P.R. Laws tit. 21, § 1095g
Once the terms of the proposal are met and complied with as approved, the Territorial Ordinance Office of the municipalities, with the area plan or the historic zone plan, or in those cases in which the municipalities do not have them, the Office of the Director, as the case may be, shall certify said compliance to the Secretary of the Treasury who, by virtue of said certification, shall be able to grant the proponent the following incentives when they apply to the proposal. The incentives shall take effect on the date of approval of the proposal. The certification to which reference is made in this section shall detail the procedure followed for approving the proposal and shall contain conclusions of fact and law on the qualifications and termination of the project so as to provide the Secretary of the Treasury with enough information to grant the incentives provided by this chapter. However, under the provisions of the Puerto Rico Internal Revenue Code of 1994, as amended, the Secretary of the Treasury shall have the power to revise and audit the income tax returns of taxpayers in order to validate the concession of the incentives granted in this chapter.
(a) Incentive for creation of jobs.— Every business or industry existing on the date of approval of this act, or a subsequent date, that meets the requirements established in this chapter, or that carries out an activity or is in harmony with the development plan promulgated for the urban center in which it is established, and generates new jobs, it [sic] shall be entitled to an additional special deduction from the gross income subject to taxation, for the purpose of the computing its income tax, equivalent to five percent (5%) of the total minimum wage applicable to each new job created by said industry or business. This deduction shall be in addition to any other granted by any act, and shall be available for a term of five (5) years. In order to be entitled to this deduction, it shall be necessary for the new job thus created to:
(1) Not eliminate or replace any job existing prior to the approval of this act.
(2) Be a full-time job, as defined by the Department of Labor and Human Resources.
(3) Be held continuously by the same person for a period of not less than six (6) months in a taxable year.
(b) Exemption for employee transfer.— Any person who transfers his/her business with a minimum of five (5) employees to an urban center, shall be entitled to a special additional deduction of the gross income subject to taxation equal to fifteen percent (15%) of the payroll expense incurred. To such effect, only the business transferred to the urban center may benefit. The limit of this deduction is of up to fifty percent (50%) of the total net income computed pursuant to the provisions of the Internal Revenue Code, adjusted by the special deductions provided by this chapter. Said deduction shall be available for a term of five (5) years.
(c) Deduction for development of parking facilities.— Any person who builds a parking structure in an urban center, that meets the requirements of §§ 805 et seq. of Title 23, known as the “Act to Regulate the Business of Public Parking Areas for Motor Vehicles”, and the regulations promulgated thereunder, and completes the work in a term of five (5) years, [counted from] the date the area where it is located is designated as [an] urban center, shall be entitled for the purposes of computing income taxes, to exclude from the gross income subject to taxation, ten percent (10%) of the net income proceeding from the operation of said parking structure, computed pursuant to the provisions of the Internal Revenue Code and adjusted by the special deductions provided in this chapter. Only those businesses that provide at least twenty (20) parking spaces may benefit. The limit of these exclusions is of up to a maximum of fifty percent (50%) of the net income calculated pursuant to the above.
However, the incentive of the deduction herein established for the development of parking areas shall also be available for any person who develops an estate of real property, a parcel, a lot or space in an urban center to provide at least twenty-five (25) parking spaces. The development of said parking areas shall likewise meet the requirements of §§ 805 et seq. of Title 23, known as the “Act to Regulate the Business of Public Parking Areas for Motor Vehicles”, and the regulations promulgated to that effect. The work must also be completed within the term of five (5) years as of the date the area where it is located is designated as [an] urban center. It is furthermore provided that availability of this benefit shall depend on whether the area devoted to the parking facility should incorporate an urban facade design and landscaping measures that include the planting of at least one tree for every two (2) parking spaces.
The parking facilities that qualify under this provision shall be exempted from the regulations of the Department of Consumer Affairs, although without prejudice to any regulations available to the municipality.
