Opportunity Zones in Puerto Rico - draft regulation
GOVERNMENT OF PUERTO RICO
DEPARTMENT OF ECONOMIC DEVELOPMENT AND TRADE
Regulations to implement the provisions of Sections 6070.54-6070.69 of the Law
No. 60-2019, known as the "Puerto Rico Incentives Code".
Chapter 1
Introductory Provisions
Section 1.01 - Legal Basis
This Regulation is adopted in accordance with the provisions of Section 6070.67 of Act No.
60-2019, known as the “Puerto Rico Incentives Code”, which empowers the
Secretary of the Department of Economic Development and Commerce of Puerto Rico, in
consultation with the Secretary of the Department of the Treasury of Puerto Rico, to establish
through regulations the mechanisms that will govern the manner and manner in which they will be requested and
they will grant decrees under Section 6070.60 of said law.
Section 1.02- Scope
The provisions of this Regulation shall apply to any person who has established, or is
proposes to establish an Eligible Business in Puerto Rico, which has received a designation
as a Priority Project in Opportunity Zones by the Project Committee
Priorities in Opportunity Zones (“Committee”) and to request before the Director of the Office
of Business Incentives in Puerto Rico a Decree under Section 6070.60 of
Law No. 60-2019, known as the “Puerto Rico Incentives Code”.
Section 1.03- Public Policy Statement
It is declared as public policy of the Government of Puerto Rico:
1. Convert Puerto Rico into an investment destination for Zone Funds of
Opportunity to invest in Priority Projects in areas of opportunity.
2. Provide the environment for the continuous formation of local and foreign capital for its
Investment in Priority Projects in areas of opportunity.
3. Establish the tax, legal and regulatory framework that encourages, streamlines and
encourage investment in Priority Projects in areas of opportunity.
Section 1.04 - Definitions
For the purposes of this Regulation, the words will be interpreted according to the context in which
they are used will have the meanings that are commonly attributed to them. In the cases
applicable, the words used in the present tense also include the future; the
used in the male gender include the female; the singular includes the plural and the
plural includes the singular. Any reference to “day” shall be understood as the period of
twenty-four (24) hours of a calendar day, unless otherwise specified.
However, the following terms will have the definition set out below:
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1. “Eligible Activity” - means a Priority Project in Opportunity Zones.
2. “Chief Financial Officer” - means the chief public finance officer created
under Executive Order OE-2013-007.
3. “Chief Investment Officer” - means the chief investment officer created in
under Executive Order OE-2018-035.
4. Code- means Act No. 60-2019 known as the “Incentive Code of
Puerto Rico".
5. “Internal Revenue Code” - means Act No. 1-2011, as amended,
known as the “Internal Revenue Code for a New Puerto Rico, or any
successor law.
6. “Federal Internal Revenue Code” - means the Federal Internal Revenue Code
1986, Pub. Law 99-514, 68A Stat. 3, as amended, or any subsequent law
I replaced it.
7. “Commissioner” - means the Commissioner of Financial Institutions created by the
Act No. 4 of October 11, 1985, as amended.
8. “Committee” - means the “Committee of Priority Projects in Opportunity Zones”,
attached to the Office of the Governor, with the powers provided in this
Regulation, and composed of the Chief Financial Officer (Chief Financial
Officer), who will preside, the Chief Investment Officer (Chief Investment
Officer), the Executive Director of the Financial Advisory Agency and Agency
Prosecutor of Puerto Rico, the Executive Director of the Authority for Public Partnerships
Private of Puerto Rico, the Secretary of the Department of Economic Development and
Commerce, a member appointed by the Puerto Rico Senate and a member
appointed by the House of Representatives of Puerto Rico, or their respective
appointed from time to time who will have the same rights and obligations
of the officials they represent, including attending meetings by
those means and / or technology that is authorized and, therefore, used by the Committee
to carry out them. At the request of the Chairman of the Committee, the Governor
may appoint other members to the Committee to meet specific requests,
according to the nature of the requesting business. The Committee will adopt the standards,
procedures and regulations that are necessary for the purposes of
functions assigned in this Regulation without subject to the provisions of Law 38-
2017, known as the “Uniform Administrative Procedure Act of
Government of Puerto Rico". Provided that five (5) of the seven (7) or a majority
of the members of the Committee shall constitute quorum for the meetings of said Committee.
