fees are not expressly fixed, twenty-five (25) dollars.
(5) For filing a written appeal opposing a tax exemption application, twenty-five (25) dollars.
The fees established in this subsection and in other subsections of this subtitle shall be subject to review every three (3) years from the date of approval of the latter. To do this, the increase in the cost of living shall be taken into consideration. The Office of Industrial Tax Exemption shall be responsible for submitting recommendations for amendments to the chapter.
(f) Nature of the concessions. — The tax exemption concessions under this chapter shall be deemed in the nature of a contract between the recipient and the Commonwealth of Puerto Rico, and shall include such terms and conditions as are consistent with the purpose of this chapter and that promote the creation of jobs through the social and economic development of the Commonwealth of Puerto Rico, taking into consideration the nature of the application or action requested as well as the facts and circumstances related to each particular case that may be applicable.
(g) Obligation to comply with representation in application. — Every exempted business shall carry out its exempted operations substantially as stated in the application, except when they have been altered through amendments authorized by the Secretary of State by petition of the grantee in accordance with the provisions of this chapter.
(h) Commencement of operations. — The exempted business shall commence operations on a commercial scale within the year following the date the tax exemption concession is signed, which term may be extended at the request of said business for just cause, but no extensions shall be granted that extend the date of commencement of operations for a period greater than five (5) years from the date the tax exemption concession is signed.
(i) Regulations under this chapter. — The Director shall draft, in consultation with the Secretary of State and the Administrator, such regulations as may be needed to implement the provisions and purposes of this chapter. Said regulations shall also be subject to the provisions of §§ 2101 et seq. of Title 3, known as the “Uniform Administrative Procedures Act of the Commonwealth of Puerto Rico”.
(j) Interagency consideration of applications. — Once the Industrial Tax Exemption Office receives any application hereunder, its Director shall send a copy thereof, within a term of five (5) days from the date the application was filed to the Administrator so that he/she may render an eligibility report on the manufactured product or the designated service, as the case may be, and other facts related to the application. The Administrator shall send his/her recommendation to the Director within sixty (60) days following the date the Director remitted the copy of said application. If the Administrator fails to submit his/her recommendation to the Director within the sixty (60) day period, from the date the Director remitted the copy of the application, it shall be deemed that the application has received a favorable recommendation from the Administrator. Each unfavorable recommendation shall be accompanied by the reasons for such recommendation.
(1) The Director shall send a copy of the application to the Secretary of the Treasury and to those agencies that, in the judgment of the Secretary of State, should have a copy thereof due to the nature of the industry.
(2) Once the eligibility report is received from the Administrator, or the sixty (60) day period has elapsed without receiving the Administrator’s recommendation or if a petition opposing thereto has not been filed, the Director shall prepare a draft decree which shall be circulated among the concerned agencies and municipalities, including the Secretary of the Treasury, within a period of twenty (20) days after having received the entire documentation needed for the handling of the case for them to submit a report with their recommendations. Every unfavorable recommendation shall be accompanied by the grounds for such recommendation. In the event that any of the agencies or municipalities does not submit the corresponding report or opinion within a term of sixty (60) days of having been notified of said draft decree, it shall be deemed that said draft decree has received a favorable recommendation by the agencies or municipalities thus notified and the Secretary of State shall take the corresponding action with regard to the exemption application.
The Director shall also send an informational copy of the draft decree to the Secretaries of Justice and of Labor and Human Resources.
(3) Once the reports are received, in no case later than one hundred and forty-five (145) days after the proper filing of the application, the Director shall submit the draft decree and his/her recommendation to the Secretary of State for his/her consideration, within the following fifteen (15) days.
(4) The Director may rely on the recommendations furnished by those agencies or municipalities that submit reports or opinions and may request them to supplement the same.
(5) The Secretary of State shall issue a final written determination within a term no greater than twenty (20) days from the date the draft decree was submitted for his/her consideration.
(6) The Secretary of State may delegate the duties on the Director that in his/her judgment he/she deems convenient in order to expedite the administration of this chapter, except the function of approving or denying original tax exemption decrees, with the exception of the decrees that are granted under subsections (b)(1)—(2) and (d)(5) of § 10039 of this title.
(k) Periodic reports to the Governor and the Legislature. — The Director shall render a semiannual report to the Governor and the Legislature on the activities and achievements of the Tax Incentives Program which shall include the exemption applications filed and approved, the businesses established, the compliance by the exempted businesses with the obligations contracted, the jobs promised and created and the effect of the tax exemption decrees on the reduction of unemployment, as well as anything else that is needed to inform the Governor and the Legislature as to the scope and the effects of implementing this subtitle. These reports shall include an analysis and evaluation of the factors related to the industrial development of Puerto Rico, such as government processing of permits, licenses, authorizations, concessions and any other similar documents. The availability of land for industrial purposes and of skilled workers and infrastructure and how such factors influence or affect the industrial development of the incentives program from the point of view pertinent to every official involved, and for these purposes the reports shall include an analysis of the relative competitiveness of Puerto Rico, taking into consideration all those factors that manufacturers evaluate in order to establish operations in country.
Likewise, the Secretary of the Treasury shall render a report to [the] Legislature every six (6) months on the tax behavior of the exempted businesses with a respective comparison of the year and a projection of such behavior for the next three (3) years following the year to which the report corresponds.
History —Jan. 24, 1987, No. 8, p. 949, § 9; Apr. 2, 1990, No. 4, p. 42; Aug. 21, 1990, No. 45, p. 188, § 1; Oct. 27, 1995, No. 218, § 9; Sept. 12, 1996, No. 212, § 5.