P.R. Laws tit. 13, § 10101
For the purposes of this part, the following terms, phrases and words shall have the meaning expressed below:
(a) Industrial development income.—
(1) The net income of an exempted business derived from an operation declared as exempted under this part, computed according to Subtitle A of Act No. 120 of October 31, 1994, known as the “Puerto Rico Internal Revenue Code of 1994”, adjusted by the special deductions provided in this part.
(2) Income from eligible investment activities described in subsection (j) of this section.
(3) Net income derived from the sale of patents, royalties or any other right to receive income related to intangible activities or properties resulting from operations declared to be exempt by this part.
(4) Income received by the exempted business as a result of foreign currency exchange rates at a given moment that can be attributed to the sale of its exempt products in foreign countries.
(5) Income from the distribution of dividends or profits by a corporation or partnership that is part of an exempt business and that may be attributed to industrial development income derived by said exempted business.
(6) Income obtained from insurance policies for interruptions in business operations, provided there is no reduction in the level of jobs in the exempted business as a result of the action that gave rise to the collection of said income.
(b) Property intended for industrial development.—
(1) Real property, including land and improvements, or parts thereof; as well as any addition equivalent to not less than twenty-five percent (25%) of the area of the main plant engaged in the operation of an industry or an agro-industrial business, as defined by regulations under this part, which is intended for and used or owned by an exempted business in its development, organization, construction, establishment or operation.
(2) An ensemble of machinery and equipment necessary and convenient for an exempted business to perform the activity for which the tax exemption is granted, which is owned, installed, or otherwise used under contract by said exempted business.
None of the provisions under this subsection shall apply to leases denominated as financing leases.
(c) Exempted business.— A business that is or will be established in Puerto Rico by a natural or juridical person, or a combination thereof; whether or not it is organized under a common name, to which a tax exemption decree has been granted under the provisions of this part or under similar preceding laws, but excluding hotels, inns or other special facilities which are exempted businesses under preceding laws.
(d) Eligible business.—
(1) Any industrial unit whose objective is the production of a manufactured product at a commercial scale that has not been in production before January 1, 1947, in Puerto Rico, or if in production, it has not been produced on a commercial scale for the three (3) calendar years prior to the date of the application for a tax exemption decree for said manufactured product.
(2) Any bona fide industrial unit established permanently to produce a designated article under this part, subject to the production of a substantial quantity thereof in a continuous manner within a reasonable period of time, as recommended by the Administrator.
(3) Any industrial unit that would normally be deemed an eligible business under the preceding clauses, but that due to foreign competition caused by lower production costs and other factors, is not financially able to perform the complete manufacturing operation in Puerto Rico, since it requires some processing or finishing of the product outside of Puerto Rico. For the purposes of this clause, the Secretary of State, as recommended by the Administrator and the Secretary of the Treasury, may determine that said industrial unit is an eligible business in view of the nature of the facilities, the investment made, the number of jobs to be created in Puerto Rico, the total payroll and any other special factors that justify the same.
(4) Any service unit whose objective is to render on a commercial scale in Puerto Rico any type of designated service for markets abroad, including United States markets, provided that within a reasonable period of time it renders in a continuous manner a substantial amount of such services, as recommended by the Administrator. Also qualifying as eligible activities under this part are the operations corresponding to airport and seaport facilities whose management or ownership is privatized or that are privately managed, and in which the prices of the products sold at retail are comparable to the price levels for said products in the general community, provided they meet the investment, job creation, or economic or labor stability parameters provided in § 10107(a)(1) of this title.
In the case of service units that have been operating in Puerto Rico prior to filing their application, the fixed tax rate on industrial development income provided in § 10102 of this title shall only apply to that income obtained as a result of the increase over the annual average for rendering said services during the three (3) taxable years prior to the date the application is filed. The income equal to the average base period income shall be subject to the income tax rates provided under Act No. 120 of October 31, 1994, known as the “Puerto Rico Internal Revenue Code of 1994”.
