Para ordenar al Departamento de Hacienda en colaboración con el Municipio de San Juan, la creación de un plan piloto para demarcar, una “Zonas Libre de IVU” en el área circundante al casco urbano de Río Piedras, en las cuales, las PyMEs estarán exentas del cobro del Impuesto sobre Ventas y Uso (IVU), por un término de cinco (3) años, en aras de incentivar el desarrollo económico y promover la repoblación del área de Rio Piedras en el Municipio de San Juan; establecer la obligación de rendir un informe ante el Gobernador y la Asamblea Legislativa; y para otros fines relacionados.

2025-2028 Session

Puerto Rico bill exempts small businesses from sales tax for five years in Río Piedras urban zone to stimulate economic development and repopulation through pilot program.

Referido a Comisión(es)

Legislative bill overview

Bill RCC 36 proposes creating a pilot program establishing "IVU-Free Zones" in the urban area surrounding Río Piedras in San Juan, where small and medium-sized businesses (PyMEs) would be exempt from the Sales and Use Tax (IVU) for five years. The Department of Treasury, in collaboration with San Juan Municipality, would manage the demarcation and administration of these zones, with mandatory reporting to the Governor and Legislative Assembly.

Why is this important

This bill directly addresses economic development and urban revitalization in Río Piedras, a historically significant but economically struggling area of San Juan. Tax incentives of this scale could influence business investment decisions, employment levels, and residential migration patterns in the targeted zone, while also creating a measurable case study for future tax policy decisions in Puerto Rico.

Potential points of contention

Fiscal impact: The five-year IVU exemption represents foregone tax revenue for the government; the bill lacks specified cost estimates or mechanisms to offset losses

Definition and scope ambiguity: The bill doesn't clearly define zone boundaries, what constitutes a PyME, or which business types qualify, creating implementation challenges

Equity concerns: Exempting only Río Piedras may be perceived as unfairly benefiting one area while other economically depressed municipalities receive no comparable incentive

Enforcement and monitoring: No clear mechanism described for tracking compliance, preventing tax evasion, or ensuring businesses actually relocate rather than simply relocate registrations

Duration and exit strategy: The three-year discrepancy (five years in description vs. three in text) needs clarification; unclear what happens when exemptions expire