“International Banking Center Regulatory Act” [Act No. 52 of August 11, 1989, as amended]

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“International Banking Center Regulatory Act” 
 
Act No. 52 of August 11, 1989, as amended 
 
(Contains amendments incorporated by: 
Act No. 121 of August 11, 1996 
Act No. 13 of January 8, 2004 
Act No. 7 of March 9, 2009 
Act No. 37 of July 10, 2009 
Act No. 110 of September 23, 2013 
Act No. 105 of July 2, 2015 
Act No. 187 of November 17, 2015 
Act No. 81 of July 22, 2016 
Act No. 208 of December 28, 2016) 
 
[Amendments non-incorporated: 
Act No. 45 of February 16, 2024 (amended Sects. 2-23)] 
 
AN ACT 
 
 
To  regulate  the  organization,  incorporation,  operation  and  regulation  of  International 
Banking Entities in Puerto Rico by the Ofﬁce of the Commissioner of Financial 
Institutions; provide tax beneﬁts; repeal Act No. 16 of July 2, 1980, as amended; 
and establish penalties.  
 
 
STATEMENT OF MOTIVES 
 
Act  No.  16  of  July  2,  1980,  as  amended,  known  as  “International  Banking  Center 
Regulatory Act” was originally conceived as an adequate instrument to convert Puerto Rico into 
an important international banking center. Neither said Act nor the amendments made thereto in 
1985, have achieved the expected results.  
Considering that current conditions are favorable for Puerto Rico to really become the 
international banking center, which was always desired, it is necessary and convenient, that the 
legislation which regulates that economic activity be made even more attractive. To that end, the 
aforementioned Act No. 16 is repealed and the approval of a new Act that will allow international 
banking entities to undertake the business activities authorized by this Act in a more competitive 
and efﬁcient manner, is hereby proposed.  
The new Act signiﬁcantly increases the number of persons and entities that may participate 
and the scope of the business activities that may be undertaken. It also increases the economic 
incentives to make it more attractive and consolidates in one legislative bill all the rights and 
obligations  which  affect  the  international  banking  entities,  including,  speciﬁcally,  all  tax 
provisions.  

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Explicitly individuals and entities from the United States are permitted to participate in the

business activities of the international banking entities; new ﬁnancial activities are permitted to

such entities; their organization is made more ﬂexible and the distribution of dividends and proﬁts

to foreign persons and entities is exempted from taxation.

This Act is intended to expand the potential market for Puerto Rico’s international banking

center and will signiﬁcantly enhance the knowledge and promotion of Puerto Rico through the

worlds ﬁnancial community.

The principal beneﬁts of an international banking center in Puerto Rico are the expansion

of the service sector, the direct and indirect creation of jobs and the increase of the island’s

economic activity.

Puerto Rico offers many favorable conditions for carrying out international banking

transactions, such as its political stability, the soundness of its banking system, the close economic

ties with the United States, the high degree of professionalism, bilingualism and technical capacity

of its human resources, a uniﬁed monetary market and system, its privileged geographical location,

and a well-developed communications network.

In order to comply with the purposes stated herein, this Act provides for the establishment

of international banking entities under the supervision and regulation of the Commissioner of

Financial Institutions.

Be it enacted by the Legislature of Puerto Rico:

Section 1. — Short Title. — (7 L.P.R.A § 232 note)

This Act shall be known as the “International Banking Center Regulatory Act”.

Section 2. — Deﬁnitions. — (7 L.P.R.A § 232) [Note: Act No. 45-2024 amended this Section but the official

translation is not available. Please consult the Spanish version]

For purposes of this Act, the following terms are deﬁned as set forth below:

(a) Bank Secrecy Act. — means the “Bank Secrecy Act,” as amended, 31 U.S.C. §§ 5311 et

seq. and 12 U.S.C. Sections l8l8(s), l829(b), and 1951-1959, or any law succeeding or amending it.

