For additional information, do not hesitate to contact our offices. Our address is:
Fiddler González & Rodríguez, P.S.C., P.O. Box 363507, San Juan, PR 00936-3507.
We welcome your questions and comments.
Myrna Y. Medina-Massanet
*Special Tax Counsel
March 8, 2017
Administrative Order No. OA-2017-01: Suspension of Tax Credits
On March 7, 2017, the Authority for Financial Advisory and Fiscal Agency of Puerto Rico (the “Authority”) issued Administrative Order No. OA-2017-01 (the “Administrative Order”) to mandate the suspension of new tax credits authorized by various tax incentives laws, among others.
The Administrative Order is based on the Executive Order No. OE-2017-01 (the “Executive Order”), signed by the Governor of Puerto Rico, Honorable Ricardo Roselló Nevarez (the “Governor”), on January 2, 2017. Through the Executive Order, the Governor decreed a State of Fiscal Emergency in the Government of Puerto Rico and ordered the agencies to take the necessary measures to reduce their operational expenses, without adversely affecting those direct services that are essential to protect the health, safety and welfare of citizens.
To that effect, the Authority, on behalf of the Government of Puerto Rico, has ordered the suspension of new tax credits authorized by various laws, including but not limited to the following (“Tax Incentives Laws”):
• Act 78-1993, known as the "Puerto Rico Tourism Development Act";
• Act 46-2000, known as the "Puerto Rico Investment Capital Fund Act";
• Income tax exemption up to $250,000 on eligible dividends;
• Act 98-2001, known as the "Tax Credits for Special Investments in Housing Infrastructure”;
• Act 140-2001, known as the "Tax Credits for Investment in New Construction and
Rehabilitation of Rental Housing for Low or Moderate Income Families Act";
• Act 183-2001, known as the "Puerto Rico Conservation Easement Act";
• Act 212-2002, known as the "Urban Centers Revitalization Act";
• Act 73-2008, known as the "Economic Incentives Act for the Development of Puerto Rico";
• Act 74-2010, known as the "Puerto Rico Tourism Development Act of 2010";
• Act 27-2011, known as the "Puerto Rico Film Industry Economic Incentives Act";
• Act 159-2011, known as the "Act to Provide Incentives for Investments in Solid Waste
Reduction, Disposal and/or Treatment Facilities”;
• Act 302-2012, which amends the Internal Revenue Code to grant a tax credit for donations
to ex-governors’ foundations, among others;
• Act 77-2015, known as the "Tax Credits for Investment in Construction or Rehabilitation of
Housing for Low or Moderate Income Families and Elderly People";
• Sections 1051.09, 1051.07, 1052.03 and 4050.10 of Act 1-2011, known as the "2011 Puerto
Rico Internal Revenue Code, as amended."
The Administrative Order establishes the Committee for the Authorization of Disbursements and Tax Concessions (the “Committee”) and designates the following members: (i) the Executive Director of the Authority or its delegate, who will preside the committee; (2) the Puerto Rico Secretary of Treasury or its delegate; and (iii) the Executive Director of the Office of Management and Budget or its delegate.
The Committee shall be responsible to evaluate and approve new applications for tax credits and those submitted and not authorized as of the effective date of the Administrative Order. The Committee is also entitled to establish limitations on the use of credits granted and to limit the use of such credits to a maximum of four (4) fiscal years.
The Administrative Order requires the Secretary of the Treasury to make an inventory of the tax credits granted and to request all credit holders to provide evidence of compliance with respect to their credits. Those credit holders who do not show the required evidence will not be allowed to claim such credits.
For further information regarding this or any other tax issue, please contact our tax attorneys.
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