P.R. Laws tit. 13, § 32130
(a) Any eligible business that purchases eligible products manufactured in Puerto Rico, including components and accessories, for export shall be entitled to claim a credit against the taxes established in subsection (h), as provided in subsection (c) of this section.
(b) Definitions.— For purposes of this section:
(1) Eligible business.— An “eligible business” shall be considered to be:
(A) Any person or entity engaged in the manufacture of any item or product in Puerto Rico.
(B) The term “eligible business” shall not include persons and entities holding tax exemption decrees under §§ 10641 et seq. of this title, better known as the “Economic Incentives Act for the Development of Puerto Rico”, or any previous or subsequent similar law.
(2) Eligible products.— For purposes of this credit:
(A) The term “products manufactured in Puerto Rico” means products transformed from raw materials into commodities through any process, and any product made in a manufacturing business in Puerto Rico, as defined in § 30209(b)(1)(A) of this title.
(B) A product shall be considered manufactured in Puerto Rico only if more than thirty percent (30%) of its value has been added in Puerto Rico.
(C) Purchases of products manufactured by persons related to the eligible business shall be excluded.
(D) The purchase of energy or water shall never be eligible for credit for purchases of products manufactured in Puerto Rico.
(E) Neither shall products manufactured by any manufacturing business that, individually or together with other members of a controlled group to which it belongs, has had a net sales volume (inside or outside Puerto Rico) in excess of one hundred million dollars ($100,000,000) for calendar year 2010, or any other higher limit that can be established by the Secretary through Circular Letter or Administrative Determination of general application, be considered eligible products.
(i) The exclusion in this paragraph shall not apply to tuna products manufactured in Puerto Rico by plants engaged in the processing of tuna, regardless of the sales volume said processing plant may have.
(ii) For purposes of this paragraph, two (2) or more corporations or partnerships shall not be considered related persons if shareholders or partners of said legal entities are members of the same family, unless the same member of the family owns more than fifty percent (50%) of the value of the shares or of the interests in each corporation or partnership.
(iii) For purposes of subparagraph (ii), “members of the same family” shall include brothers or sisters, be they whole-blood siblings or not, and linear ancestors or descendants.
(iv) Any transaction or series of transactions shall be rendered without effect if one of its main purposes is to circumvent paragraph (C) or (E), including, but not limited to the organization or use of corporations, partnerships or other entities, the use of shareholder representative agreements (including facilitation agreements) or the use of any other plan or agreement to avoid matching the description of related person provided in paragraph (C) meeting the requirement of net sales volume provided in paragraph (E).
(3) Added value in Puerto Rico.— For purposes of this section, added value in Puerto Rico shall be understood to be the difference between the price collected by the manufacturing business for the manufactured product, and the cost of any imported raw material or any other cost incurred outside Puerto Rico. Added value in Puerto Rico includes, without it being understood as a limitation, direct or indirect costs incurred in Puerto Rico such as labor, general expenditures related to overhead, and the cost of locally manufactured raw material.
(c) The credit provided in this section shall be computed as follows:
(1) First, the amount of the purchases of eligible products manufactured in Puerto Rico made by the eligible business during the taxable year shall be determined.
(2) Then, the average of the purchases of eligible products manufactured in Puerto Rico made by the eligible business shall be determined for three (3) of the ten (10) previous taxable years that reflect the lowest purchase amount, that is, excluding the seven (7) years in which the amount of the purchases was higher.
(3) Amount of the credit.—
(A) In general.— The credit for purchases of eligible products shall be ten percent (10%) of the excess of the purchases of said eligible products, as provided in clause (1), on the average determined pursuant to clause (2).
(B) In the case of products manufactured in Puerto Rico by plants engaged in the processing of tuna, the credit shall be ten percent (10%) of the total purchases of said eligible products, as provided in clause (1), but the limitations provided in subsection (b)(2)(B) of this section shall not apply.
(d) The Secretary shall establish, through regulations, the documentation that the eligible business shall submit as evidence to claim the credit provided in this section.
(e) The credit shall not be transferrable, except in the case of an exempt reorganization. However, in the case of the credit for purchases of eligible products manufactured in Puerto Rico for export, such credit may be transferred to affiliated entities engaged in trade or business in Puerto Rico.
(f) The amount of unused credit of the eligible business in a taxable year may be carried over to subsequent taxable years until it is exhausted.
(g) The credit granted in this section shall not generate a refund.
(h) Use of the credit.— The credit provided in this section shall be applied, first and foremost, to the sales and use tax established in §§ 32021 and 32022 of this title, collected by the eligible business and payable pursuant to Subchapter B of this Subtitle. However, at the taxpayer’s request, the Secretary shall be empowered to allow the application of this credit to any other tax imposed in this Code.
(i) Credit subject to taxation.— The eligible business shall recognize the amount of the credit thus applied as income in the taxable year(s) in which the credit is used.
(j) In addition to any other penalty applicable by law, any person who submits false or incorrect information to an eligible business or to the Secretary about the place of manufacture or the amount of added value in Puerto Rico of any product with the purpose of qualifying for the provisions of this section shall be liable to the Secretary for the amount of any credit illegally claimed by the eligible business under this section, and shall also have to pay a penalty of one hundred percent (100%) of the amount of the illegally claimed credit.
History —Jan. 31, 2011, No. 1, § 4050.10; July 1, 2011, No. 108, § 3; Dec. 10, 2011, No. 232, § 146.