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However, quorum will only be recognized if a representative of the Bodies
Legislative participates in meetings and is certified, unless there are
unexcused absences to two or more consecutive meetings, in which case
certify the quorum with the other five (5) members present.
9. “Eligible Investment Credit” - means the credits according to section (i) of the
Section 6070.56 of the Code.
10. “Decree” - means the Decree issued in accordance with Section 6070.60 of the
Code, by which the approval of an application is duly notified
filed and the conditions imposed on it.
11. “Director” - means the Director of the Business Incentives Office, attached to the
Puerto Rico Department of Economic Development and Commerce.
12. “Distribution of net income from development of opportunity zones” - means
any distribution of dividends or earnings of an Exempt Business or a
Liquidation distribution of a Business Exempt from profits and benefits
from the net income of opportunity zones.
13. “Entity ignored” - means an entity that is treated as a “disregarded entity”
for purposes of the Federal Internal Revenue Code.
14. “Fund” - means an entity that meets the following requirements:
to. no later than the date of commencement of operations in accordance with the
section (e) of Section 6070.59 of the Code and during the period of
designation set forth in Section 1400Z-1 (f) of the Revenue Code
Internal Federal, the entity is an “Opportunity Zone Fund” pursuant to the
Section 1400Z-2 (d) (1) of the Federal Internal Revenue Code;
b. during the period that begins the day after the expiration of the
designation established in section 1400Z-1 (f) of the Revenue Code
Internal Federal and ending the day of the expiration of the Decree, the entity
otherwise it would qualify as an “Opportunity Zone Fund” under the
Section 1400Z-2 (d) (1) of the Federal Revenue Code, if such designation
It was still in force.
15. “Governor” - means the Governor of Puerto Rico.
16. “Net income from opportunity zones” - means the net income of a Business
Exempt generated in the operation of an eligible activity, as determined under
the Internal Revenue Code.
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17. “Eligible Investment” - means the cash that has been contributed to:
to. a Fund that is an Exempt Business in exchange for shares issued by the
Fund (if the Fund is a corporation) or in exchange for a participation in the
Fund (if the Fund is a company, limited liability company,
society or company in common);
b. a Fund in exchange for shares issued by the Fund (if the Fund is a
corporation) or in exchange for a participation in the Fund (if the Fund is a
company, limited liability company, company or company in
common) and the Fund invests said contributions to the capital of a corporation
which is an Exempt Business or a company that is an Exempt Business in return
of shares issued by the corporation or in exchange for a participation in the
company (if the company is a limited liability company,
society or company in common) and said investment by the Fund is in
compliance with Section 1400Z-2 (d) (2) of the Internal Revenue Code
Federal; or
c. to a corporation that is an Exempt Business in exchange for issued shares
by the corporation, or to a limited liability company, company or
joint venture that is an Exempt Business in exchange for a participation
in a limited liability company, partnership or joint venture,
as long as a Fund invests in said corporation or company of
limited liability, joint venture or company and said investment by
The Fund is in compliance with Section 1400Z-2 (d) (2) of the Code of
Federal Internal Revenue.
18. “Investor” - means any natural or legal person that makes an Investment
Eligible, as defined in paragraph (17) of this section.
19. “Municipal Patent Law” - means Act No. 113 of July 10, 1974,
as amended.
20. "Business" - means a corporation, partnership, liability company,
society or company in common.
