P.R. Laws tit. 13, § 10432
(a) Credit for the purchase of products manufactured in Puerto Rico. —
(1) If an exempt business purchases products manufactured in Puerto Rico, including components and accessories, it shall be entitled to a credit against the GEI provided in this chapter, equal to twenty-five percent (25%) of the purchase of said products during the taxable year in which said credit is granted up to a maximum of fifty percent (50%) of said tax. This credit shall be granted solely for the purchase of products that have been manufactured by businesses unrelated to the exempt business.
(2) In the event that the exempt business that holds a decree granted under this chapter purchases or uses products transformed into commercial articles made from recycled materials or with raw materials from material recycled or recovered or reconditioned by exempt businesses which have been granted a tax exemption decree under § 10642(d)(1)(I)of this title, or other analogous provisions of preceding or subsequent laws, the credit granted in clause (1) of this subsection shall be equal to thirty-five percent (35%) of the total purchases of said products or the amount paid for the use thereof, as the case may be, during the taxable year for which the credit is claimed, up to a maximum of fifty percent (50%) of the tax against which such credit is claimed, as provided in clause (1) of this subsection. This credit shall only be granted for the purchase of products that have been manufactured by businesses not related to such exempt business.
(3) The credit provided in this subsection shall be nontransferable, except in the case of an exempt reorganization. The amount of the credit not used by the exempt business in a taxable year may be carried over to subsequent taxable years until said credit is exhausted. The credit shall not generate a refund.
(b) Credit for job creation. —
(1) Any exempt business commencing operations after the effective date of this act shall be granted a credit for each job created during its first year of operations. The amount of this credit shall depend on the zone of industrial development where the operations of said exempt business is located, as provided below:
Area Credit
Vieques and Culebra $ 5,000
Low Industrial Development Zone $ 2,500
Intermediate Industrial Development Zone $ 1,000
High Industrial Development Zone $ 0
(2) Whenever an exempt business that holds a decree granted under this chapter establishes operations in more than one zone, the amount of the credit shall correspond to the location of the operations where the job that originated the credit was created.
(3) For the purposes of this clause, the job of the said exempt business shall consist of the number of individuals residents of Puerto Rico that work as permanent regular full-time employees in the exempt business, but it shall not include individuals such as independent consultants or contractors. In order to be granted this credit it shall be required that the average job of the exempt business for each of the three (3) consecutive years following the year in which such credit was granted be equal or greater than the number of jobs generated by the credit. The Secretary of the Treasury shall establish through regulations the applicable proportional recovery mechanism, based on the period elapsed and the levels of employment kept, in the event that such exempt business has failed to comply with the requirement of the employment level.
(4) The exempt business shall only claim the credit provided in this clause against the tax on its GEI provided in § 10430(a) of this title. Such credit may not be sold, assigned or transferred nor generate a refund to the exempt business. However, the credit provided in this clause, that is not used during the first year of operations may be carried over by a period which shall not exceed four (4) years as of the first taxable year in which the exempt business earned net income.
(5) For the purposes of this credit, the classification of the industrial development zones shall be those determined by the Secretary of Development in consultation with the Director of Development, the Chairperson of the Planning Board, and the Secretary of the Treasury, as provided in § 10651 of this title.
(6) The reclassification of a municipality or geographic area from one zone to another shall not affect the exemption of the exempt business already established in this municipality or region. However, a business that has requested a tax exemption decree to establish itself in a specific municipality or region, but is not yet established, or that had the exemptions before the date in which such municipality or area has been reclassified from one zone to another that, as a consequence of such change in designation qualifies for lesser incentives than those it would have under the previous classification, shall be entitled to current exemption incentives, prior to the reclassification if it is established there within one (1) year as of the date in which the area was reclassified. For the purposes of this chapter, the date of the first training or production payroll shall be deemed to be the date of establishment of the business.
(c) Green energy source research and development investment credit. —
(1) Any exempt business that holds a decree granted under this chapter may claim a research and development investment credit equal to fifty percent (50%) of the special eligible investment made in Puerto Rico after the effectiveness of this act by such exempt business or any affiliate entity thereof. Such credit may be applied to the tax on its GEI provided in § 10430(a) of this title.
