2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART IV - Excise Taxes (§§ 31601 — 31771) › Chapter 1033 - Exemptions to Taxes on Goods (§§ 31651 — 31671) › § 31665 - Nonprofit charitable institutions

(a) The organizations recognized by the Secretary as exempt from the payment of income tax pursuant to § 30471(a)(1), (2)(A), (2)(B) (in the case of a civic league) and (5)(A) (in the case of nursing homes) of this title, and that upon an investigation to such effects demonstrate that they are engaged in Puerto Rico in social service work such as hospitals, dispensaries or nursing homes that, among other things, provide free transportation services to the elderly and persons with disabilities, or that are engaged in the teaching of educational material that appears in the general curriculum of the public education system of Puerto Rico, including vocational training, shall be exempt from the payment of the excise taxes fixed in this part on:
(1) The first five thousand dollars ($5,000) of the excise tax on any automobile that is not a luxury car; Provided, That this exemption shall apply to two (2) automobiles per calendar year, except in the case of vehicles known as “vans” or “mini vans”, which shall not be subject to this limitation.
(2) the amount of the excise taxes on trucks and buses especially designed and equipped for the transportation of persons with disabilities or the elderly, and
(3) buses that, in accordance with the rules adopted by the Secretary, are necessary for the operation of the institution.
(b) The organizations described in subsection (a) that render free emergency services to the people of Puerto Rico shall be entitled to a total exemption on any vehicle that is donated to them under the condition that they use it to render said emergency services.
(c) Any institution that wishes to avail itself of the exemption of the payment of excise taxes on vehicles established in this section shall meet the following requirements:
(1) The organization must be recognized by the Secretary as an organization exempt from the payment of income tax pursuant to § 30471(a)(1), (2)(A), (2)(B)(in the case of a civic league) and (5)(A)(in the case of nursing homes) of this title, engaged in the rendering of social services or free emergency services.
(2) The exempt vehicle must remain in the possession of the nonprofit charitable institution for a term of four (4) years; and
(3) In the case of institutions that render emergency services, it shall be necessary for the donor to obtain express authorization from the Secretary acknowledging the exemption prior to donating the vehicle.
(d) If at any time after its acquisition, the nonprofit charitable institution sells, transfers, or otherwise alienates the vehicle exempt from the partial payment of excise tax, the new acquirer shall be bound to pay the excise tax that results from the application of the table contained in § 31628 of this title, taking as basis the taxable price over which the partial exemption was granted minus depreciation, prior to taking possession thereof. It shall be the duty of the exempt nonprofit charitable institution to demand evidence of the payment of the excise tax from the new acquirer prior to delivering the vehicle to him/her. Likewise, a notice and payment of excise taxes shall be required in every case in which any other exempt goods is sold, transferred, or alienated.
(e) The exemptions granted in this section shall not apply to fuel.
(f) Every nonprofit charitable institution that wishes to acquire any goods or vehicle for the exclusive use of the institution, free from the payment of the excise taxes fixed in this part, must request it in advance from the Secretary. The equipment it wishes to acquire shall be described in the petition as well as the necessity and convenience of its acquisition.
(g) For purposes of this section and of other applicable provisions of this part, “social services” shall mean any systematic and effective program to improve living conditions in the rural zones or slum areas in Puerto Rico, also including the hospitalization of insolvent or needy persons, the maintenance of outpatient clinics, the teaching of educational material comprised in the public education system of Puerto Rico, vocational training, reeducation or reorientation of persons with deficiencies in their physical or mental development, and the maintenance of prevention centers, sanitariums, reformatories, and orphanages.
(h) In the case of religious institutions engaged in different activities, the exemption shall apply to those programs or units of the institution that are exclusively engaged in social service work. With regard to teaching, the fact that religious doctrine is taught shall not be an impediment for the granting of this exemption if, in the judgment of the Secretary, the teaching of the courses in the general curriculum of the public education system of Puerto Rico and vocational training prevails.
(i) “Nonprofit charitable institution” shall mean that partnership, association, organization, or entity that renders social services free of charge, at cost price or at less than cost price, or if at more than cost price, the amount of the profits is invested in extending the physical structure or the social services, including the American Red Cross and the United Way of Puerto Rico. The Secretary may, at any time, prospectively revoke his/her recognition to these institutions as an exempt person, when he/she determines that the institution does not qualify as a “nonprofit charitable institution”, based on the following considerations, among others:
(1) That it pays its directors, officers, officials, or employees salaries, per diems, perquisites, or other emoluments higher than those prevailing for similar institutions of the Government of Puerto Rico.
(2) That it incurs in extravagant expenses, or its expenditures are not clearly related to the objectives of social services as established in this section; and
(3) That it refuses, as required by the Secretary, to file any reports on its operations and the services rendered, or its accounting books.
History —Jan. 31, 2011, No. 1, § 3030.15, retroactive to Jan. 1, 2011; Sept. 30, 2015, No. 159, § 15.