(b) Commissioner. — means the Commissioner of Financial Institutions of Puerto Rico.

incorporated or organized under the laws of Puerto Rico, the United States, or a foreign country,

or a unit of such person, to Which a license has been issued pursuant to Section 7 of this Act.

(d) United States. — means the United States of America, any state of the United States, the

District of Columbia, and every possession, territory, political subdivision, and agency thereof,

excluding Puerto Rico.

(e) Insolvency. — refers to the ﬁnancial condition in which an international banking entity

may ﬁnd itself or the person of which an international banking entity is a unit, when it is unable to

pay its debts when they become due or when its paid-in capital has been reduced to less than one-

third (1/3).

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(t) OFAC. — means the Ofﬁce of Foreign Asset Control of the United States Department of

the Treasury

(g) Person. — means an individual, corporation, partnership, association, unit, trust or estate,

syndicate or enterprise of any kind, government or political subdivision or agency thereof.

(h) Domestic Person. — means any natural person who is a resident of Puerto Rico or a person

incorporated or organized under the laws of Puerto Rico, or a person whose principal place of

business is located in Puerto Rico, and the Government or any political subdivision or agency of

the Commonwealth of Puerto Rico.

(i) Foreign Person. — means any person other than a domestic person.

(j) Puerto Rico. — means the Commonwealth of Puerto Rico and every political subdivision

and agency thereof.

(k) Resident of Puerto Rico. — any person established in Puerto Rico with a deﬁned purpose

or interest, the nature of which requires a lengthy stay on the Island, shall be deemed to be a

resident of Puerto Rico for purposes of this Act. Such person must make Puerto Rico his/her home

temporarily, even when his/her intention is to return to his/her domicile outside of Puerto Rico

after the purpose or interest that originally brought him/her to Puerto Rico has been terminated or

abandoned. Such person shall be deemed to be a resident of Puerto Rico as of the day he/she

establishes his/her residence in Puerto Rico, even though temporarily.

An essential requirement for any person to be deemed a resident of Puerto Rico pursuant

to the previous paragraph is to be subject to the Puerto Rico income tax law as if he/she were a

resident of Puerto Rico.

(l) Unit. — includes any subdivision or branch of any person other than an individual, whose

business and operations are segregated from the other business and operations of such person, as

required by this Act.

(m) USA Patriot Act. — means the “Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terrorism Act,” as amended, 115 Stat. 272

(200l).

Section 3. — Authority and Duties of the Commissioner — (7 L.P.R.A § 232a) [Note: Act No. 45-

2024 amended Subsection 3(a) but the official translation is not available. Please consult the Spanish version]

(a) The Commissioner shall:

(1) Adopt, and may thereafter, from time to time, repeal, amend, or supplement rules and

regulations in order to comply with the provisions of this Act;

(2) Collect fees for examinations and audits, receive monies and make disbursements

according to its budget or as otherwise provided by law or regulations; Provided, That for

Fiscal Year 2015-2016, of the funds collected on this account or any other in accordance

with this Act, the sum of two million, seven hundred thousand dollars ($2,700,000) in

account number 0750000238-779-1998, or in any other created for the same purposes in

the Department of the Treasury’s accounting system shall be transferred to the “2015-2016

Legal Liability Fund”. Provided, further, That for Fiscal Year 2016-2017, the sum of one

million dollars ($1,000,000) shall be transferred from account 0750000-238-779-1998 or

any other account created for the same purposes in the Department of the Treasury’s

accounting system to the “Elections Support Fund”.

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(3) open and maintain such bank accounts as may be necessary and appropriate for his

operations;

(4) review and carry out investigations with regard to all applications for licenses to operate

international banking entities;

(5) approve, grant conditional approval, or deny applications for permits and licenses to

operate international banking entities; Provided, that any person whose applications has

been denied or conditionally approved may request a hearing pursuant to the regulations

provided in Section 21 of this Act [Note: Current Section 23 renumbered by Act 110-2013, Art. 9].