In order to determine the above conditions, the rendering of services by any predecessor business shall be taken into account. For these purposes, “predecessor business” shall include any business related to the applicant business even if it had not been exempted before, and regardless of whether it had been operating under another corporate name or other owners.
(5) Property intended for industrial development.
(6) The breeding of animals for experimental use in scientific, medical and other research laboratories.
(7) Scientific or industrial research and development laboratories to develop new products and industrial processes or for their improvement.
(8) Filming and production of short and feature films, as well as the broadcast[ing] of television programs of which ninety percent (90%) or more is produced using talent established in Puerto Rico, provided that the Secretary of State determines, with the recommendation of the Administrator and the agencies that issue reports on tax exemption decrees, that the activities that such filming and production entail, as well as the referred television broadcasts, shall benefit the economy in general. The Secretary of State, with the recommendation of the Secretary of the Treasury and the Administrator, shall establish the terms and conditions in the decree, such as the limits on the term and percentage of the exemption, the taxes to be covered by the decree, the establishment of a fixed tax rate on the industrial development income higher than that provided in § 10102(a) of this title, and the establishment of the job requirements that are necessary and convenient pursuant to the purposes of this part.
(9) Any industrial unit established after the approval of this act whose main objective is the production of energy on a commercial scale for consumption in Puerto Rico, using local renewable sources of energy such as vegetation and other forms of biomass, solid waste (as this term is defined § 1320(a) of Title 12), and direct solar and wind energy, subject to the condition that the Energy Affairs Administration of the Department of Natural and Environmental Resources approve said unit beforehand. The prior approval of the Authority is also required in the case of units that sell energy to the Electric Power Authority, or that substitute substantial amounts of energy purchased from the latter.
(10) Partial recycling activities that include the collection, classification, shredding, compacting, and storing of recyclable materials as defined in § 1320(o) of Title 12, that do not involve the transformation of said materials or the manufacture of new products, taking into account the stages or degrees of complexity of the process to be performed. Provided, That the Secretary [of] State may grant up to a maximum of the benefits provided under this part, after recommendation of the Solid Waste Authority and the agencies concerned with handling tax exemption applications.
(11) Value-added activities related to the operation of the Port of the Americas, such as storage, merchandise consolidation and shipment thereof; repacking of consolidated products for shipment from the Port of the Americas; the finishing of semi-processed products for shipment to regional markets and any other business or service activity related to the administration and management of goods or finished, semi-processed, or manufactured products that are associated with, are part of or pass through the Port of the Americas; Provided, That this eligibility shall be subject to [that] the generated value-added activity will represent not less than seventy percent (70%) of the total business of the local commercial entity which receives the benefit.
(e) Designated articles.— This term comprises the following manufacturing operations:
(1) Straw, reed and fiber articles, as well as ceramics and artificial flowers.
(2) Sporting goods and fishing tackle.
(3) Bedsprings, mattresses and rugs.
(4) Leather and imitation leather articles as well as leather tanning and finishing.
(5) Bodies or platforms for trailers.
(6) Candles, soap and paint of all kinds.
(7) Food products manufactured or substantially prepared on a commercial scale. In the case of industrial units that are operating in Puerto Rico prior to filing their application, the fixed tax rate on industrial development income provided in § 10102 of this title shall apply solely to the income obtained as a result of the increase over the annual average of such operations for the three (3) taxable years prior to the date the application was filed. Said average base period income shall be subject to the income tax rates provided under the Puerto Rico Internal Revenue Code of 1994. In order to determine the above conditions, the industrial production of any predecessor business shall be taken into account.
For this purpose, “predecessor business” shall include any business related to the applicant business, even if it had not been exempted before, or regardless of whether it had been operating under another corporate name or other owners.
The production of roasted and ground coffee, carbonated beverages, pasteurized milk, and traditional pastries and baked products [is] excluded from this designated article.
(8) Products derived from the slaughter of poultry and rabbits, among others, and the product of packing houses that use the products derived from the slaughter as their raw material.
(9) Cigars and cigarettes.
(10) Perfumes, cosmetics and other toiletries.