(2) For the purpose of the credit provided in this subsection, the term “special eligible investment” means the amount of cash used by the exempt business or any entity affiliated to such exempt business in research and development activities directly related to green energy production, including expenses related to operations, infrastructure or intellectual property directly incurred or used in such research and development activities. The term special eligible investment shall include any investment of the exempt business made with the cash originating from a loan secured by the exempt business itself or its assets, or any entity affiliated to the exempt business or its assets. The Secretary of the Treasury, in consultation with the Administration shall establish through regulation the costs that shall qualify as special eligible investment.
(3) Use of the tax credit. — The tax credit granted under this subsection may be used in two (2) or more installments: up to fifty percent (50%) of said credit may be used in the year in which the eligible investment is made and the balance of said credit may be used in the subsequent years until such credit is exhausted. This credit shall not generate refunds.
(4) Assignment of special eligible investment credit. —
(A) The special eligible investment provided under this clause may be assigned, sold, or otherwise transferred by the exempt business to any other person, whether in whole or in part, and shall be governed by the provisions of clauses (1) and (3) of this subsection, except that if the assignor is not an exempt business it may use the credit against the income tax levied in Subtitle A of the Internal Revenue Code of Puerto Rico.
(B) The money or the value of the received property in exchange for the investment credit shall be exempt from taxation under Subtitle A of the Internal Revenue Code of Puerto Rico, and under the Municipal Licenses Act, up to an amount equal to the amount of the investment credit so assigned.
(C) Buyers of investment tax credits shall be exempt from taxation under Subtitle A of the Internal Revenue Code of Puerto Rico for the difference between the amount paid to acquire such credits and the value thereof, and such buyers shall not be subject to the provisions of Chapter 1 of Subtitle F of the Internal Revenue Code of Puerto Rico.
(5) Adjustment basis. — The basis of any asset for which the credit provided in this subsection is claimed shall be reduced from the amount of the claimed credit.
(6) The exempt business may not claim this credit with respect to the portion of the eligible investment for which it uses or has used the deduction set forth in § 10433(b) of this title.
(d) Technology transfer investment credit. — Any exempt business that holds a decree granted under this chapter, may take a credit only against the fixed tax on the GEI provided in subsection (a) of this section, equal to twelve percent (12%) of the payments made to corporations, partnerships, or nonresidents persons on account of the use or right to use in Puerto Rico of intangible property in its exempt operations; provided, that the income on account of such payments derives from sources in Puerto Rico. The tax credit established in this subsection shall be nontransferable, but may be carried over until it is exhausted. However, such carry-over shall never exceed the eight (8) taxable year-period counted as of the closing of the taxable year in which the credit was originated. This carry-over shall never result in a tax lesser than that provided in subsection (e) of this section. This credit shall not be refundable.
(e) Credit application and minimum tax. — The application for the tax credits established in this section shall be subject to the following rules:
(1) Tentative tax. — The exempt business shall initially compute its tax liability pursuant to the applicable fixed income tax rate pursuant to § 10430(a) of this title.
(2) Credit application. — The total of the addition of the tax credits granted in this section, subject to the limitations applicable to each, claimed by the exempt business shall be reduced to the tax obligation computed in clause (1) of this subsection.
(3) Minimum tax. — The tax determined on its GEI, computed after applying the credits pursuant to clause (2) of this subsection, shall never be less than the amount which when added to the amounts deposited under § 10430(b) of this title with respect to the taxable year, results in:
(A) The fixed income rate provided in § 10430(a) of this title that may apply to the exempt business multiplied by the GEI of the exempt business.
(B) In the case of an exempt business which at least fifty percent (50%) is directly owned by individuals residents of Puerto Rico, three percent (3%) of the GEI of the exempt business.
(4) The exempt business that holds a decree granted under this chapter shall pay whichever is greater between clause (2) and clause (3) of this subsection.
History —July 19, 2010, No. 83, § 2.11.