(d) Special income tax exemption on interest generated by loans.— Any financial entity or natural person who grants private loans for the financing of urban centers revitalization projects, shall be entitled to a special exemption of one hundred percent (100%) of the interest received on said loans. In those cases that a natural person is granting the loan, it shall be the responsibility of the municipality, whether through the Office of the Director or the Territorial Ordinance Office, to keep a register of all documents which accredits the granting of said loan. The municipalities shall adopt, through regulations, the necessary requirements for compliance with these provisions. Said regulations shall contain the norms and procedures that allow the municipality to keep control of the time the transaction is made, which shall include the granting of said loan and its eventual disbursement to be used in an eligible project under the provisions of this chapter.
(e) Tax credit for infrastructure investment.— The Office of the Director may recommend to the Secretary of the Department of Housing and the Secretary of the Department of the Treasury to grant credits for special housing investments, to urban center revitalization projects that qualify under the provisions of §§ 10601 et seq. of Title 13, known as the “Tax Credits for Special Investments in Housing Infrastructure Act”; Provided, That the Department of Housing may be recommended to grant up to a maximum one hundred percent (100%) tax credit for investment in infrastructure, in urban center revitalization projects that include housing components of any kind.
(f) Tax credit for investments in construction projects in urban centers.— Any owner or tenant, natural or juridical person that undertakes a construction or improvements project (including housing projects) in an urban center pursuant to the provisions of this chapter may claim an income tax credit of seventy-five percent (75%) of the cost of the project or improvements. The credit not used in a taxable year may be carried over to subsequent taxable years for a maximum of ten (10) years. This incentive shall be of one hundred percent (100%) for those municipalities with historic zones. Likewise, the properties along the four (4) streets that surround the public town square of all urban centers, whether historic zones or not, shall also enjoy this incentive of one hundred percent (100%).
Upon determining the control of the project for purposes of the credit herein provided, those amounts or costs used in the computation of the credit provided in subsection (e) of this section shall not be considered in the case both credits apply. Except as otherwise provided above, the credit granted under this subsection shall neither apply nor be available to those owners who receive or have received any other tax benefit under other federal or state laws or regulations that such owner may use or have used against the investment attributable to cost of the project or improvement under this subsection. Notwithstanding the foregoing, the credit available under this subsection may apply and be available to be applied against the investment attributable to the cost of the project or improvement under this subsection, even if said project is receiving or has received other tax benefits under federal laws or regulations for the construction or improvement of an independent senior living housing project certified as such by the United States Department of Housing and Urban Development. In the case of said independent senior living housing projects that receive tax benefits under federal programs, the tax credit to be granted under the provisions of this chapter shall be in the amount necessary to defray up to one hundred percent (100%) of the balance of the investment attributable to cost of the project or improvement subject to the limits previously established in this section. The credit provided by this subsection may be assigned, sold, or otherwise transferred, in whole or in part, by the owner or natural or juridical person entitled to claim the same to another person.
(g) Exemption from exaction by impact.— No agency shall impose or require any charge for exaction by impact on projects to be developed within the urban centers pursuant to the provisions of this chapter.
(h) Accelerated depreciation.— Any person who invests in the construction or remodeling of housing in an urban center, who has not availed him/herself of the tax credit on said investment, shall be entitled to depreciate that of the built, remodeled or rehabilitated property using the accelerated depreciation method with a useful life of seven (7) years.
(i) Historic zone incentives.— The Secretary of the Treasury may grant the incentives and exemptions proposed for historic zones to all projects built or improved in the urban centers.
(j) Use of special deductions.— The special deductions and credits provided in this chapter shall not be used to reduce the net income or the income tax, as the case may be, to less than zero (0).
(k) Application period.— No applications shall be accepted nor any incentives, credits, deductions, and other benefits provided for in this section shall be granted to projects whose construction has not begun as of June 30 th, 2015, or that have failed to submit a certificate of eligibility to the Department of the Treasury as of June 30 th, 2016; provided, that the aforementioned projects were eligible under the provisions of subsection (a)(5) of § 30210b of Title 13.
History —Aug. 29, 2002, No. 212, § 4.03; Apr. 23, 2004, No. 102, § 2; Sept. 29, 2004, No. 515, § 1; Apr. 15, 2008, No. 41, § 1; Nov. 17, 2015, No. 187, § 81.