P.R. Laws tit. 13, § 206
(a) Every natural or artificial person is hereby exempt, for a period of ten (10) years, from the payment of income tax on revenues derived from the production of flowers and ornamental plants for the local market and for export in operations which may be established in the coffee zone of Puerto Rico. If such person has already been engaged in the commercial production of flowers and/or ornamental plants in Puerto Rico during previous years, the exemption herein provided shall only be applicable to the remaining excess on comparing (1) the value of the production corresponding to the taxable year concerned with (2) the value of the production during its first taxable year beginning after December 31, 1969. Provided, That in no case shall the said exemption exceed the amount of the income derived from the operations established in the coffee zone as said term is defined in this section.
(b) The exemption herein provided shall be effective from the taxable year in which the Secretary of the Department of Agriculture and the Secretary of the Treasury are notified of the intent of availing themselves of the benefits of this subsection. Said notice shall be filed in duplicate, and as a sworn statement, at least sixty (60) days prior to the close of the first taxable year for which the exemption is requested. The Secretary of the Department of Agriculture of the Commonwealth of Puerto Rico shall issue a Certificate of Compliance, as provided in subsection (g) of this section, attesting that the land where the operations shall be carried out and in relation to which the tax exemption is requested under this subsection were devoted to coffee growing and that it was withdrawn from said activity under the Integrated Development Program of the Coffee Zone in its diversification phase.
If for causes outside of his control and will such as wars, action of the government or of its elements, lack of demand, or any other act of God, the person exempt under this subsection should temporarily cease his operations, he may, each time this occurs, upon notice to the Secretary of the Department of Agriculture and the Secretary of the Treasury before the close of his taxable year, waive the exemption for said particular year, in which case the exemption herein provided shall be extended for another additional year. In no case shall the exemption exceed ten (10) years.
(c) If the person exempt under this subsection should transfer his business, the acquirer shall, through notice to the Secretary of the Department of Agriculture and upon amendment to the Certificate of Compliance for such purpose, continue enjoying the exemption herein provided for the remainder of the exemption.
(d) Except as herein provided, no person who has enjoyed or who is enjoying the exemption herein provided shall be entitled to a new exemption through the establishment of another business in which he may have a ten percent (10%) or more interest. For such purposes, the holding of stock or participation in the other business shall be determined in accordance with the provisions of the income tax laws in force in Puerto Rico.
Any person who for the purpose of obtaining benefit from the exemption provided by this section liquidates or reorganizes his business or uses any other method by which he pretends that an income derived from operations that otherwise are taxable appear as derived from operations exempt under this section shall be bound to pay the corresponding taxes, surcharges and penalties on said income.
(e) Persons covered by the exemption herein provided shall keep in Puerto Rico an accounting system which clearly shows the gross income, expenses, losses, and other deductions in regard to its operation exempt hereunder. Such persons shall, further, include in their income tax returns as attachments, a written report with the appropriate financial statement also including the area and location of the cultivated land, number of employees, sum of annual payroll corresponding to the exempt operations and any other data required by the Secretary of the Department of Agriculture and the Secretary of the Treasury through regulations.
(f) As used in this section, the term:
(1) Coffee Zone.— Shall mean the lands in Puerto Rico devoted to the production of coffee and which have been withdrawn from said cultivation under the Integrated Development Program of the Coffee Zone of the Department of Agriculture, in its diversification phase.
(2) Commercial production of flowers and ornamental plants.— Shall mean the production for sale in the market during the normal course of business, in amounts and prices which justify the production of flowers and ornamental plants for the local market and export as a functioning business.
(g) In the evaluation, analysis, consideration, award, renegotiation, and revision of any incentives or benefits granted under this section, the Secretary of the Department of Agriculture shall be required to oversee and ensure compliance with all the provisions of this section. The Secretary of the Department of Agriculture shall be the official responsible, first and foremost, for verifying and ensuring that the exempt persons meet the eligibility requirements established in this section. The Secretary of the Treasury may adopt regulations to achieve the purposes of this subsection.
The Secretary of Agriculture shall be required and responsible for preparing a Certificate of Compliance every two years, once the exempt persons validate, in the judgment of said official, that they have met the requirements of this section. Every two years, the Secretary of Agriculture shall verify the information submitted by exempt persons so that the Certificate of Compliance is issued not later than on the fifteenth (15 th) day of the second (2 nd) month after the close of the taxable year of the applicant.
The Certificate of Compliance shall include, in turn, the following information regarding the exempt person: the name of the business, the cadastre number of the property or properties connected to the business; the merchant registration number; the account connected to the business as required in the Puerto Rico Internal Revenue Code of 2011; the employer identification number; and the information required by §§ 1141 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 of Agriculture 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 awarding benefits or incentives under this section. 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 awarding the benefits or incentives under this section following the ordinary procedure. The filing of the Certificate of Compliance by an exempt person shall be an essential requirement for the agency, public corporation, or municipality to award the benefit or incentive provided for in this section.
Actions taken by 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, in connection with the qualification process for the granting of the benefits or incentives under this section 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 subsection. The Secretary of the Department of Agriculture shall be responsible, first and foremost, for overseeing eligibility under any and all provisions of this section. 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 section 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 said 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 (CRIM) may deny any tax incentives or benefits requested if, in their judgment, the information requested has not been supplied. Moreover, the provisions of this section shall not preclude in any manner the power conferred to the Secretary of the Department 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 pertinent agency or public corporation for the corresponding action.
History —June 21, 1971, No. 54, p. 176, §§ 1—7; Nov. 17, 2015, No. 187, §§ 31—34; Dec. 28, 2016, No. 208, § 11.