Summary of Bill PC 1300 (Session 2025-2028, Puerto Rico)
Purpose and intent
- This bill seeks to amend key sections of the Internal Revenue Code for a New Puerto Rico (Ley 1-2011, as amended) to broaden and simplify access to tax credits that promote purchases of Puerto Rico-produced agricultural and manufactured goods.
- The underlying aim is to stimulate demand for local agricultural and manufacturing products, bolster the agricultural sector, create jobs, reduce import dependence, and support the broader economic recovery.
Key provisions and changes
1) Amends Section 1051.07 and adds Section 1051.07 A
- Credit focus: Incremental purchases of Puerto Rican agricultural products (agro) by eligible businesses.
- Eligible purchases: Direct or through related parties, substituting imported products with locally produced agriproducts for local sale.
- Credit amount (Section 1051.07)::
- Range: 5% to 15% of the incremental increase in purchases of Puerto Rican agricultural products over a base period.
- Determination: The exact percentage is set by agreement among the business, the Secretary of Agriculture, and agricultural producer groups; criteria established by regulation.
- Limitation and carryforward: Credit can reduce up to 15% of the business’s Subtitulo A tax liability and unused credits may be carried forward to future years.
- Definitions (highlights):
- “Negocio Elegible” (Eligible Business): Purchases of agro Puerto Rico products for sale to consumers; excludes businesses primarily selling prepared foods eligible for a separate credit.
- “Núcleo de Producción Agrícola” and “Sector Agrícola organizado” defined to align with existing agricultural programming.
- “Producto del agro puertorriqueño”: Puerto Rico-produced or harvested products sold to consumers; excludes manufactured products under certain conditions.
- “Agricultor Cualificado” and “Período Base” rules to anchor the base for measuring incremental purchases.
- Effective date: Credit available for taxable years starting after December 31, 2019.
2) Adds Section 1051.07 A (Credit for Purchases of Agro Puerto Rican Products)
- Credit for buyers: 10% of the value of agro Puerto Rican products purchased (directly or through related parties) to substitute imports.
- Eligible buyers: Businesses that purchase from bona fide Puerto Rican agricultural producers; includes a certification process.
- Limitations: Credit can reduce up to 15% of the buyer’s tax liability under Subtitulo A; unused credits may be carried forward.
- Definitions and process: Clarifies who is an Eligible Buyer and the certification timeline (Secretary to issue a Certification; 100-day review window).
3) Amends Section 1051.09 and adds Section 1051.09 A
- Credit focus: Purchases of Puerto Rico-manufactured products (including components and accessories).
- Eligible businesses: Manufacturing entities and other qualifying businesses, with exclusions for certain entities under other incentive laws and for those primarily selling prepared foods (which have a separate credit under 1051.09 A).
- Manufactured product criteria: A product is considered manufactured in Puerto Rico if more than 40% of its value is added in Puerto Rico; energy and water purchases are not eligible; strict related-party supplier exclusions apply; special treatment for tuna-processing plants.
- Value added: Includes local labor, factory overhead, and locally manufactured inputs.
- Credit amount: Generally 10% of eligible purchases; calculation uses an average of purchases over the prior 3 of the last 10 years to determine the base, with a 15% cap on the credit against tax liability.
- Special provisions for tuna processing plants: If applicable, credit is 10% of total eligible purchases without the average-based limitation.
- Transferability and refunds: Credit is non-transferable except in certain reorganizations; non-reimbursable (no refund).
- Penalties for falseclaims: Heavy penalties (including 100% of the impropriately claimed credit) for misrepresentations by the claimant or the buyer/evaluator.
- Administration: Secretary and the Industrial Promotion Company (as applicable) to issue rules; 100-day review period for eligibility determinations; appeals and review provisions included.
4) Adds Section 1051.09 A (Credit by Purchasing Manufactured Products)
- Parallel framework to 1051.09 for buyers of manufactured Puerto Rico products.
- Eligible buyer: Includes a test based on sales mix (80% or more of retail sales from prepared foods for eligibility), with consideration of beverages and sweets if sold with prepared foods.
- Definitions: Aligns with “Productos manufacturados en Puerto Rico” and clarifies eligible and ineligible products (including exclusions for energy, water, and related-party purchases in some contexts).
- Calculation: 10% credit on eligible purchases; 15% cap on credit against liability; carryforward allowed for unused credits.
- Certification and review: Secretary and the Industrial Promotion Company to regulate documentation; 100-day approval window; remedies if denied (20-day cure period and potential review).
- Penalties: Similar severe penalties for misrepresentation, including exposure to both the Secretary and the Industrial Promotion Director for illegally claimed credits.
- Effective date: Credits available for years beginning after December 31, 2019.
5) Administrative and effective-date provisions
- Regulation: The Secretary of Hacienda, in collaboration with the Secretary of Agriculture and the Industrial Promotion Company, to issue implementing regulations within 120 days of enactment to govern credits and qualification processes.
- Effective date: The law would take effect immediately upon approval.
Who is affected
- Businesses eligible to claim credits for increasing local agro and manufactured product purchases (including restaurants, cafeterias, food retailers, and manufacturing entities).
- Puerto Rican farmers, agricultural cooperatives, and sectoral agricultural groups recognized under Puerto Rico’s agricultural statutes.
- Tax authorities (Departamento de Hacienda) and the Agencia or agency charged with agricultural development and industrial promotion.
- Consumers indirectly benefit via increased local supply and potential stabilization of local food and manufactured goods markets.
Procedural and timeline notes
- The bill has passed first reading, with referral to the Committee on Finance (as of 2026-06-08). Central to the bill are new regulatory rules to be issued within 120 days post-enactment.
- The credits are designed to apply to tax years beginning after December 31, 2019, indicating a prospective but retrospective alignment with earlier rules.
- Certification processes (for Eligible Buyers) impose a regulatory 100-day review period, plus cure periods for denials.
Potential impact
- Aims to significantly expand the use and accessibility of credits for local agro and manufactured product purchases.
- Expected to stimulate demand for Puerto Rican products, promote local agriculture, and increase employment and production over time.
- Quantified projections in the bill’s exposé suggest sizable potential impact on agricultural production and the broader economy, including job creation and reduced import reliance, though exact future effects depend on regulatory design and market response.