(6) supervise, inspect, and audit international banking entities and require from them

periodic reports and other information speciﬁed in the regulations of the Commissioner;

(7) require periodic auditing of the accounts of each international banking entity at least

once a year, which shall include an audit of the ﬁnancial condition of each international

banking entity, its compliance with the terms of this Act and the regulations of the

Commissioner, and such other matters as the Commissioner may deem appropriate;

(8) ascertain the ﬁnancial security and operating soundness of international banking entities

and ensure that they comply with applicable laws and regulations and with any other

provision or requirement which the Commissioner may require by order or regulation;

(9) revoke or suspend a license to operate an international banking entity or impose any

sanctions he may deem necessary and convenient pursuant to regulations; Provided, That

any person whose license has been revoked or suspended, or to whom any other sanction

has been imposed, shall have the right to request a hearing pursuant to the regulations

provided in Section 21 of this Act [Note: Current Section 23 renumbered by Act 110-2013, Art. 9];

(10) suspend, dismiss, or otherwise sanction any director, official, employee, agent, or

individual acting in a similar capacity for an international banking entity, who violates, or

voluntarily or negligently allows another person to violate this Act, its regulations, order,

or any provision of the certiﬁcate of incorporation, partnership agreement or any written

document establishing the international banking entity; Provided, That any individual who

is suspended, dismissed, of sanctioned may request a hearing pursuant to the regulations

provided for in Section 21 of this Act [Note: Current Section 23 renumbered by Act 110-2013, Art. 9];

(11) conduct studies and investigations, on petition of any interested party or on his/her

own motion, of authorized matters or on apparent violations of this Act or the regulations

of the Commissioner, and in doing so, he/she may require the necessary, pertinent, and

critical information to achieve such purposes, as well as any other investigations as are

necessary for the proper administration of the act or the regulations of the Commissioner.

For purposes of this subsection, the applicant or licensee shall be responsible for defraying

the costs of any special investigation ordered by the Commissioner. Any examination or

investigation shall be kept conﬁdential except as provided in Section 21 of this Act [Note:

Current Section 23 renumbered by Act 110-2013, Art. 9], and

(12) take actions and grant remedies as are necessary to enforce the provisions of this Act

or the regulations thereunder.

(b) In the evaluation, analysis, consideration, award, renegotiation, and revision of any incentives

or beneﬁts granted under this Act, the Commissioner of Financial Institutions shall be required to

oversee and ensure compliance with all the provisions of this Act. The Commissioner shall be the

official responsible for verifying and ensuring that international banking entities meet the

eligibility requirements established in this Act.

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The Commissioner shall be required and responsible for preparing a Certiﬁcate of

Compliance every two years, once the international banking entities validate, in the judgment of

said official, that they meet the requirements of this Act. Every two years, the Commissioner shall

verify the information submitted by international banking entities so that the Certiﬁcate of

Compliance is issued not later than on the ﬁfteenth (15th) day of the second (2nd) month after -the

close of the taxable year of the applicant.

The Certiﬁcate of Compliance shall include, in turn, the following information regarding

international banking entities: the name of the entity; the cadastre number of the property or

properties connected to the entity; the merchant registration number; the account connected to the

business as required in the Puerto Rico Internal Revenue Code; the employer identiﬁcation

number; and the information required by Act No. 216-2014, better known as the “Fiscal

Information and Permit Control Act”, as applicable. .

The Certiﬁcate of Compliance shall be issued by the Commissioner through the

Interagency Validation Portal for the Granting of Incentives for the Economic Development of

Puerto Rico, to the agencies, public corporations, and municipalities responsible for awarding

beneﬁts or incentives under this Act. However, during the period in which the Portal is still not

operating, it shall be the duty of the Commissioner to issue a Certiﬁcate of Compliance to the

agencies, , public corporations, ‘and municipalities responsible for awarding the beneﬁts or

incentives under this Act following the ordinary procedure. The ﬁling of the Certiﬁcate of

Compliance by an international banking entity shall be an essential requirement for the agency,

public corporation, or municipality to grant the beneﬁt or incentive provided for in this Act.

