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Summer 2004-09 Materials in Foreign Trade Zones are exempt from personal property tax

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Number 56
Summer 2004

Materials in Foreign Trade Zones are exempt from personal property tax

The possible imposition of personal property tax on inventories owned by entities operating in Foreign Trade Zones and Sub Zones in Puerto Rico has been a recent matter of concern.


As of press time the Municipal Revenue Collection Center ("CRIM") is yet to do so, but since it is not restrained from doing so, under questionable legal grounds, the taxation of such property may create an unstable business environment to those entities operating within such zones in Puerto Rico. To dissipate doubts which may exist, the Puerto Rico Legislature enacted Act Number 159 of June 24, 2004, and made it effective immediately.

Act 159

Act 159 amended Article 5.01 of the Municipal Property Tax Act of 1991 to clarify specifically that all articles to be used as raw materials for the manufacture of new products, as well as all inventory and equipment owned by entities operating within a Foreign Trade Zone or Sub zone-"duly accredited in accordance with the Foreign Trade Zone Act of 1934," as amended-are exempt from the payment of personal property tax.

In addition, all real estate acquired or developed by a private entity within a Foreign Trade Zone or Sub Zone-"duly accredited in accordance with the FTZ Act"-is also exempted at the rate of 60% of the assessed value, for real property tax purposes.

Act 159 does not clarify what "duly accredited in accordance to the FTZ Act" means. Waiting for the promulgation of regulations is necessary to answer this question.

© 2004 Goldman Antonetti
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