(11) Wearing apparel, provided it is cut in Puerto Rico, unless the Secretary of State exempts the same for just cause; hosiery, gloves, and footwear.
(12) Edible oils and fats.
(13) Polishing and other processing of precious and semi-precious stones.
(14) Articles made of glass and metal containers.
(15) Cardboard, wood pulp and boxes, cartons and other cardboard containers, except corrugated cardboard boxes, cartons, and containers produced therefrom.
(16) Animal feed.
(17) Book publishing, when printed in Puerto Rico, printing and binding of books, as well as other products printed, provided they can be considered as products manufactured on a commercial scale. In the case of industrial units in operation in Puerto Rico prior to filing their application, the fixed tax rate for industrial development income provided in § 10102 of this title shall only apply to income obtained as a result of the increase over the annual average of such operations during the three taxable years prior to the date the application is filed. Said average base period income shall be subject to the income tax rates provided under the Puerto Rico Internal Revenue Code of 1994.
For the purposes of determining the above conditions, the industrial production of any predecessor business shall be taken into account. For this purpose, “predecessor business” shall include any business related to the applicant business, even if it was not exempted previously, or even when it had been operating under another corporate name or other owners.
The production of magazines, newspapers and commercial supplements or shoppers [is] excluded from this designated article.
(18) Distilled spirits for export and shipping to the United States if deemed to be Puerto Rican products under applicable federal legislation. The applicable period shall be fifteen (15) years, regardless of the area in which the industrial unit is located. In case they had been produced in Puerto Rico prior to 1975, the following will be eligible under the provisions of this part:
(A) Income obtained as a result of the increase over the average annual production in proof gallons, for the five (5) years of the business ending on June 30, 1974;
(B) real and personal property acquired on and after June 30, 1975, used to obtain such increase, and
(C) municipal licenses, municipal excises and other municipal taxes that apply to the volume of business resulting from such increase.
(19) Production of sand derived from industrial processes through the crushing of stone which meets the applicable specification standards.
(20) Commercial fishing to furnish raw material to the canneries or packing houses established in Puerto Rico and as raw material in the production of other products in Puerto Rico.
(21) All kinds of furniture as well as carved, embellished or turned wooden articles, including souvenirs, decorations, balustrades, and other wooden articles for decorative or functional use.
(22) Processing, dubbing and editing of short and feature films, as well as broadcasts of television programs, provided that the Secretary of State determines, with the recommendation of the Administrator and the agencies that issue reports on tax exemption decrees, that said activities shall benefit the economy in general. In the case of television stations, the condition that the television station shall broadcast a minimum [number] of hours per week of programs filmed and produced in Puerto Rico equal to twenty-five percent (25%) of the television program hours broadcast weekly by the television station shall be imposed. In addition, in the case of television stations, the fixed tax rate on the industrial development income provided in § 10102 of this title for income tax purposes, shall only apply to the income obtained as a result of the television broadcasts of programs produced and filmed in Puerto Rico using ninety percent (90%) of local talent. The Secretary of State, with the recommendation of the Secretary of the Treasury and the Administrator, shall establish the terms and conditions in the decree, such as the limits on the term and percentage of the exemption, the taxes to be covered by the decree, the establishment of a fixed tax rate on the industrial development income higher than that provided in § 10102(a) of this title, and the establishment of the job requirements that are necessary and convenient pursuant to the purposes of this part.
(23) Planting and cultivation through hydroponics, as well as the intensified culture of mollusks, crustacea, fish or other aquatic creatures through aquaculture, provided these operations are performed under standards and practices approved by the Department of Agriculture of the Government of Puerto Rico.
