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 983 - Act to Promote the Export of Services (§§ 10831 — 10844) › § 10832 - Fixed income tax rate

(a) General rule.— Eligible businesses that hold a decree under this chapter shall be subject to a fixed income tax rate of four percent (4%) on income derived from the export of services during the term of such decree in lieu of any income tax provided in the Code or in any other law, as provided in this section, counting from the date of the beginning of operations, as provided under § 10836 of this title. However, the fixed income tax rate for a taxable year shall be reduced by one percent (1%) when, with the previous approval of the Secretary and the Secretary of the Treasury, the following conditions are met:
(1) More than ninety percent (90%) of all the gross income of the entity that carries out the eligible business and its affiliate entities, is derived from the rendering of services for export, and
(2) the export services rendered are considered strategic services.
The determination of whether certain services constitute strategic services shall be made on the basis of the characteristics, attributes, or special or striking qualities of the service in question that benefit the socioeconomic development of Puerto Rico. In order to determine whether certain services constitute services of strategic importance, the following factors shall be considered:
(A) The nature of the services.
(B) The existence or lack of an industry to render such services in Puerto Rico.
(C) The importance of the service in the international market.
(D) The employment of residents of Puerto Rico.
(E) The nature of the jobs to be created.
(F) The investment in technology.
(G) The development of high-level scientific, technological, and managerial skills.
(H) Any other factor that warrants recognizing the service in question as a service of strategic importance, considering that rendering such services in or from Puerto Rico shall result in the Island’s best economic and social interest.
(b) Payment of tax.—
(1) Except when otherwise provided, the tax imposed in this section shall be paid in the form and manner provided by the Code for income tax payments, including the requirement to pay the estimated tax under the Code.
(2) Special rules for promoters.—
(A) Except as provided in paragraph (B) of this clause, the income, expenses, deductions, and concessions of promoter services shall be reported by the eligible business in the taxable year in which said items are recognized under the Code.
(B) The Secretary of the Treasury may, with the advice of the Secretary, allow through regulations a method to recognize the items described in the preceding subparagraph when the conditions set forth in § 10831(d) of this title are met after the taxable year in which the income would be otherwise recognized under the Code.
(c) Limitation of benefits.—
(1) In case that on the filing date of the application for a decree, pursuant to the provisions of this chapter, an eligible business was engaged in the activity for which the benefits of this chapter are granted, or was engaged in such activity during the three (3) taxable years preceding the date on which the application was filed, called the “base period”, the eligible business may enjoy the fixed income tax rate provided in § 10832 if this title only with regards to the increase in the average gross income of the base period which shall be denominated “base period income” for the purposes of this clause.
(2) In order to determine base period income, the net income of any business that preceded the applicant business shall be taken into account. For this purpose, “any business that preceded” shall include any operation, activity, trade, or business carried out by another business and which was transferred or otherwise acquired by the applicant business, without taking into consideration if it was operating under another name or owner.
(3) The income attributable to base period income shall be subject to the income tax rates provided in the Code, except in the case of entities with tax exemption decrees under §§ 100641 et seq. and 10101 et seq., all of this title, in which case the fixed rate that appears in the decree shall apply, and the distribution of the utilities and benefits stemming from such income shall not qualify for the treatment provided in § 10834 of this title.
History —Jan. 17, 2012, No. 20, § 4.