On March 7, 2017, the Puerto Rico Fiscal Agency & Financial Advisory Authority (“AAFAF” by its Spanish acronym) issued Administrative Order OA-2017-01 to stay the issuance of new tax credits pursuant to various tax incentives laws, including the ones listed below (the “Order”). The consideration and issuance of new tax credits under those tax incentives laws, including applications that have been submitted but are pending authorization, will fall upon a new committee created by the Order to be known as the Committee for the Authorization of Disbursements and Tax Concessions (the “Committee”). The Committee will be comprised of the Executive Director of the AAFAF, the Secretary of the Treasury, and the Executive Director of the Office of Management and Budget, or their delegates.
The Committee is also authorized to establish limitations to the use of credits that have been granted, including a term restriction of a maximum of four years for the use of the credits. The Order directs the Secretary of the Treasury to prepare a list of the tax credits that have been granted and request the holders of tax credits to report the amount of such tax credits, in the form and manner established by the Secretary of the Treasury for these purposes. The tax credit holders that do not comply with this requirement will not be allowed to claim such credits.
The responsibility of analyzing and authorizing requests for disbursements related to special assignments from previous fiscal years is also delegated into the Committee.
The list of statutes granting tax credits that has been included in the Order, which is not exhaustive, is as follows:
The Order does not contain enough information to determine with certainty what will be the impact on tax credits that have been granted, the availability of tax credits for new projects or new investments, or the procedures that will have to be followed under each tax incentives law. Therefore, the development of the implementation of this Order should be closely monitored.