(24) Products transformed into commercial articles derived from recyclable materials that have been recovered in Puerto Rico, subject to the condition that they contribute to the objective of developing the recycling industry in Puerto Rico with the endorsement of the Solid Waste Authority and other concerned agencies, that have tax exemption applications. As an exception, in case the recyclable materials available in Puerto Rico are not sufficient to meet the demand for said materials as required for manufacturing operations, the Secretary of State, after recommendation of the Solid Waste Authority and other concerned agencies, may authorize the applicant industrial unit to import recyclable materials to meet its needs as if they had been recovered in Puerto Rico. The Solid Waste Authority shall establish regulations to such ends, which shall include a registration and certification procedure with regard to the availability of recyclable materials in Puerto Rico market in the normal course of business, in amounts and at prices that justify the operation of an industrial or service unit as an ongoing business.
(f) Production on a commercial scale.— Production for sale in the market in the normal course of business, in amounts and at prices that justify the operation of an industrial or service unit as an ongoing business.
(g) Manufactured product.— Shall include products transformed from raw material into commercial articles, designated articles, and any product with regard to which substantial industrial operations are carried out in Puerto Rico, which, in the judgment of the Secretary of State, deserve to be considered as manufactured products under this part, due to their nature and extent, the technology required, the substantial employment provided, or any other benefit represented by operations, for the welfare of Puerto Rico.
Subcontracting for production in Puerto Rico of one or several products, or the subcontracting of all or part of the manufacturing process of products covered by an exempted business decree, may be permissible, and the industrial development income from the sale of said products manufactured in Puerto Rico under a subcontract, may be exempt under the terms and conditions of the decree of the exempted business, provided that the Secretary of State determines beforehand that said subcontracting would be in the best interests of Puerto Rico, upon consideration of the factors indicated in the above paragraph.
Furthermore, value-added activities related to the Port of the Americas operation as provided in subsection (d)(11) of this section shall be deemed as manufactured products, for the purposes of this part, provided they are endorsed by the Executive Director of the Industrial Development Company, accepted by the Board of Directors of the Port of the Americas, and the Secretary of the Treasury of Puerto Rico.
(h) Industrial unit.—
(1) A plant, factory, machinery or ensemble machinery and equipment with the capacity to perform the main functions used in the production of a manufactured product or article designated in a commercial scale, or value-added activities related to the Port of the Americas operations that have been qualified, even when certain facilities are shared with other industrial units of lesser importance such as parts of buildings, power plants, warehouses, material conveyors, or other production facilities, or perform certain industrial operations outside of said industrial unit. An industrial unit may subcontract the production in Puerto Rico of one or several products, or all or part of the manufacturing process of products covered under the exempted business decree, and the subcontractor will also qualify as an industrial unit, as long as the Secretary of State determines that said subcontracting shall be in the best interests of Puerto Rico, in consideration of the terms and conditions established in its decree.
(2) An industrial unit may use facilities in common with other industrial units of greater importance when the Secretary of State determines that said common use is necessary and convenient for the industrial and economic development of Puerto Rico, in view of the nature of the operations, the additional investment and the number of jobs generated.
(3) Any exempted business that establishes an eligible business to manufacture an article that is separate and distinct from that produced by said exempted business, with the machinery and equipment needed for an efficient operation, in addition to any other operation that has enjoyed or is enjoying an exemption, with an accounting system that clearly reflects the operation of said eligible business according to generally accepted accounting standards and principles.
(i) Service unit.— A bona fide office, business or establishment with its equipment and machinery, with the capacity and expertise required to render on a commercial scale a designated service for markets outside of Puerto Rico, including markets in the United States, if in the judgment of the Secretary of State such designated service meets the provisions and purposes of this part, in consideration of the nature of the service, the knowledge and technology required, as well as the contribution of said activity to the development of human resources in Puerto Rico and any other benefit that the service unit represents for the welfare of Puerto Rico. Provided, That not less than eighty percent (80%) of the employees, technicians and professionals of the service unit shall be residents of Puerto Rico.
It shall be understood that the service is rendered for markets outside of Puerto Rico, even when the service is rendered to another firm established in Puerto Rico which finally exports the designated service.
The service units for markets outside of Puerto Rico may operate together with the services rendered for the local market if they are able to show proof to the satisfaction of the Secretary of the Treasury of the income which is obtained from sources outside of Puerto Rico through an accounting method that reflects said transactions satisfactorily.
