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PS 865

Para enmendar los Artículos 7.092 y 7.148 de la Ley 107-2020, según enmendada, conocida como “Código Municipal de Puerto Rico”, a los fines de establecer una exención contributiva al pago del impuesto sobre todo el inventario de propiedad mueble perteneciente a un pequeño o mediano comerciante (PyMEs) cuyo volumen de ventas brutas anuales no exceda de cinco millones de dólares ($5,000,000.00); y para otros fines relacionados.

2025-2028 Session

Puerto Rico bill exempts small businesses (under $5M annual sales) from property taxes on inventory to reduce PyME tax burden, but reduces municipal revenues.

Vista Pública: Casa Pilar Defilló, Mayagüez
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Bill Summary · PS 865

Legislative bill overview

Bill PS 865 proposes to amend Puerto Rico's Municipal Code to establish a tax exemption on property taxes for small and medium-sized businesses (PyMEs) whose annual gross sales do not exceed $5 million. This exemption would apply to taxes on all movable property inventory owned by qualifying businesses.

Why is this important

This measure directly affects Puerto Rico's small business sector by reducing their tax burden on inventory holdings, potentially improving cash flow and competitiveness for PyMEs. However, the exemption will reduce municipal tax revenues, which could impact funding for local services and infrastructure unless alternative revenue sources are identified.

Potential points of contention

  • Revenue impact on municipalities: The exemption will reduce tax collections for local governments that depend on property tax revenue, potentially requiring cuts to services or alternative taxes
  • Definition and enforcement challenges: Determining which businesses qualify (sales verification, classification disputes) and preventing abuse of the exemption requires administrative resources
  • Equity concerns: The exemption may disproportionately benefit certain sectors or types of businesses while others pay full taxes, raising fairness questions about tax policy design
  • Scope limitations: The $5 million sales threshold may exclude some struggling businesses just above the limit while including relatively successful ones below it

Compiled from official sources — confirm details with the bill’s official record.

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