Actions taken by the Secretary of the Department of the Treasury, the Executive Director

of the Municipal Revenues Collection Center (CRIM), or any other government official or body,

or public corporation concerned, in connection with the qualiﬁcation process for the granting of

the beneﬁts or incentives under this Act shall be limited to the taxation aspects of the granting of

the beneﬁt or incentive in question, upon the issuance of the Certiﬁcate of Compliance in effect,

as provided in this section. The Commissioner shall be responsible, ﬁrst and foremost, for

overseeing eligibility under any and all provisions of this Act. However, the Secretary of the

Department of the Treasury, the Executive Director of the Municipal Revenues Collection Center

(CRIM), or any other‘ government official or body, or public corporation concerned with any of

the beneﬁts or incentives granted under this Act may contact the applicant and the Commissioner

should further information be needed to validate the data on the Certiﬁcate of Compliance, and

shall notify and request the applicant to supply such information in order to-rectify the situation.

The Secretary of the Department of the Treasury or the Executive Director of the Municipal

Revenues Collection Center (CRIM) may deny any tax incentives or beneﬁts requested if, in their

judgment, the information requested has not been supplied. Moreover, the provisions of this Act

shall not preclude in any manner the power conferred to the Secretary of the Treasury under

Section 6051.02 of Act No. 1-2011, known as the “Puerto Rico Internal Revenue Code of 2011”;

and, if necessary, the power to revoke any incentives previously granted by virtue of a Certiﬁcate

of Compliance, in accordance with the corresponding act; or the power to refer the case to the

pertinent agency or public corporation for the corresponding action.

such documents as he may deem necessary to carry out any investigation which, in his judgment,

shall be required to comply with the provisions of this Act: The information obtained through this

process shall be kept conﬁdential.

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(d) If a person fails to comply with a summons issued by the Commissioner, the latter may seek

whatever remedy may be legally applicable, from the Court of First Instance of Puerto Rico;

Provided, That the court with jurisdiction may order such person to comply with the summons of

the Commissioner, under admonition of contempt of court. ' ,

(e) Within the term of ninety (90,) days after the closing of each ﬁscal year of the Commonwealth

of Puerto Rico, the Commissioner shall remit to the Treasury Department, to be covered into the

General Fund of the Government of Puerto Rico, ﬁfteen percent (15%) of the net income obtained

from his functions related to this Act for such ﬁscal year.

Section 4. — Interest Rates and Reserves — (7 L.P.R.A § 232b) [Note: Act No. 45-2024 amended this

Section but the official translation is not available. Please consult the Spanish version]

The Commissioner may not establish interest rates to be paid or charged by an international

banking entity, nor require that deposit reserves be kept.

Section 5. — Organization — (7 L.P.R.A § 232c) [Note: Act No. 45-2024 amended Subsection 5(b) but

the official translation is not available. Please consult the Spanish version]

(a) An international banking entity may be:

(1) Any person, other than an individual, incorporated or organized under the laws of

Puerto Rico, of the United States, or of any other country, or

(2) constituted as a unit of another person, other than an individual, incorporated or

organized under the laws of Puerto Rico, of the United States, or of any other country.

(b) The articles of incorporation, the partnership agreement or any other written document

establishing an international banking entity shall specify: ,

(1) The name by which it is to be known.

(2) The street, number and town where its principal place of business shall be established

in Puerto Rico.

(3)

(A) In the case of a corporation, the amount of its authorized capital stock, which

shall not be less than ﬁve million dollars ($5,000,000) and of which at least two

hundred and ﬁfty thousand dollars ($250,000) shall be fully paid at the time the

license is issued in accordance with the provisions of Section 7 of this Act [7

L.P.R.A. § 232e]; Provided, That the Commissioner may authorize a lesser

authorized and/or paid-in capital, by request of the interested party, when the type

of business or powers that the international banking entity intends to exercise or

other circumstances thus merit it, in the criterion of the Commissioner; the number

of shares into which it shall be divided and the par value of each share. If the shares

are to be issued in series, the date of issue of each series, as well as the manner and

term in which payment thereof shall be made.

