2023 Laws of Puerto Rico › TITLE TWENTY-THREE - Public Planning and Development (§§ 1 — 11273) › PART IX - Economic Development II (§§ 11001 — 11273) › Chapter 257 - SMBs Job Generation and Retention Act (§§ 11111 — 11144) › Subchapter II - Job Creation and Retention Incentives (§§ 11121 — 11126) › § 11122 - Incentives available for eligible new SMBs that enter into an agreement

Eligible new SMBs that have entered into a job creation agreement may choose to avail themselves of the following incentives, provided they meet the requirements of said agreement and this chapter:
(a) Partial wage refund.— Eligible new SMBs may apply for a refund equal to fifty percent (50%) of the minimum federal wage of $7.25 per hour, up to a maximum of $3.625 per hour, paid for completing a regular work schedule (without including overtime) to individuals hired to hold the new jobs created by an eligible new SMB in compliance with the agreement entered into with the Company. Said refund shall apply for a maximum of fifteen (15) full-time employees or the equivalent thereof to wages paid during the twelve (12)-month period of the eligible employee recruitment with respect to eligible employees who have been recruited after a eligible new SMB has filed an application § 11135 of this title, and not later than six (6) months after the execution of the agreement; provided it is established, to the satisfaction of the Executive Director, that jobs for which benefits are granted constitute eligible incremental jobs for the eligible new SMB. The incentive shall be processed through the Job Promotion Bureau of the Department of Labor and Human Resources through the mechanisms provided under Act No. 52-1991, as amended.
(b) Preferential income tax rates.— The net income subject to normal tax of the eligible new SMB during the first year of operations pursuant to an agreement shall be subject to a fixed five percent (5%) income tax or the lowest applicable rate under the Code, at the option of the taxpayer. This tax rate shall apply retroactively to the first day of the taxable year in which the agreement is executed. The tax rate applicable to the second taxable year following the year in which the agreement is executed shall be ten percent (10%), and for the third taxable year, the tax rates shall be fifteen percent (15%) or the lowest applicable rate under the Code, at the option of the taxpayer. The alternative minimum tax or any other additional tax rate under the Code shall not apply during the effective term of this incentive.
(c) Temporary partial municipal license tax exemption.— Eligible new SMBs that enter into an agreement under this chapter and choose to avail themselves of this incentive shall enjoy a fifty percent (50%)-exemption from the payment of municipal licenses, excise taxes, and other municipal levies imposed by any municipal ordinance during the two (2) fiscal years following the execution of the agreement. Eligible new SMBs shall attach a copy of the agreement along with the declaration of volume of business for the years to which the exemption apply.
(d) Partial real and/or personal property tax exemption.— Partial exemption from real and/or personal property taxes during the two (2) fiscal years following the execution of the agreement by an eligible new SMBs that choose to avail themselves of this incentive, in accordance with the terms and conditions provided herein below. Eligible new SMBs shall attach a copy of the agreement along with the property tax return for the years to which the exemption apply.
(1) The personal property of an eligible new SMB that enters into an agreement under this chapter, used in the development, organization, construction, establishment, or operation of the business activity of the eligible new SMB shall enjoy a fifty percent (50%)-exemption from municipal and state taxes on personal property during the exemption period provided in this chapter.
(2) The real property of an eligible new SMB that enters into an agreement under this chapter, used in the development, organization, construction, establishment or operation of the business activity of the eligible new SMB shall enjoy a fifty-percent (50%) exemption from municipal and state taxes on real property during the exemption period provided in this chapter. Real property taxes shall be appraised, imposed, notified, and administered as provided in §§ 5001 et seq. of Title 21, known as the “Municipal Property Tax Act of 1991”.
(e) Discount on premiums of the state insurance fund corporation.— Eligible new SMBs that have entered into a job creation agreement under this chapter and choose to avail themselves of this incentive shall enjoy a fifty-percent (50%) exemption discount on premiums payable to the State Insurance Fund Corporation for two (2) years after the execution of the special[sic] agreement in relation to eligible incremental jobs agreed upon in the agreement.
(f) Christmas bonus staggered payment.— Eligible new SMBs that enter into an agreement under this Act shall not be subject to the minimum Christmas Bonus payment established in §§ 501 et seq. of Title 29. In lieu thereof, any eligible new SMB that has twenty-five (25) full-time employees or the equivalent thereof as such term is defined in this chapter, shall pay a minimum Christmas Bonus of two hundred dollars ($200) in the first year as of the execution of the agreement; four hundred dollars ($400), in the second year; and six hundred dollars ($600), in the third year. Any Eligible New SMB that is a microbusiness or small-sized business as such terms are defined in § 11111(d) of this title that has twenty-five (25) full-time employees or the equivalent thereof, as such term is defined in this chapter, shall pay a minimum Christmas Bonus of one hundred seventy-five dollars ($175) in the first year as of the execution of the agreement; two hundred and twenty-five dollars ($225), in the second year; and two hundred seventy-five dollars ($275), in the third year. Any other exemptions and terms provided under Act No. 148, supra, shall apply to Eligible New SMBs that avail themselves of this incentive, provided that they are not contrary to the minimum amounts fixed in this subsection. Such Eligible SMB may not apply to the Secretary of Labor and Human Resources for a Christmas Bonus payment exemption as provided in §§ 501 et seq. of Title 29, while availing themselves of the benefits of this chapter.
Eligible new SMBs shall have a maximum of six (6) months to create the jobs object of the agreement as of the execution date thereof and in relation to which they may apply for the incentives provided herein.
History —July 31, 2014, No. 120, § 2.2.