Puerto Rico - Solar Tax Credit (Corporate)

August 08, 2010

Summary

The tax credits for FY2011 will not be available; the Puerto Rican Department of Revenue has suspended this tax credit. Puerto Rico enacted legislation in August 2008 in an effort to reduce its 68% reliance on fossil fuels for electricity generation. Act 248 provides a corporate tax payer with a credit for acquiring and installing "solar electric equipment." The credit is allowed against the taxpayer's income tax. During fiscal years 2007-08 and 2008-09, the credit amount is 75% of the cost of the equipment and installation. During fiscal years 2009-10 and 2010-11, the credit is 50% of the cost of the equipment and installation. During fiscal year 2011-12 and beyond, the tax credit is limited to 25% of the cost of equipment and installation. In order to apply for the credit from the Secretario de Hacienda (Department of Revenue), the taxpayer must provide the following documentation:

• Certification that the solar equipment conforms to the Energy Affairs Administration (EAA) norms and specifications, issued by the EAA.
• Certification that the equipment has been installed by an EAA certified and registered installer.
• A five-year factory or distributor warranty for the solar equipment.
• Declaration that the taxpayer has no outstanding debts with the Secretario de Hacienda or Centro de Recaudaciones de Ingresos Municipales (Department of Municipal Revenue Collection).
• A completed application form

If approved, the credit shall be taken during the year of the installation. However if the amount of credit exceeds the taxpayer's liability, the excess credit may be carried forward for up to ten years. In addition, full or partial credit may be transferred, sold or given to any other person. Additional procedures must be followed with the Secretario de Hacienda in order to carry out the credit transfers. The Secretario de Hacienda is authorized to issue up to $15,000,000 of solar income tax credits to corporate tax payers per year, and has the authority to increase the total amount for any given year if it determines that increase to be in the best interest of Puerto Rico. Individuals and/or companies that have received this tax credit must complete and file form 480.71 by August 31, 2009 to the Puerto Rican Secretario de Hacienda to retain the unused portions of the previously granted credits for tax years 2009 and beyond. See the form for complete instructions. This is required as a result of Act #7 the Special Law Declaring Financial Emergency and Creation of Integral Stabilization Plan to Save Puerto Rico's Credit, that passed in March 2009.