(B) In the case of a person other than an individual or a corporation, the amount of

the proposed capital, which shall not be less than ﬁve million dollars ($5,000,000)

and of which at least two hundred and ﬁfty thousand dollars ($250,000) shall have

been fully paid at the time the license is issued in accordance to the provisions of

Section 7 of this Act [7 L.P.R.A. § 232e]; Provided, That the Commissioner may

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authorize a lesser proposed and/or paid-in capital, by request of the interested party,

when the type of business or powers that the international banking entity intends to

exercise or other circumstances thus merit it, in the criterion of the Commissioner;

the name and address of its partners and other owners.

(4) The term of its existence, which in the case of a corporation, may be perpetual.

(5) The purposes for which it is organized, including a speciﬁc limitation of its operations

to carry out only those services authorized in Section 12 of this Act [7 L.P.R.A. § 232j]

[Note: Current Section 13 renumbered by Act 110-2013, Art. 4].

(6) Any other provisions which may be convenient for the proper operation of the business.

Such provisions shall not be in conﬂict with other laws of Puerto Rico.

(7) Any other provisions required by the regulations of the Commissioner.

executed by the person of which it is a unit and in the form prescribed by the regulations of the

Commissioner, which shall specify:

(1) The name by which the unit shall be known.

(2) The street, number, and town where its principal place of business in Puerto Rico shall

be established.

(3) The amount of the authorized or proposed paid-in capital of the person of whom the

international banking entity is to be a unit, whose capital shall not be less than ﬁve million

dollars ($5,000,000), of which at least two hundred and ﬁfty thousand dollars ($250,000)

shall have been fully paid at the time the license is issued; Provided, That the Commissioner

may authorize a lesser authorized, proposed, and/or paid-in capital, by petition of the

interested party, when the type of business or powers that the international banking entity

intends to exercise or other circumstances thus merit it, in the criterion of the

Commissioner.

(4) The purposes for which the unit is organized, including a speciﬁc limitation of its

operations to carry out only those services authorized in Section 12 of this Act [7 L.P.R.A.

§ 232j] [Note: Current Section 13 renumbered by Act 110-2013, Art. 4]

(5) such other provisions as may be required by the regulations of the Commissioner.

Section 6. — Application for Permit. (7 L.P.R.A § 232d)

(a) Any person may apply to the Commissioner for a permit to organize an international banking

entity. The application shall be in writing, in the form specified by the regulations of the

Commissioner and shall be accompanied by:

(1) The proposed articles of incorporation, partnership agreement or other written

document establishing the international banking entity or the certification required by

Section 5 of this Act;

(2) a nonrefundable application fee of five thousand dollars ($5,000), and

(3) such other documents as may be specified or required by the regulations of the

Commissioner.

(b) Every application shall include, in the form required by the regulations of the Commissioner:

(1) The identity and business history of the applicants;

(2) the city or town in Puerto Rico and the street and number or any other address where

its principal place of business in Puerto Rico shall be maintained;

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(3) the identity and business and credit history of any person who, directly or indirectly,

possesses or controls or intends to possess or control ten percent (10%) or more in the

capital of the proposed international banking entity;

(4) a statement of the assets and liabilities of any applicant and of any person who possesses

or controls or intends to possess or control ten percent (10%) or more of the interest in the

capital of the international banking entity, or of the person of which the proposed

international banking entity shall be a unit, for each of the three (3) years preceding the

application;

(5) the identity and background of all proposed directors, and officials or persons who

intend to act in a similar capacity in the international banking entity, and

(6) such additional information as may be required by the regulations of the Commissioner.

Commissioner shall carry out all the necessary investigations of the applicants and of the

application, including a review of:

(1) The financial solvency, credit, banking experience and business integrity of the

applicants, their directors and officers, or persons who intend to act in a similar capacity in

the proposed international banking entity;

(2) the adequacy of the capital available for the operations of the proposed international

banking entity;

(3) the adequacy of the articles of incorporation, partnership agreement or other written

document belonging to any applicant and, when appropriate, of the articles of

incorporation, partnership agreement or other written document establishing the proposed

international banking entity, and

(4) the impact that the proposed international banking entity shall have on the economy of

Puerto Rico.

