P.R. Laws tit. 13, § 10045
(a) A successor business may enjoy the exemptions provided by this chapter when:
(1) The predecessor exempted business has not ceased operations for more than six (6) consecutive months prior to filing the application for exemption of the successor business or during the exemption period of the successor business, unless such occurrence is due to extraordinary circumstances.
(2) The predecessor exempted business maintains its average annual employment for the three (3) taxable years ending with the close of its taxable year preceding the filing of the application for exemption of the successor business, or the applicable part of said period while the tax exemption of the successor business is in force, unless such average cannot be maintained due to extraordinary circumstances.
(3) The employment of the successor business after its first year of operations is more than twenty-five percent (25%) of the average annual employment of the predecessor business referred to in clause (2), above.
(4) The successor business does not use physical facilities, including land, buildings, machinery, equipment, inventory, supplies, trademarks, patents, marketing outlets having a value of twenty-five thousand dollars ($25,000) or more, and which have been previously used by a predecessor exempted business. The foregoing shall not apply to additions to property devoted to industrial development, even when these constitute physical facilities valued at twenty-five thousand dollars ($25,000) or more, and which are being or have been used by the main unit or the predecessor exempted business. Notwithstanding the above, the Secretary of State may determine, upon the recommendation of the agencies which render reports on tax exemption, that the use of physical facilities or the acquisition of any industrial unit of a predecessor exempted business that is or was in operation will be in the best economic and social interests of the Commonwealth of Puerto Rico in view of the nature of said facilities, the number of jobs, the payroll, the investment, the location of the project or other factors which in his/her judgment merit such a determination.
(b) Exceptions. — Notwithstanding the provisions of subsection (a) of this section, the conditions of the aforesaid shall be deemed as having been met when:
(1) The successor business assigns to the predecessor exempted business such portion of its annual employment as may be necessary so that the annual employment of the predecessor exempted business is maintained at, or is equivalent to the annual employment that said predecessor exempted business must maintain. The assignment provided herein shall not be covered by the exemption of the successor business, but it shall enjoy the exemption, if any, with respect to the portion so assigned which the predecessor exempted business would have enjoyed thereon, as if such portion had been its own annual production. If the exemption period of the predecessor exempted business has expired, the successor business shall pay the applicable taxes on such portion of its annual production as it may assign to the predecessor exempted business.
(2) The successor business declares as not covered by its exemption such portion of its facilities as may be necessary for property tax purposes, so that the investment in physical facilities of the predecessor exempted business is maintained at or is equivalent to its total investment in physical facilities at the close of the taxable year of such predecessor exempted business prior to the filing of the application for exemption of the successor business, less depreciation thereof and less any decrease in the investment in physical facilities that may have occurred as of the date the provisions of this clause are used as a result of an authorization to use the same under the provisions of subsection (a)(4) of this section. In those cases in which the tax exemption period of the predecessor exempted business has not expired, the successor business shall enjoy the exemption which the predecessor exempted business would have enjoyed with respect to the portion of its investment in said physical facilities that for purposes of this clause it declares as not covered by its exemption, if the said facilities had been used in producing its industrial development income.
(3) The Secretary of State determines, upon the recommendation of the agencies which render reports on tax exemption, that the operation of the successor business will be in the best economic and social interests of the Commonwealth of Puerto Rico, in view of the nature of the physical facilities, the number of jobs, the total amount of the payroll, the investment, the location of the project or any other factors which in his/her judgment merit such a determination, including the financial standing of the particular exempted business, and the dispensation from total or partial compliance of the provisions of subsection (a) of this section, and he/she shall condition the operations as shall be convenient and necessary in benefit of the best interests of the Commonwealth of Puerto Rico.
History —Jan. 24, 1987, No. 8, p. 949, § 7; Oct. 27, 1995, No. 218, § 7, eff. Jan. 1, 1996.