21. “Eligible Business” - means a business that meets all of the following
requirements:
to. the business activity is carried out in its entirety in an eligible area;
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b. the activity carried out by the business is not eligible for a concession
tax exemption under Previous Incentive Laws, as defined
in the Code, such as: Act No. 20-2012, as amended, known
such as the "Law to Promote the Export of Services", Law No. 73-
2008, as amended, known as the “Economic Incentives Law
for the Development of Puerto Rico, ”Act No. 74-2010, as amended,
known as the "Puerto Rico Tourism Development Act of 2010", the Law
No. 83-2010, as amended, known as the “Law of Incentives of
Green Energy of Puerto Rico, ”Act No. 27-2011, as amended,
known as the “Law of Economic Incentives for the Film Industry
of Puerto Rico ”or any successor or analogous law to those previously
described;
c. the business is carried out by the Fund or an entity in which the
Fund under Section 1400Z-2 (d) (2) of the Federal Internal Revenue Code;
Y
d. the activity carried out by the business is a Priority Project in the area
of opportunity
22. “Exempt Business” - means an Eligible Business that has been granted a
Tax exemption decree under Section 6070.60.
23. “Office of Incentives” - means the Office of Business Incentives in Port
Rico, attached to the Department of Economic Development and Commerce of Puerto Rico.
24. “Priority Project in Opportunity Zones” - means an industry or business or
other income production activity that will contribute to diversification,
recovery and social and economic transformation of the community in the area
eligible.
25. “Eligible Residential Priority Project” - means a Priority Project in
Opportunity areas that have an important housing component.
26. “Secretary of the DDEC” - means the Secretary of the Development Department
Economic and Commerce of Puerto Rico.
27. “Secretary of the Treasury” - means the Secretary of the Department of the Treasury of
Puerto Rico.
28. “Eligible Zone” - means an area of Puerto Rico that has been designated as a zone
of opportunity under Section 1400Z-1 (b) (3) of the Federal Internal Revenue Code,
as outlined on the map maintained by the Federal Treasury Department and
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which has been designated as an eligible area by the Committee through
regulation, circular letter, administrative determination or newsletter of
general character.
Definitions of other terms.- Other terms applicable to the Opportunity Zones
which are used in this Regulation, unless specifically provided otherwise,
They will have the same meaning as they have in the Internal Revenue Code and its regulations.
Episode 2
Eligible Investment Credit
Section 2.01 - Eligible Investment Credit
Every Investor will be entitled to an Eligible Investment Credit equal to percent
eligible for your Eligible Investment, made after July 1, 2019. Credit for
Eligible Investment may be taken in four (4) installments: twenty-five (25) percent in the
year in which the Exempt Business completed the total construction of the Priority Project or, in
If the Priority Project does not require construction, when the Exempt Business
start operations, whichever is later, and twenty-five (25) percent of the balance of
said credit in the next three (3) subsequent years.
The date of commencement of operations for the purposes of this Section may be the date of the
first payroll for training or production of the Exempt Business that has a Decree
granted under the Code, or any date within a period of two (2) years after
the date of the first payroll.
In the event that the Eligible Investment is made after the construction of the
Priority Project in Opportunity Zones or that the Exempt Business has started
operations, the Eligible Investment Credit will be taken in the following four (4) terms:
twenty-five (25) percent in the year in which a significant expansion has been made
in the built property or in the Exempt Business, and twenty-five (25) percent of the
balance of said credit in the next three (3) subsequent years.
In the event that the Priority Project is never carried out, the Credit will not be granted for
Eligible Investment.
Any Eligible Investment made during the Investor's taxable year will qualify for
the Eligible Investment Credit of this Section, in said taxable year, provided and
when it meets all the requirements of this Regulation and the Code. The Credit for
Eligible Investment may be applied against any specific contribution of the
Investor, according to Subtitle A of the Internal Revenue Code including the contribution
minimum alternative of Section 1022.03; or the alternate basic contribution of the Section
1021.02 of the Internal Revenue Code; or against any other contribution imposed by
Previous Incentive Laws, as defined in the Code, such as: Law No. 20-
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2012, as amended, known as the “Law to Promote the Export of Services”,
Act No. 73-2008, as amended, known as the “Law of Economic Incentives
for the Development of Puerto Rico, ”Act No. 74-2010, as amended, known as
the "Tourism Development Law of Puerto Rico of 2010", Law No. 83-2010, according to
as amended, known as the "Green Energy Incentives Act of Puerto Rico", and under
Act No. 273-2012, as amended, known as the “Center Regulatory Law
International Finance ”, Act No. 399-2004, as amended, known as the“ Law
of International Insurance Underwriters and Reinsurers of Puerto Rico ”or any
successor law or analogous to those described above.