(d) The expenses incurred by the Commissioner for the above indicated investigation shall be

defrayed by the applicants. The Commissioner shall claim said investigation expenses from the

applicants.

(e) Should the Commissioner determine that the results of his investigation are favorable, he may,

at his sole and exclusive discretion, and after payment of the investigation expenses as established

in subsection (d) of this section, issue to the applicants a permit to organize an international

banking entity, subject to such conditions as the Commissioner may establish.

(f) When the Commissioner issues a permit pursuant to the provisions of this section, the interested

party shall file with the Department of State of Puerto Rico the articles of incorporation,

partnership agreement or other written document establishing the proposed international banking

entity, or those of the person of which the international banking entity shall be a unit, as well as

the certification provided for in Section 5 of this Act in the case of a unit, and the permit issued by

the Commissioner. The Department of State shall issue under its official seal, a certification of the

filing of the stipulated documents.

Section 7. — License — (7 L.P.R.A § 232e) [Note: Act No. 45-2024 amended Subsection 7(a) but the official

translation is not available. Please consult the Spanish version]

(a) At his discretion, the Commissioner may issue to the applicants a license to operate an

international banking entity upon receipt of:

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(1) the certiﬁcation by the Department of State referred to in Section 6 of this Act;

(2) the payment of ﬁve thousand dollars ($5,000) as an annual fee for the license to operate

an international banking entity. This license fee shall be paid annually within ﬁfteen (15)

days following each anniversary date of the issuance of the original license;

(3) a certiﬁed copy of the articles of incorporation, partnership agreement or other written

document establishing the international banking entity or the certiﬁcation of the person of

which the international banking entity shall be a unit;

(4) a copy of the bylaws or internal governing agreements adopted by the Board of

Directors or similar governing body of the international banking entity, which shall be

certiﬁed by its Secretary or an individual acting in a similar capacity, before a notary public;

(5) evidence, in the form required by the regulations of the Commissioner, that the capital

of the international banking entity has been subscribed to, issued and paid-in, to the extent

and under such conditions as the Commissioner may establish at his sole discretion;

(6) a statement, in the form required by the regulations of the Commissioner and

authenticated before a notary public, by the Secretary of the Board of Directors or the

person acting in a similar capacity for the international banking entity, or for the person of

which the international banking entity shall be a unit, to the effect that the international

banking entity has complied with the provisions of this Act and of the regulations of the

Commissioner and that it is ready to commence operations; Provided, that a license shall

not be issued if the Commissioner believes, or has reason to believe, that the applicants

have violated the provisions of this Act or of the regulations of the Commissioner;

Provided, further, that any person to whom a license has been denied, may request a hearing

pursuant to the regulations provided in Section 21 of this Act [Note: Current Section 23 renumbered

by Act 110-2013, Art. 9].

(b) No international banking entity shall commence operations unless it has been previously issued

a license in accordance with the provisions of this Act.

Section 8. — License Renewal. — (7 L.P.R.A § 232e-1) [Note: Act No. 45-2024 amended Subsection

8(b)and 8(c) but the official translation is not available. Please consult the Spanish version]

(a) Every license shall remain in effect until its expiration, which shall be on the anniversary date

of the original license.

(b) Every license renewal application shall be submitted within thirty (30) days before the

expiration date of each license. It shall contain:

(l) A description of any material change in the information provided to OCIF in the initial

license application;

(2) Evidence that the licensee maintains the capital required by the Commissioner as

provided in Section 5 of this Act, computed in accordance with generally accepted

accounting principles;

(3) A statement, as provided in the Regulations of the Commissioner, undersigned by the

chief executive ofﬁcer or any other executive ofﬁcer expressly authorized by the Board of

Directors of the concerned institution, certifying:

a) That the international banking entity has implemented the necessary and

appropriate procedures and systems to comply with the provisions of the ‘Bank

Secrecy Act’;

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b) A statement acknowledging the entity’s management responsibility to establish

in such entity, and to maintain and comply with the Bank Secrecy Act Compliance

Program;

c) That the necessary policies and procedures have been adopted in the entity to

comply with the provisions of OFAC, as applicable; and

d) Any other related information that the Commissioner may require by regulations.

certiﬁed check, postal or bank money order, payable to the Secretary of the Treasury. The

Commissioner may extend the license renewal period.