The designated services shall include any of the following business activities:
(1) Commercial and mercantile distribution.
(2) Investment banking and other financial services.
(3) Advertising and public relations.
(4) Economic, scientific, managerial and auditing consulting services.
(5) Commercial and graphic arts services.
(6) News services syndicates.
(7) Catalog sales.
(8) Assembly, bottling and packing operations for export.
(9) Electronic data processing centers.
(10) Airport and seaport facilities.
(11) General repair and maintenance of ships and aircrafts as well as any kind of machinery and equipment, including electric, electronic, and clock and watch repair equipment.
(12) Production of engineering and architectural plans and designs, and related services to be used in the construction of projects to be located outside of Puerto Rico.
(13) Dental, photographic and optical and ophthalmologic laboratories.
(14) Prefabricated houses made of any kind of material.
(15) Marketing centers mainly engaged in providing, through leasing, service fees or other agreements, space and services such as secretarial, translating and data processing services, communications, marketing, telemarketing and other consulting services, to firms engaged in, or otherwise related to the purchase and export of products or the rendering of services for markets outside of Puerto Rico, including export and marketing companies, adjunct offices of commercial attachés, government agencies responsible for foreign trade, exchange, and product and service exhibition centers.
(16) Central or regional corporate headquarters engaged in rendering centralized accounting, finance, tax, auditing, marketing, engineering, quality control, human resources, communications, electronic data processing services, and other centralized management services to affiliated entities.
(17) Export of products manufactured in Puerto Rico.
(18) International trading companies.— For the purposes of this section, “international trading companies” shall mean any entity that derives not less than eighty percent (80%) of its gross income from:
(A) The purchase of products in or outside of Puerto Rico and their resale for use, consumption or disposition outside of Puerto Rico, and
(B) commissions derived from the sale of products for the use, consumption or disposition outside of Puerto Rico; Provided, That no part of the income derived from the sale or resale of products for their use, consumption or disposition in Puerto Rico shall be deemed to be industrial development income.
From time to time, the Governor, after favorable recommendation of the Administrator and the Secretary of the Treasury, may designate other service industries that merit being included under this part as a service unit through an executive order, when he/she determines that this designation shall be for the best interests and the economic and social welfare of Puerto Rico, considering the demand that may exist for said services outside of Puerto Rico, the total number of jobs to be created, the payroll, and the investment that the service unit would make in Puerto Rico, or any other additional factor that merits special consideration.
The designations thus provided shall be effective from the date of the Governor’s executive order, and they shall be remitted to the Legislature for ratification at the beginning of the next regular session. Said designations shall be deemed to be ratified thirty (30) days after being filed if the Legislature has not acted on them. In the event they are not approved, their effectiveness shall terminate on the date of said disapproval by the Legislature.
(j) Income from eligible activities.—
(1) The interest and dividends on eligible funds invested by the exempt business in:
(A) Obligations issued or secured by the Government of Puerto Rico or any of its instrumentalities or political subdivisions, and loans or shares on loans granted or secured by them.
(B) Loans for financing the construction, acquisition or improvement of housing in Puerto Rico.
(C) Loans for the construction, expansion or acquisition of buildings or land, and for the acquisition of machinery and equipment or for operating capital used in exempted businesses. The borrower exempted business shall not qualify for the benefits of this subsection with regard to the investments it makes, for up to the amount of the unpaid balance of its loans for operating capital.
(D) Loans for the acquisition of intangible property to be used by exempted businesses in their operations in Puerto Rico.
(E) Obligations issued by the Conservation Trust of Puerto Rico and the Housing and Human Development Trust of Puerto Rico; Provided, That when issuing said obligations, the Secretary of the Treasury has not revoked his/her determination of the fact that the same are nonprofit trusts according to the terms and conditions established by the Commissioner.
(F) Capital obligations or preferred stock as authorized [in] §§ 1 et seq. of Title 7, known as the “Banking Law of Puerto Rico”, as well as capital obligations issued by financial institutions, provided that the amount of capital raised through the capital obligations or preferred stock issued is invested in Puerto Rico according to the terms and conditions established by the Commissioner.
