P.R. Laws tit. 23, § 5008
The following tax benefits shall be provided to the entities that contribute to the Company for the Integral Development of the Cantera Peninsula:
(a) All gifts made to the Company shall be treated as gifts made to educational entities, pursuant to §§ 8006 et seq. of Title 13, for the purposes of the limitations placed on gifts.
(b) The establishment of a “Capital Investment Fund in Puerto Rico” shall be allowed without the restriction regarding the nature of the projects permitted by Act No. 3 of October 8, 1987.
(c) Interest generated by the bonds issued by the Company shall be exempt from income taxes imposed by §§ 8006 et seq. of Title 13.
(d) Use of accelerated depreciation methods shall be allowed to recover the cost of the investment.
(e) Tax credit on investments in the Cantera Project. —
(1) Concession of credit. — There shall be allowed as a credit against the income tax imposed by §§ 8006 et seq. of Title 13, known as the Income Tax Act of 1954, for each taxable year of the allowable period, an amount equal to the sum of:
(A) Investment credit in the Cantera Project carried forward to the current tax year;
(B) investment credit in the Cantera Project for the current tax year, plus,
(C) investment credit in the Cantera Project dated back to the current tax year.
(2) Investment credit in the Cantera Project for the current tax year. — For the purposes of this section, the amount allowable as an investment credit for the Cantera Project for the current tax year shall be as determined pursuant to the provisions of clause (4) of this subsection.
(3) Limitations. —
(A) General rule. — Credit granted under clause (1) of this subsection for each taxable year, shall not exceed the lesser of:
(i) The allowable proportion of the normal net tax to be paid for the taxable year, or
(ii) one hundred thousand dollars ($100,000).
(B) Allowable proportion of the normal net tax. — For the purposes of this paragraph, the allowable proportion of the normal net tax paid by the taxpayer for each tax year shall be the sum of:
(i) The amount of the normal net tax paid by the taxpayer for the tax year not to exceed fifteen thousand dollars ($15,000), plus
(ii) seventy-five percent (75%) of the amount of the normal net tax paid by the taxpayer for the tax year which exceeds fifteen thousand dollars ($15,000).
For the purposes of this paragraph, the term “normal net tax” means the normal average tax paid by the taxpayer determined for the tax year, minus the sum of any other credits allowable under any other act.
(C) Special rules. —
(i) Married individuals. — In the case of a husband or wife filing separate returns, the amount established in subparagraph (i) of paragraph (B) above, shall be seven thousand five hundred dollars ($7,500). This special rule shall not apply [if] the taxpayer’s spouse does not claim a credit under this section for the taxable year.
(ii) Controlled group. — In the case of a controlled group of corporations, the amount of fifteen thousand dollars ($15,000) established in subparagraph (i) of paragraph (B) above, shall be reduced for each corporation in an amount equal to the proportion that the net income of each corporation bears to aggregate net income of the controlled group.
(4) Amount determined as credit. —
(A) In general. — For the purposes of the provisions of clause (2) of this subsection, the amount determined as an investment credit in the Cantera Project shall be equal to:
(i) The applicable percentage of;
(ii) the adjusted base of the participating structure in the Cantera Project.
(B) Applicable percentage. —
(i) Participating structures put into service during the years 1993, 1994, 1995, 1996 and 1997. — In the case of any participating structure in the Cantera Project put into service by the taxpayer during the years 1993, 1994, 1995, 1996 and 1997, the term “applicable percentage” shall be nine percent (9%).
(ii) Participating structures put into service after 1997. — In the case of any participating structure in the Cantera Project put into service after 1997, the term “applicable percentage” shall be six percent (6%).
(C) Adjusted base. —
(i) The “adjusted base” of the participating structure in the Cantera Project shall that which is determined pursuant to what is established in § 8514 of Title 13. It shall not include that portion determined by a reference to the base of another property belonging to the taxpayer.