In addition to the requirements outlined in the following section, any Investor requesting the
Significant Eligible Investment Credit shall:
1. Be in compliance with all your tax responsibilities, including
those in which it acts as a withholding agent.
2. Be in compliance with all your responsibilities with the Collection Center of
Municipal Income, in terms of movable and immovable property, as well as
with the Department of Labor and Human Resources and the Fund Corporation
of the State Insurance.
Section 2.02 - Significant Expansion
to. For purposes of the Code and this Regulation, the criteria to be considered for
Determine what a significant expansion will be:
1. The Exempt Business have started operations prior to the presentation of the
request for tax incentive exemption under Section 6070.60 (a) (3) of the
Code:
i. The hiring of employees by the Exempt Business on time
complete resulting in a twenty-five (25%) increase in employment of the
Exempt Business during the previous taxable year the date of the
filing of the tax incentive exemption request under the
Section 6070.60 (a) (3) of the Code.
2. The acquisition of equipment or machinery that involves the investment of fifty per
one hundred (50%) or more of the value in the financial statements of the assets
Exempt Business operations exist at the effective date of the Code.
3. The investment, construction or acquisition of a premises that represents an increase
in the area in square feet, including the construction or acquisition of a
separate plant and additional to the original, for use by the Exempt Business.
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4. The investment or expansion of the original premises for the use of the Exempt Business.
5. The entry of the Exempt Business to other areas of industry to which it was not engaged
previously.
b. In investment cases, the expansion will be significant if it represents an amount
equivalent to the original value of the building, excluding the value of the land.
c. For purposes of this Regulation, an increase in jobs will not be considered
those created by transfer from a sister or subsidiary entity
of the Investor or the Fund, or of another Fund participating in the Zones of
Opportunity, as part of an asset transfer or business line. In
In these cases, the Eligible Investment for the credit will be equivalent to the difference between
Exempt Business payroll expenses prior to expansion and after the
expansion.
d. In cases of acquisition of equipment or machinery, improvements or expansion of
existing facilities, or construction of new facilities, Eligible Investment
for the credit it will be equal to the cost of construction materials, labor and
those costs known as "hard costs" that the Director understands merit being
included, excluding any cost for professional, administrative services,
architecture, engineering, design, consulting, and those other costs that are considered
within the “soft costs”, as this term is used in the construction industry.
and. Eligible Investment will not be considered for credit for significant expansion
the following:
1. An investment whose purpose is to refinance any debt of the Business
Exempt.
2. The contribution of assets, other than cash, through the transfer or
transfer, in exchange for capital of the Exempt Business.
3. Any investment made with the cash of a loan that is guaranteed
for the Exempt Business itself, for its assets or that in which the Exempt Business
be the only debtor entity; Y
4. Any other investment, whose funds are not used directly and in their
whole, for the purposes described in subsection (a) of this Section.
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Section. 2.03 - Investment loan application process
The request for an investment credit will be submitted using the Portal created according to the
Section 6011.01 of the Incentives Code and administered by the Incentives Office.
The request for an investment credit must include an affidavit with the following
information, as applicable:
to. Name, address and employer identification number of the Exempt Business.
b. Property dedicated to the business or company of the Exempt Business and the value in
the financial statements of the same at the closing date of the base year.
c. Description of physical expansion of facilities, or the acquisition of
additional facilities
d. Amount of the investment.
and. Number of employees at the end of the taxable year for which you wish to obtain
The credit.
F. Number of jobs created or projected to be created during the first
twelve (12) months following the effective date of the expansion
significant.
g. Location where jobs were created.
h. Amount and percentage of the credit to be claimed.
i. Effective date of significant expansion.
j. Sufficient documentary evidence to certify that a
significant expansion as defined in this Regulation. This evidence
Documentary may include, without limitation, construction plans that
reflect the area before the expansion and the area after the expansion,
human resources office certifications that demonstrate the increase
in employees, and so on.
k. Any other information that the Investor deems necessary, or that the
Director asks you to support the Investment Credit application
Eligible.