(G) Obligations issued by any subsidiary of the Farm Credit Banks of Baltimore, or its successor, the AgFirst Farm Credit Bank, set aside to finance farm loans directly or indirectly with said funds, as well as to finance farmers in Puerto Rico, including loans to rural residents to finance rural housing, loans to cooperatives owned and controlled by farmers and set aside for the marketing or distribution of agricultural produce, the purchase of supplies, the rendering of services to agricultural businesses and the acquisition of loans or discounts on notes which have already been granted.
(H) Loans for financing maritime and air operations related directly to trade and industry in Puerto Rico, including but not limited to the moneys used in the construction, acquisition and operation of all types of ships and aircrafts.
(I) Loans made to special employee-owned corporations.
(J) Corporate stock or shares in partnerships that own or operate tourist businesses exempted under §§ 6001 et seq. of Title 23, known as the “Puerto Rico Tourist Development Act of 1993,” which constitute an eligible investment under § 6001(n) of Title 23.
(K) Stock in corporations or shares in partnerships established as Capital Investment Funds under §§ 6001—6039 of Title 23, known as the “Puerto Rico Tourism Development Act of 1993”, provided the Fund invests at least twenty percent (20%) of the total contributions received on account of tourism activities.
(L) Any other obligations or loans designated by the Commissioner with the approval of the members of the public sector of the Board of Finance and of the Administrator. The Commissioner is hereby authorized to issue the regulations needed for the administration of this paragraph, with the approval of the members of the public sector of the Board of Finance and of the Administrator.
(M) Notes, promissory notes, bonds or any other evidence of indebtedness issued by the Puerto Rico Science, Technology and Research Trust established through public deed granted by the Secretary of Economic Development and Commerce and the President of the University of Puerto Rico as trustors.
(N) Obligations issued by the Puerto Rico Education and Rehabilitation Society (SER de Puerto Rico); provided, that it obtains and maintains an exemption under Section 1101.01 of Act No. 1-2011, as amended, known as the “Internal Revenue Code for a New Puerto Rico.”
The Commissioner is hereby authorized to issue the regulations necessary for the administration of this clause, with the approval of the members of the public sector on the Financing Board and of the Administrator.
(2) Interest on eligible [funds] deposited or invested by the exempted business in institutions engaged in banking, savings and loan associations, savings banks, stock brokerage firms and other similar institutions conducting business in Puerto Rico which the Commissioner, with the approval of the members of the public sector of the Financial Board and of the Administrator, determines to be eligible institutions to receive such eligible funds. The regulations on eligible institutions shall take into consideration the following factors, among others:
(A) That the eligible funds shall be invested in Puerto Rico or in a Caribbean Basin country qualified under § 936(d)(4) of the Federal Internal Revenue Code in effect as of December 31, 1994, by the institutions that receive the same.
(B) That said funds be channeled towards activities that promote production, income and jobs in Puerto Rico, such as commercial, industrial, agricultural and construction loans or for the preservation of natural resources.
Regulations issued under equal provisions of preceding laws shall continue in effect and shall apply to investments under this part until the Commissioner, with the approval of the Financial Board and the Administrator, amends or repeals said regulations or issues new regulations specifically for funds invested under this part.
Should the Commissioner determine that an institution is no longer eligible to receive such funds, such a determination shall not prevent the interest earned thereon which was invested before the institution’s loss of eligibility, from continuing to be considered as eligible interest under this part until said investment has matured.
(3) The assets that evidence the investments that qualify under this subsection, shall be fully exempt from the payment of property taxes. Furthermore, income obtained from said investments shall be fully exempt from income taxes, municipal license taxes, municipal excises, and other municipal taxes. The expiration or extension of the exemption period under this part of the borrower or the lender prior to the expiration of the loan, or even before the exemption period of the borrower has commenced, shall not prevent the interest paid by the borrower or earned by the lender from being treated as income from eligible funds under this part.
