2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 43 - International Insurers and Reinsurers (§§ 4301 — 4327) › § 4324 - Tax treatment

(1) Except as provided in subsection (16) of this section, the income derived by the international insurer or by an international insurer holding company that complies with § 4304 of this title shall not be included in the gross income of such entities and shall be exempt from the taxes imposed under §§ 30011 et seq. of Title 13. Income derived by the international insurer or by an international insurer holding company that complies with § 4304 of this title by reason of the liquidation and/or dissolution of its operations in Puerto Rico shall be treated as income derived from the operations allowed under this chapter, thus shall have the same treatment, and shall not be included in the gross income of such entities.
(2) The shareholders or partners of an international insurer or an international insurer holding company that complies with § 4304 of this title shall not be subject to the income tax imposed under the Internal Revenue Code for a New Puerto Rico, as amended, nor to municipal license taxes imposed by §§ 651–651y of Title 21, known as the “Municipal License Tax Act”, with respect to distributions in total or partial liquidation of an international insurer or an international insurer holding company that complies with § 4304 of this title.
(3) The income derived from dividends and profit sharing, in the case of a partnership, distributions in total or partial liquidation, or other income items similar thereto received from an international insurer or an international insurer holding company that complies with § 4304 of this title, shall be exempt from taxation pursuant to §§ 30011 et seq. of Title 13, and from the payment of municipal license taxes imposed by §§ 651-651y of Title 21, known as the “Municipal License Tax Act”. Amounts received by a nonresident individual or a foreign corporation or partnership not engaged in trade or business in Puerto Rico as benefits or interest of any kind under a life insurance or annuity contract issued by an international insurer, shall be exempt from income taxes in accordance with §§ 30011 et seq. of Title 13, and from the payment of municipal license taxes under the Municipal License Tax Act, §§ 651-651y of Title 21.
(4) Except as provided in subsection (16) of this section, the international insurer or international insurer holding company that complies with § 4304 of this title shall not be required to file corporate, partnership, or insurance company tax returns, as provided in §§ 30242, 30243 and 30252 of Title 13. An international insurer or an international insurer holding company that complies with § 4304 of this title and is organized as a corporation of individuals, pursuant to the Internal Revenue Code for a New Puerto Rico, as amended, shall not be required to file the returns and reports required under § 30247 of Title 13. However, an international insurer holding company that complies with § 4304 of this title shall submit to the Commissioner and to the Secretary of the Treasury of Puerto Rico the Certification required under § 4304(6) of this title.
(5) The provisions of § 30278 of Title 13 that impose the requirement to deduct and withhold at the source the income tax on payments made to nonresident individuals shall not apply to an amount received on account of benefits or interests of any kind under a life insurance or annuity contract or the interest (including original issue discount, letters of credit, and other financial guarantees), dividends, partnership interest, distributions in total or partial liquidations, or other similar income items received from an international insurer or an international insurer holding company, as applicable, that complies with § 4304 of this title, provided that these individuals are not engaged in trade or business in Puerto Rico.
(6) The provisions of § 30278 of Title 13 that impose the requirement to deduct and withhold at the source the income tax on payments made for an interest attributable to alien nonresident shareholders on the income of a corporation of individuals shall not apply with respect to the attributable interest of the nonresident shareholders not engaged in trade or business in Puerto Rico, of an international insurer or an international insurer holding company that complies with § 4304 of this title.
(7) The provisions of § 30281 of Title 13 that impose the requirement to deduct and withhold at the source income tax on payments made to foreign corporations not engaged in trade or business in Puerto Rico shall not apply to the amount of any benefit or interest of any kind received under a life insurance or annuity contract or the interest (including the original issue discount, letters of credit, and other financial guarantees), dividends, partnership interest, distributions in total or partial liquidations, or other similar income items, received from an international insurer or an international insurer holding company that complies with § 4304 of this title.
(8) Income derived by an alien nonresident individual, not engaged in trade or business in Puerto Rico, on account of benefits or interest of any kind received under a life insurance or annuity contract or interest (including the original issue discount, letters of credit, and other financial guarantees), dividends, partnership interests, or other similar income items, received from an international insurer or an international insurer holding company that complies with § 4304 of this title, shall not be subject to the payment of the taxes imposed under § 30431 of Title 13.
(9) Income derived by a foreign corporation not engaged in trade or business in Puerto Rico, on account of benefits or interest of any kind received under a life insurance or annuity contract or interest (including the original issue discount, letters of credit, and other financial guarantees), dividends, partnership interest, or other similar income, received from an international insurer or an international insurer holding company that complies with § 4304 of this title, shall not be subject to the taxes imposed under § 30441 of Title 13.
(10) The income derived by an International Insurer, as defined in § 4302(4) of this title, shall not be subject to the taxes imposed under § 30442 of Title 13.
(11) None of the provisions of this section shall be construed as to limit the powers of the Secretary of the Treasury to apply the provisions of § 30179 of Title 13, to an international insurer or an international insurer holding company that complies with § 4304 of this title, or to any other person.
(12) International insurers or international insurer holding companies that comply with § 4304 of this title shall be exempted from the payment of municipal license taxes levied by §§ 651–651y of Title 21, known as the “Municipal License Tax Act”, as amended, as well as any other type of tax, assessment, fee, license, excise tax, levy and tariff, as provided in the “Autonomous Municipalities Act”, §§ 4001 et seq. of Title 21.