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At the time of submitting the Eligible Investment Credit application, they will be charged
the fees for the corresponding procedure, which will be paid by
electronic transfer in the Portal.
Within a period of five (5) days from the presentation of the Credit application for
Eligible Investment, the Director, at the express request of the Investor may review
preliminary request for the purpose of determining whether it meets the requirements
initials.
If the request for Eligible Investment Credit submitted is missing any information or
element necessary for consideration, the Investor will be notified of such omission, not
no later than ten (10) days after the request has been received, and a term of
ten (10) days for the Investor to submit the information. If the Incentive Office does not
receives the information requested in the notification of omission within the established term
In this paragraph, you can proceed to file the case.
Section 2.04 - Final Determination of the DDEC Secretary
Once the Director of the Incentive Office notifies you of your final recommendation on the
Eligible Investment Credit application to the Secretary of DDEC, the latter must issue
Your final determination.
The Secretary of the DDEC may rest on the comments of those agencies or
municipalities that are consulted and may request additional information from them
Supplement the one included at the time of issuing your recommendation. All approval or
Denial of the Eligible Investment Credit application will be at the discretion of the Secretary
of the DDEC, subject to the endorsement of the Department of the Treasury.
Once the DDEC Secretary issues his determination on the Investment Credit
Eligible, will be published in the Investor's account on the Portal.
For purposes of its final determination, the Secretary of DDEC may request
Investor additional information or require a meeting.
In case of approval, the Secretary of the DDEC will issue an electronic notification to the
Investor designating the Eligible Investment Credit granted.
In case of denial of the investment credit, the Secretary of the DDEC will issue a
electronic notification to the Investor, with a brief explanation of the reasons for such
determination and warning of the rights and processes for a request for reconsideration.
Section 2.05 - Judicial Review and Review
The Investor, after being notified electronically of the denial of the Credit by
Eligible Investment, may request a reconsideration from the Secretary of the DDEC
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twenty (20) business days after receipt of the notification, adducing the facts and
arguments that you understand to make, including any consideration for the benefit of
Puerto Rico that you consider merits your request for reconsideration.
If the request for reconsideration is accepted, the Secretary of the DDEC will notify the
Investor within twenty (20) working days of receiving the request for
reconsideration, provided that said term had elapsed without the Secretary
of the DDEC emits response to the request, it will be understood that the reconsideration was
denied, for which a written notification must be issued for this purpose. Once welcomed
a request for reconsideration, the Secretary of the DDEC will evaluate it and may accept
any consideration offered for the benefit of Puerto Rico and require and dispose of any
other term or condition that is necessary to ensure that the investment credit
result in the best interests of Puerto Rico and the purposes of economic development.
Once the evaluation process of a reconsideration request that has been completed
If received, the Secretary of the DDEC will notify the Investor of his final determination.
In cases where the reconsideration by the Secretary of DDEC entails changes
Upon determination of the Eligible Investment Credit, such changes will be notified to
The government entities consulted.
Section 2.06 - Compliance with credit conditions
The Secretary of the DDEC may include in the granting of the Eligible Investment Credit
those terms and conditions that it deems necessary to meet the objectives of the
Code. Failure to comply with such terms and conditions may entail, without limitation.
a, the following penalties:
1. The revocation of the Eligible Investment Credit.
2. The reduction of the Eligible Investment Credit.
3. An increase in the income tax rate contained in the Decree of
Exempt business.
4. The exclusion of future eligibility for incentives or credits, or their extensions.
5. A combination of the penalties described above or any action
similar to that the Secretary of the DDEC deems prudent, reasonable, and proportional.
Section 2.07 - Effective Date of Eligible Investment Credit
The effective date of the investment credit will be the date of granting it,
as long as the significant investment has been made or is in progress.
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Chapter 3
Eligible Investment Credit Assignment
Section 3.01 - Eligible Investment Credit Assignment
After the date of notification of the distribution of the investment credit, the credit for
investment may be assigned, sold or in any way transferred, in full or
partially, by an Investor, to any other person.
