P.R. Laws tit. 23, § 11111
For purposes of this chapter, the following terms, phrases and words shall have the meaning and scope stated below:
(a) Job Creation and Retention Agreement.— An agreement by and between an eligible SMB and the Government, whereby the eligible SMB commits to create and retain jobs and other conditions, as appropriate, in exchange for the applicable benefits provided in this chapter that are specifically listed in said agreement. Agreements shall state their effective term and shall expire upon expiration of the benefits granted thereunder, as provided in this chapter or the agreement itself, and subject to the availability of funds for the award of such benefits by the Company.
(b) SMBs.— Includes the following types of businesses: (1) microbusinesses – generate an annual gross income of less than five hundred thousand dollars ($500,000) and have seven (7) employees or less; (2) small-sized businesses - generate an annual gross income of less than three million dollars ($3,000,000) and have twenty-five (25) employees or less on a full-time basis or its equivalent, as such term is defined in this chapter; and (3) medium-sized businesses - generate an annual gross income of less than ten million dollars ($10,00,000) and have fifty (50) employees or less or its equivalent, as such term is defined in this chapter.
(c) Eligible SMB.— Any natural or juridical person, including corporations, partnerships, limited liability companies or any other entity or organization doing business or considering to do business in Puerto Rico, regardless of their place of organization; that is a SMB as such term is defined in this chapter; that is not receiving payments, subsidies, refunds, or incentives of any kind by the Government for job creation and retention; and that meets all other requirements of this chapter and the regulations thereof to receive benefits thereunder in relation to eligible incremental jobs created by the SMB. In addition, it must have a fifteen-percent (15%) minimum local capital investment or deposit and maintain at least twenty percent (20%) of the gross sales generated in Puerto Rico every month in local banks and/or cooperatives for a period of not less than three (3) years.
(d) Eligible new SMB.— An eligible SMB as provided in subsections (b) and (c) of this section that has not begun its main business operations (although organized) at the time the job creation agreement was executed. No business that has been operating through affiliates or resulting from a reorganization, as defined in §§ 30011 et seq. of Title 13, known as the “Puerto Rico Internal Revenue Code of 2011”, shall be considered an eligible new SMB.
(e) Eligible expanding SMB.— An eligible SMB as provided in subsections (b) and (c) of this section operating as of January 1st, 2014, that, on the filing date of the application for incentives under this chapter, has retained the total number of employees thereof during the six (6) months preceding the filing date of the application; and that, (1) is considering to increase the number of full-time employees (forty (40)-hour workweek) by at least twenty percent (20%) on or before six (6) months as of the execution of the agreement; or (2) has made changes in its operations (such as adding products or a line of business) that, in the judgment of the Executive Director, constitute an expansion of the eligible SMB that shall lead to the creation of new jobs and yield other financial benefits for the community where the eligible expanding SMB operates, without impairing the competitiveness of other existing SMBs. For purposes of this definition, the voluntary resignation of an employee shall not be considered a reduction in the number of employees of an eligible expanding SMB. Moreover, the dismissal of an employee for just cause who is replaced by another employee with a similar salary and position shall not be considered a reduction in the number of employees of an eligible expanding SMB.
(f) Eligible SMB with net operating losses.— An eligible SMB as provided in subsections (b) and (c) of this section operating as of January 1st, 2014, that has had net operating losses during each one of the last two (2) taxable years preceding the filing date of the application for incentives under this chapter, and has retained the total number of employees thereof during the six (6) months preceding the filing date of the application. For purposes of this definition, the voluntary resignation of an employee shall not be considered a reduction in the number of employees of an eligible SMB with net operating losses. Moreover, the dismissal of an employee for just cause who is replaced by another employee with a similar salary and position shall not be considered a reduction in the number of employees of an eligible SMB with net operating losses.
(g) Eligible incremental job.— The increase in the number of eligible employees, as such term is defined in this section, hired by an eligible SMB under a job creation agreement as of the effective date of this act and the execution of the agreement pursuant to which it is applying for the benefits thereunder.
(h) Eligible job or employee.— A regular, full-time employee (or its equivalent), as defined in this section. It shall not include employees working under contract who are recruited through employment agencies.
(i) Regular job or employee.— An individual who is a resident of Puerto Rico and is included in the eligible SMBs” payroll shall be counted as a regular employee. The number of regular employees shall include the number of individuals who work a full-time shift for the eligible SMB and/or “the number equivalent to full-time employees”. The number equivalent to full-time employees shall be calculated by adding the hours worked by employees who are not hired on a full-time basis and dividing the sum by five hundred and twenty (520) to determine the quarterly eligible incremental job, and by one hundred and sixty-two (162) to determine the monthly eligible incremental job.
(j) Definitions of other terms:
(1) Government.— The Government of the Commonwealth of Puerto Rico and all its municipalities, instrumentalities, political subdivisions, agencies, and public or quasi-public corporations.
(2) Code.— Sections 30011 et seq. of Title 13, known as the “Internal Revenue Code of 2011”, or any subsequent law that supersedes it.
(3) Company or PRTEC.— the Puerto Rico Trade and Export Company.
(4) Executive Director.— The Executive Director of the Puerto Rico Trade and Export Company.
(5) Secretary of the Treasury.— The Secretary of the Department of the Treasury of Puerto Rico.
(6) Act.— The “SMBs Job Generation and Retention Act”, this chapter.
History —July 31, 2014, No. 120, § 1.1.