(ii) Participating structures in the Cantera Project. — For the purposes of this section, a “participating structure” shall be:
(I) That certified structure which qualifies according to the terms of this chapter because of its location, purpose, investment or any other requirement established herein, and
(II) that structure which has been acquired by the taxpayer through purchase and/or is subject to substantial rehabilitation.
(iii) Structure put into service. — A structure participating in the Cantera Project shall be “put into service on the first day of the taxable year in which it is available for use.
(iv) Adjusted base determined when the participating structure is put into service. — The adjusted base of a participating structure shall be, that which has been determined when the structure is put into service, during the allowable credit period, plus the adjustments for subsequent years.
(v) Allowable credit period. —
(I) For the purposes of this section, the “allowable credit period” shall be, with regard to each structure, a period of ten (10) consecutive years starting on the first year in which the participating structure is put into service, or, at the taxpayer’s choosing, on any of the following three (3) years after the year in which the participating structure was put into service. Once the choice has been made it shall be irrevocable.
(II) Any amount in excess of the credit allowed by clause (3) of this subsection may be rolled over to subsequent years within the allowable period for that structure. During the last year of the allowable credit period, said excess may be carried back to the year immediately before, subject to the limitation established in clause (3) of this subsection.
(5) Certifications in general; faculty of the Secretary of the Treasury. —
(A) To be eligible for the tax incentives provided by this chapter, every taxpayer who avails him/herself of said benefits is required to submit a certification issued by the Company giving proof of the eligibility of his/her project or investment.
(B) No later than ninety (90) days after the close of the first taxable year in which the credit established in this section is claimed, the taxpayer must file a Certification with the Secretary of the Treasury, in the manner determined by the Secretary, establishing the following:
(i) The date in which the structure was acquired.
(ii) The taxable and calendar year in which the structure was put into service.
(iii) The adjusted base of said structure.
(iv) Any other information established by the Secretary of the Treasury through regulations to such effect.
(C) In case of noncompliance with the requirement to file the Certification provided in the preceding paragraph (B) of this clause within the term established therein, the credit any taxable year prior to the year in which the aforementioned should have been filed, shall not be allowed.
(6) Special Commission. — Since this is an experimental incentive, a Special Commission is hereby created composed of the Secretary of the Treasury, the President of the Government Development Bank for Puerto Rico, the President of the Housing Bank, the Secretary of the Department of Housing, the Chairman of the Planning Board and the Executive Director of the Company, who shall meet after a period of five (5) years, counting from the approval of this act, to evaluate and submit recommendations to the Legislature and the Governor concerning this measure.
In case said Commission does not meet and/or submits unfavorable recommendations, this section shall be rendered ineffective after the conclusion of the 7th year from the approval of this act, without affecting the credit on the structures which have been put into service prior to this term.
(7) Regulations. — The Secretary of the Treasury shall prescribe whatever regulations are necessary and convenient to comply with the purposes of this section, including regulations to cover:
(A) Projects which include more that one structure;
(B) structures that are phased into service;
(C) the origin of the credit for taxable years of less than twelve (12) months, and
(D) ensuring compliance with the provisions of this section.
(f) For purposes of computing their income taxes, all businesses or industries established or to be established in the Cantera Peninsula shall be entitled to an additional deduction for paid wages equivalent to five percent (5%) of the applicable minimum wage of each new job created after the approval of this act. This deduction shall be in addition to any other deduction granted by any act and the same shall be for a five (5)-year term.
In order to be entitled to the deduction granted by this subsection, it is necessary that the newly created job:
(1) Does not eliminate or replace a job existing prior to the approval of this act;
(2) is a full-time job of not less than thirty-five (35) hours a week, and
(3) is performed by a resident of the Cantera Peninsula for a continuing period of not less than six (6) months of a taxable year, except in those business[es] or industries that are cyclic or seasonal due to their nature.
History —July 10, 1992, No. 20, § 9; Dec. 25, 2002, No. 306, § 1.