(4) For the purposes of this subsection, the term “eligible funds” shall include funds generated by industrial or service activities covered by an exemption decree under this part (including the extension under § 10107(c) of this title and the taxable years covered by the option of § 10105(f) of this title) or similar provisions of preceding laws, in addition to their earned or accrued income on said funds during the term they have been invested in Puerto Rico or abroad prior to October l, 1976.
(k) Exempted predecessor business.—
(1) Any business that is or was exempted under this part or preceding laws for the conduct of a business activity substantially similar to the one specified in the decree of a successor business, and
(2) twenty-five percent (25%) or more of its issued and outstanding stock or other interest on property is or was owned by the successor business or by any of the stockholders or owners of the successor business who own twenty-five percent (25%) or more of the stock or other interest on property of the successor business. This last requirement shall not apply when reference is made to an exempted predecessor business in § 10110(a)(4) of this title.
(A) The holding of stock or other interest on property shall be determined according to the rules concerning the holding of corporate stock or shares in partnerships under §§ 8401 et seq. of this title, part of the Puerto Rico Internal Revenue Code of 1994.
(B) If any of the stockholders or owners of a successor business affected by said rules can prove to the satisfaction of the Secretary of the Treasury that the capital invested or to be invested in the successor business does not proceed directly or indirectly from their spouses, lineal ancestors or descendants, or siblings, but proceeds from their own private money, such rules shall not apply to them.
(l) Successor business.— Any business that obtains a decree under this part to conduct a business activity substantially similar to that specified in the decree of an exempted predecessor business.
(m) Industrial tax exemption grant.— Shall have the same meaning as “exemption decree”, “tax exemption”, or merely “exemption” or which can be used interchangeably as may be convenient for the purpose of explaining what is provided in the text.
(n) Extraordinary circumstances.— Any cause of an exceptional nature such as strikes, wars, actions by the Government or the elements, fire and others, or any other cause beyond the control of the successor business or the exempted predecessor business.
(o) Investor.— Means any person making an eligible investment.
(p) Eligible investment.—
(1) Means the amount in cash used to buy the majority of the stock, shares, or operating assets of an exempted business in the process of closing its operations in Puerto Rico, and/or the cash amount contributed into said business for: (i) building or improving physical facilities, and (ii) buying machinery and equipment. Any other investment not made entirely and directly to serve the purposes described in this clause shall be excluded from the definition of “eligible investment” established in this part.
The determination as to whether an exempted business is under process of closing its operations shall be made jointly by the Executive Director and the Secretary of the Treasury.
(2) The term “eligible investment” shall not include an investment made with cash originating from a loan secured by the exempted business itself or by its assets.
(q) Industrial investment credit.— Means the credit granted under § 10104a of this title.
(r) Definitions of other terms.— For the purposes of this part, “Governor” means the Governor of Puerto Rico; “Administrator” means the Economic Development Administrator; “Director” means the Director of the Industrial Tax Exemption Office; “Commissioner” means the Commissioner of Financial Institutions, created by §§ 2001 et seq. of Title 7; “Financing Board” means the Financing Board attached to the Office of the Commissioner of Financial Institutions created by §§ 2001 et seq. of Title 7; “Exemption Office” shall mean the Industrial Tax Exemption Office; “Puerto Rico Internal Revenue Code” means the Puerto Rico Internal Revenue Code of 1994; “Federal Internal Revenue Code” shall mean the United States Internal Revenue Code of 1986, Pub. Law 99-514, 68A Stat. 3, as amended.
The remaining terms used in this part, unless otherwise specifically provided, shall have the same meaning that they have in the Internal Revenue Code of Puerto Rico and its regulations.
History —Dec. 2, 1997, No. 135, § 2; Aug. 17, 2001, No. 109, § 1; Dec. 25, 2002, No. 300, § 1; Aug. 18, 2004, No. 214, § 13; Sept. 17, 2004, No. 381, §§ 1, 2; Sept. 21, 2004, No. 397, § 1; Aug. 16, 2012, No. 179, § 4.