In the case of investment credit, the basis of the Eligible Investment will be reduced by the value
of the assigned investment credit but can never be reduced to less than zero (0). the basis of
An Eligible Investment that will be subject to the reduction established in this clause, will be the
basis, as determined considering any choice that has been made under the
Section 1031.06 of the Internal Revenue Code with respect to such investment.
The person or entity that acquires the investment credit will be subject to them
limitations applicable to the Investor or Fund with respect to its use. For these purposes, the
The acquirer may use the credit only in the taxable year that begins within
or after the year in which the Investor or Fund had the right to use the credit
tax transferred or any subsequent year to it, as long as the credit
has been assigned, sold or transferred by the Investor or Fund before the date of
filing of income tax return corresponding to the taxable year for
which is intended to be used, including any extension granted by the Secretary of
Estate.
The amount of credit for significant expansion assigned, sold or transferred will reduce the
Adjusted basis of the Eligible Investment of the assignor in an amount equal to the credit for
significant expansion assigned, sold or transferred.
Section 3.02 - Transfer through a broker-dealer
An Investor may assign, sell, or in any way transfer an Investment Credit
Eligible through a broker-dealer.
For purposes of this Regulation, the term “broker-dealer” means any
person who has a license to operate as such before the Commissioner of Institutions
Financial at the time of the transfer, as long as said broker is acting
in the ordinary course of your business and not for your own use.
The broker-dealer may serve as an intermediary in the transfer, sale or
credit transfer or you can buy the same for resale.
When the broker-dealer acquires the loan with the intention of reselling it,
such transaction will not be considered an assignment, or transfer of credit. When he
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broker-dealer resells the credit, the credit transfer will be considered as
made directly by the Exempt Business to the buyer.
Section 3.03 - Assignment through an underwriter
An underwriter who, having acted as such, has acquired a credit for
investment at the time of closing for the financing of a Priority Project in Zones
of Opportunity, you may assign, sell, or in any way transfer any credit for
Investment to a third party.
Section 3.04 - Notification
Within twenty (20) days following the assignment, sale or transfer of credit, the
Investor or Fund that has assigned, sold or transferred the credit, as well as the
acquirer must notify the Director and the Secretary of the Treasury of the transaction
by submitting an affidavit or statement under penalty of perjury. The
Statement will be joint and will include the following information:
1. Name, address and employer or social security account number of the Investor or
Fund that transfers, sells or transfers the credit.
2. Name, address and employer or social security account number of the acquirer.
3. Total amount of credit assigned, sold or transferred.
4. Amount of credit used by the Investor or Fund and credit balance
pending claim at the date of assignment, sale or transfer of credit.
5. Amount of the loan assigned, sold or transferred.
6. Date of assignment, sale or transfer of credit.
7. Taxable year in which the Investor or Fund had the right to use the credit
assigned, sold or transferred, and taxable year in which the acquirer may use
The credit.
8. The consideration given in exchange for credit.
Copy of the notification described above with evidence of your submission must be
included with the income tax return, by the Investor or Fund for the
year in which the assignment, sale or transfer of the credit has been made and by the acquirer
in each year you use part of the credit.
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Section 3.05 - Conditions applicable to the acquirers of the Investment Credit
Eligible
Credit acquirers, whether by assignment, sale or transfer, directly from the
Investor or Fund or through a broker-dealer or subscriber, will be subject to the
following conditions:
1. Will be subject to the same terms and conditions as the Investor or Fund
original.
2. They may only claim the credit in taxable years beginning within or after
of the first year in which the original holder of the credit was entitled to use it.
3. The amount paid for the credit cannot be claimed as a deduction, nor
capitalize or be considered in some way as an expense for purposes
contributory
4. When the amount paid for the credit is less than the amount of the credit, the
difference will not be considered an income and will be exempt from taxation.
Section 3.06 - Nullity of transaction and judicial review
The validity of the credit will not be affected if it is transferred to a third party in good faith, to
change of appropriate consideration and according to the fair market value of the latter.
Provided that in these cases the only person responsible for the repayment of the credit is the
Investor or the Fund.
The Director reserves the right to revoke the transaction when the broker-dealer or the
Subscriber fails to comply with the requirements imposed by the laws and these Regulations, or with the
conditions stipulated in the loan assignment, sale or transfer agreement.
