WAIVER OF REQUIREMENTS FOR TAX DECREE HOLDERS AFFECTED BY THE HURRICANES

(TAX HEADLINES 2018-07)
By: Janira Beltrán-Selles, Esq. & Marisel Valentín-Márquez, Esq., CPA
 
Due to the passage of Hurricanes Irma and María, many exempt businesses were not able to comply with certain requirements set forth in their tax decrees.  Noncompliance may lead to revocation of tax decrees in some instances.  Act 91-2018 was approved on April 14, 2018 to provide a waiver for tax decree holders of the following laws who held a tax decree as of September 1, 2017 or were granted one after said date:
  • Act 73-2008 – Economic Incentives Act for the Development of Puerto Rico, and its predecessors;
  • Act 83-2018 – Puerto Rico Green Energy Incentives Act;
  • Act 20-2012 – Act to Promote the Export of Services; and
  • Act 120-2014 – Economic Incentives Act for the Generation and Retention of Jobs in Small and Medium Businesses (PYMES).
The law states that these businesses will be waived any job, income (or gross receipts), and/or machinery and equipment investment requirements or metrics included in the terms of their tax decrees, which must have been complied with totally or partially, during their first year[1] of operations started during 2017.  The waiver is automatic and no fees are required to enjoy it.
 
[1] Even though this language may suggest that the waiver is only for businesses whose first year of operation started within 2017, it appears to be the legislative intent to grant the wavier for all businesses exempt under the above mentioned acts. 
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On June 30, 2016, a Financial Oversight and Management Board has been assigned to Puerto Rico by the United States Federal Government with the enactment of Public Law 114-187 (“Puerto Rico Oversight, Management, and Economic Stability Act”).  This Oversight Board has ample powers over actions that may be taken by the Puerto Rico Government in pursuit of economic development, such as, new incentives laws or new tax decrees.
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