(13) The personal and real property that belongs to an international insurer or an international insurer holding company that complies with § 4304 of this title shall be exempted from the payment of personal and real property taxes imposed by §§ 5001 et seq. of Title 21, better known as the “Municipal Property Tax Act of 1991”, as amended.
(14) The provisions of §§ 30501-30511 of Title 13 shall not apply to international insurers.
(15) The Commissioner, along with the Secretary of Economic Development and Commerce and the Secretary of the Treasury, shall promulgate rules and regulations as necessary for the implementation of this section.
(16) Notwithstanding any provisions to the contrary in §§ 30041 et seq. of Title 13, or Subtitle A of the Internal Revenue Code of 1994, as amended, and in this Code, during each of the taxable years beginning after December 31st, 2008, and before January 1st, 2012, every international insurer and every international insurer holding company shall be subject to a special five percent (5%) tax on the amount of its net income for the taxable year, computed in accordance with the provisions of §§ 30041 et seq. of Title 13 or Subtitle A of the Internal Revenue Code of 1994, as amended, whichever applies, as amended[sic], regardless of the provisions of this Code. In addition, for each taxable year beginning after December 31st, 2011, every international insurer shall be subject to a four percent (4%) tax on the amount of its net income in excess of one million two hundred thousand dollars ($1,200,000) computed without taking into account the exemption provided in the first paragraph of this section and without including for these purposes the income from segregated asset plans that the international insurer may have established. Likewise, for each taxable year beginning after December 31st, 2011, every segregated asset plan of an international insurer other than a Class 5 Authority shall be subject to a four percent (4%) tax on the amount of its net income in excess of one million two hundred thousand dollars ($1,200,000), which shall be paid exclusively with the funds of such segregated asset plan; provided that such net income shall be computed as if the segregated asset plan were an international insurer. The Secretary of the Treasury shall prescribe by regulations, circular letter or other administrative determination or general communication, the forms or returns to be filed with respect to the aforementioned taxes; Provided, That in the case of international insurers with segregated asset plans subject to taxation, the international insurer shall report and pay the tax owed by each one of said segregated asset plans.
(17) For purposes of §§ 31001 et seq. of Title 13, the value of any amount payable by an international insurer under a life insurance or annuity contract to a Puerto Rico nonresident, shall be exempt from the taxes on estates and gifts imposed under said sections. Any stock or partnership interest certificate of a partner of an international insurer or an international insurer holding company that complies with § 4304 of this title which are owned by a Puerto Rico nonresident, and any bonds, notes, or other debt obligations of an international insurer or an international insurer holding company that complies with § 4304 of this title that are owned by a Puerto Rico nonresident, shall be exempt from the estate and gift taxes imposed under these sections.
(18) Upon issuing a certificate of authority to an international insurer, in accordance with this chapter, the Commissioner, along with the Secretary of Economic Development and Commerce, shall also issue a tax exemption decree which shall state in detail all that pertains to the tax treatment provided by the different paragraphs of this section. As a requirement to grant the decree and as provided in the regulations adopted pursuant to subsection (15) of this section, the Commissioner and the Secretary of Economic Development and Commerce may impose on the international insurer additional conditions regarding employment or economic activity. The tax exemption decree so detailed including the income tax rates provided in subsection (16) of this section, shall be considered as a contract between the international insurer, its stockholders, partners, or owners and the Government of Puerto Rico, during the effectiveness of the decree, and such contract shall be deemed to be the law between the parties. The decree shall be effective for fifteen (15) years beginning on January 1st, 2012, or on the date of issue, if later, unless such certificate of authority of the international insurer is revoked, suspended, or not renewed before the expiration thereof, in which case, the decree shall become ineffective as of the time of such revocation or non renewal, or during the suspension period, as the case may be. The decree shall not be transferrable; however, it shall not be rendered ineffective as a result of a change of control over the shares of the international insurer or due to the merger or consolidation thereof or because the international insurer converts to a stock or mutual insurer, as the case may be, as long as such change of control, merger or consolidation, or conversion is approved the Commissioner in accordance with this chapter. Any international insurer whose certificate of authority has been issued before the effective date of this act, shall be issued a decree under the same terms provided in this subsection with an effective term beginning on January 1st, 2012, and shall not be required to meet any other condition. No decree shall be issued after December 31st, 2019.
(19) Subject to the conditions or requirements prescribed by regulations pursuant to subsection (15) of this section, any international insurer holding a decree issued pursuant to subsection (18) of this section, may file an application for the renewal thereof for an additional term of fifteen (15) years with the Commissioner and the Secretary of Economic Development and Commerce. Such application shall be filed with the Commissioner not more than twenty-four (24) months or less than six (6) months before the expiration of the decree, and include the information required by Commissioner and the Secretary of Economic Development and Commerce to such purpose. Likewise, before the expiration of the renewal period, the international insurer may apply for another renewal for an additional term of fifteen (15) years.
History —Ins. Code, added as § 61.240 on Sept. 22, 2004, No. 399, § 1; Mar. 9, 2009, No. 7, § 29A; July 10, 2009, No. 37, § 20; June 20, 2011, No. 98, § 2.