If the loan transfer, sale or transfer transaction is revoked, the beneficiary of the
same or any interested party, as determined by the Director, may within five (5)
days of notification submit a reconsideration which will be awarded within a
five (5) day term. If the determination is sustained, the Investor may present
the review of the same within a term of thirty (30) days before the Court of
Appeals
Chapter 4
Credit priority and return on investment
Section 4.01 - Eligible Investment Credit Priority
In case other legislation establishes a ceiling or certain priority in the granting of Loans
for Eligible Investment, the approval of the investment credits requested under this
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Regulations will have priority over the approval of credit applications that are
filed after the effectiveness of the Code, under any other law that provides credits
for investment, if the Committee so decides, except for those investment credits
set forth in Previous Incentive Laws as defined in the Code, such as:
Sections (c) and (f) of Section 5 of Act No. 73-2008 as amended, known as
the "Law of Economic Incentives for the Development of Puerto Rico" or under the Section
3030.01 of the Code, except also those investment credits with a Return of
Positive tax investment.
Section 4.02 - Positive Tax Investment Return
The term Investment Return as used in these Regulations and in the Code of
Incentives refers to the relationship between net profit and the cost resulting from a
concession or decree. The above includes the result of total benefits less total
of costs, divided by total costs.
Benefits taken into consideration include but are not limited to:
1. Taxes generated from direct payroll;
2. Indirect and induced payroll taxes;
3. Sales and Use Taxes (IVU) generated by direct economic activity and
indirectly; and
4. Taxes generated on the consumption of non-residents.
The costs used in computing include:
1. credits;
2. investments;
3. subsidies; Y
4. opportunity costs related to income tax exemption.
These calculations vary by the type of industry and its multipliers by production and by
type of employment according to the tables of the American Industry Classification System
(NAICS, for its acronym in English). Different types of incentives will be considered, using the
Return on Investment formula and other factors to assess the effectiveness of loans,
including, without limitation the following factors:
1. The various sources of tax revenue generated by the activity;
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2. All tax and economic benefits granted;
3. Direct, indirect and induced effects based on multiplying factors
officers provided or endorsed by the Planning Board;
4. Local purchases, including purchase of Manufactured Products in Puerto Rico;
Y
5. An analysis of the benefits attributable to incremental economic activity and not
redundant to sustainable by aggregate local demand.
Chapter 5
Tax exemption pursuant to Section 6070.60 (a) (3) of the Code
Section 5.01 - Tax Exemption Applications
Any person who has established, or proposes to establish a Business in Puerto Rico
Eligible and has received a designation as a Priority Project in Areas of
Opportunity by the Committee may request from the Director the benefits of the Code,
by submitting the corresponding duly sworn application before the
Incentive Office, pursuant to Section 6070.60 (a) (3).
The DDEC Secretary and / or the Director are authorized to request that
information / documentation necessary to evaluate the tax exemption request
according to Section 6070.60 (a) (3).
Section 5.02 - Fees to be charged
The submission of the application for Decrees according to the Section according to the Section
6070.60 (a) (3) will entail the payment of fees in the amount of $ 5,000.00 by
electronic transfer in the Portal established for this by the Incentives Office.
The DDEC Secretary and / or the Director are empowered to establish the rights of the
procedures related to tax benefits served in these Regulations, through
circular letter, administrative determination or any other official pronouncement of the
DDEC
Chapter 6
Miscellaneous Clauses
Section 6.01 - Disclaimer
If any clause, paragraph, subparagraph, sentence, word, letter, article, provision,
section, subsection, title, chapter, subchapter, section or part of this Regulation outside
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annulled or declared unconstitutional, the resolution, opinion or sentence issued for this purpose
It will not affect, harm, or invalidate the remainder of these Regulations. The effect of said
sentence will be limited to the clause, paragraph, subparagraph, sentence, word, letter, article,
provision, section, subsection, title, chapter, subchapter, section or part thereof
that thus it has been annulled or declared unconstitutional.
Section 6.02 - Validity
These Regulations will enter into force on the date of their approval