P.R. Laws tit. 13, § 10851a
(a) Duties of the Secretary, Certificate of Compliance.— In the evaluation, analysis, consideration, award, renegotiation, and revision of any incentive or benefit granted under this chapter, the Department of Economic Development and Commerce and the Secretary thereof shall be required to oversee and ensure compliance with all the provisions of this chapter. The Secretary shall be the official responsible for verifying and ensuring that resident individual investors meet the eligibility requirements provided for in this chapter; however, the Secretary may receive assistance from the Director of the Industrial Tax Exemption Office to carry out this task
The Secretary shall be responsible for verifying that resident individual investors meet the requirements established in this chapter.
The Secretary shall be required and responsible for preparing a Certificate of Compliance every two years, once Resident Individual Investors validate, in the judgment of said official, that they have met the requirements set forth in this chapter. Every two years, the Secretary shall verify the information submitted by resident individual investors annually so that the Certificate of Compliance may be issued not later than the last day of the third (3 rd) month after the close of the taxable year of the applicant.
Upon the filing of an application for a Certificate of Compliance with the Industrial Tax Exemption Office, the Director shall collect the fees for the processing thereof, which shall be payable by certified check, money order, or cashier’s check to the Secretary of the Treasury. The Secretary of Economic Development shall prescribe by regulations the application processing fees. Provided, That said regulations shall be revised every three (3) years after its approval.
The Certificate of Compliance shall include, in turn, the following information regarding the resident individual investor: his name and the name of related business, the cadaster number of the property or properties connected to the incentivized activity; the merchant registration number; the related account as required in the “Puerto Rico Internal Revenue Code”; the employer identification number; and the information required by §§ 1411 et seq. of Title 23, better known as the “Fiscal Information and Permit Control Act”, as applicable.
The Certificate of Compliance shall be issued by the Secretary through the Interagency Validation Portal for the Granting of Incentives for the Economic Development of Puerto Rico to the agencies, public corporations, and municipalities responsible for granting benefits or incentives under this chapter. However, during the period in which the Portal is still not operating, it shall be the duty of the Secretary to issue a Certificate of Compliance to the agencies, public corporations, and municipalities responsible for granting the benefits or incentives under this chapter following the ordinary process. The filing of the Certificate of Compliance by a resident individual investor shall be an essential requirement for the agency, public corporation, or municipality to grant the benefit or incentive provided for in this chapter.
Actions taken by the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM, Spanish acronym), or any other government official or body, or public corporation concerned, in connection with the qualification process for granting benefits or incentives under this chapter, shall be limited to the taxation aspects of the granting of the benefit or incentive in question, upon the issuance of a valid Certificate of Compliance, as provided in this section. The Secretary shall be responsible, first and foremost, for overseeing eligibility under any and all provisions of this chapter. However, the Secretary of the Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center (CRIM), or any other government official or body, or public corporation concerned with any of the benefits or incentives granted under this chapter may contact the applicant and the Secretary should further information be needed to validate the data on the Certificate of Compliance, and shall notify and request the applicant to supply such information in order to rectify the situation. The Secretary of the Department of the Treasury or the Executive Director of the Municipal Revenues Collection Center may deny any tax incentives or benefits requested if, in their judgment, the information requested has not been supplied. Moreover, the provisions of this chapter shall not preclude in any manner the power conferred to the Secretary of the Treasury under § 33202 of this title, known as the “Puerto Rico Internal Revenue Code of 2011”; and, if necessary, the power to revoke any incentives previously granted by virtue of a Certificate of Compliance, in accordance with the corresponding act; or the power to refer the case to the appropriate agency or public corporation for the corresponding action.
To benefit from the incentives provided under this chapter, any resident individual investor shall request, in accordance with this chapter, a tax exemption decree to the Secretary upon filing a duly-sworn application with the Exemption Office. At the time of the filing of the application, the Director shall collect the corresponding processing fees prescribed by regulations. Such fees shall be paid in the manner and form prescribed by the Secretary. Once the Exemption Office issues a favorable recommendation, the Secretary shall issue the tax exemption decree, through a Certificate of Compliance, stating in detail the tax treatment provided in this chapter. Decrees under this chapter shall be deemed to be an agreement between the grantee and the Commonwealth of Puerto Rico, and such agreement shall be the law between the parties. The decree shall be valid during the effective term of the benefits granted under this chapter, but shall never be later than December 31, 2035, unless the decree is revoked in accordance with subsection (b) of this section before the expiration of said effective term. Decrees are not transferrable.
For applications for decrees filed after December 1, 2015, the Secretary shall require the applicants, as an essential requirement to grant the decrees established herein, that the resident individual investor acquire a residential property in Puerto Rico and to open a personal or business account in a bank or cooperative with a presence in Puerto Rico.
(b) Revocation.— The Secretary may revoke any decree issued under this chapter, if:
(1) The grantee fails to meet any of the obligations imposed under this chapter or the regulations thereunder, or the terms of the decree; or
(2) the grantee fails to comply with his/her tax responsibilities under the Code and other taxation laws of Puerto Rico;
(3) the decree has been obtained through false or fraudulent representation of material facts or circumstances that, in whole or in part, gave rise to the issue of the decree.
(c) Revocation procedure.— In the event a decree issued under this chapter is revoked, the grantee shall have the right to a hearing, in accordance with the procedure established by the Secretary of the Treasury by regulations, circular letter, or administrative determination, after which the official designated to such purposes shall report his/her findings and conclusions to the Secretary.
(d) Penalties.— In the case of revocation, any net income computed, previously reported as exempt income under this chapter, shall be subject to the taxes imposed under the provisions of the Code. Thus, it shall be understood that the grantee has filed a false or fraudulent return with the intent to evade tax; and therefore, such grantee shall be subject to the criminal provisions of the Code. The tax owed in such case as well as any other taxes heretofore exempt and not paid, shall become due and payable with interest from the date on which such taxes would have become due, if it were not for the decree, and shall be assessed and collected by the Secretary of the Treasury in accordance with the provisions of the Code.
History —Jan. 17, 2012, No. 22, § 2, added as § 3 on July 11, 2012, No. 138, § 1; Dec. 22, 2014, No. 241, § 2; Nov. 17, 2015, No. 187, § 106; Dec. 28, 2016, No. 208, § 33.