(d) If the licensee fails to ﬁle the license renewal application and/or fails to pay the applicable fees

within the established term or during any additional term that the Commissioner authorizes, if any,

it shall be understood that the licensee intends to surrender the license to operate an international

banking entity, and shall follow the process established therefor by Regulations, and may not

continue operating such business.

Section 9. — Amendments to the Articles of Incorporation — (7 L.P.R.A § 232f) [Note: Act No.

45-2024 amended this Section but the official translation is not available. Please consult the Spanish version]

(a) No amendment whatsoever shall be adopted to the articles of incorporation, partnership

agreement or other written document establishing an international banking entity or to any

certiﬁcation executed in accordance with Section 5 of this Act, unless such amendment has been

previously approved, in writing, by the Commissioner.

(b) After the due adoption of any amendment to the articles of incorporation, partnership

agreement or other written document establishing an international banking entity or to any

certiﬁcation executed in accordance with Section 5 of this Act, the same shall be ﬁled with the

Department of State.

Section 10. — Unencumbered Assets, Capital, Shares of Capital Stock — (7 L.P.R.A § 232g)

[Note: Act No. 45-2024 amended Subsection 10(a) but the official translation is not available. Please consult the

Spanish version]

(a) Every international banking entity shall possess not less than three hundred thousand dollars

($300,000) of unencumbered assets or acceptable ﬁnancial securities, or that lesser sum that, by

request of the interested party, the Commissioner authorizes, when the type of business or powers

that the international banking entity intends to exercise or other circumstances thus merit it, in the

[judgment] of the Commissioner: The unencumbered assets shall be physically located in Puerto

Rico and subject to the requirements regarding the same provided by the regulations of the

Commissioner.

(b) The capital of, or assigned to an international banking entity shall not be reduced without the

prior written approval of the Commissioner.

issue:

(1) additional shares of capital stock or other securities convertible into additional shares

of capital stock, in the case of a corporation; or

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(2) additional capital or other securities convertible into additional capital, in the case of a

person other than a corporation;

(3) notwithstanding the above, in the case of a corporation, it may issue additional shares

of capital stock or other securities convertible into shares of capital stock, and in the case

of a person other than a corporation, issue additional capital or other securities convertible

into additional capital, without the prior written approval of the Commissioner, provided

such additional shares or capital are issued directly to the shareholders of the international

banking entity previously identiﬁed pursuant to Section 6(b)(3) of this Act. In such event,

the international banking entity shall notify the Commissioner of all the particulars of such

issuance within the ten (10) business days following said date of the issue.

Section 11. — Transfer of Capital or Control of an International Banking Entity — (7

L.P.R.A § 232h) [Note: Act No. 45-2024 amended this Section and added Subsection 11(d) but the official

translation is not available. Please consult the Spanish version]

(a) Except as provided in the regulations adopted by the Commissioner, no sale, encumbrance,

assignment, merger, barter, exchange or other transfer of shares, interest or participations in the

capital of an international banking entity may be initiated without the previous written

authorization of the Commissioner, if by way of such- transaction, a person could acquire, directly

or indirectly, control of ten per-cent (10%) or more of any class of stock, interest or participations

in the capital of an international banking entity.

(b) Every sale, encumbrance, assignment, merger, barter, ex- change or other transfer of shares of

capital stock, interest or participation in the capital of an international banking entity, as set forth

in subsection (a) of this section, shall be null “ab initio" if the written authorization of the

Commissioner has not been obtained.

transfers referred to in subsection (a) of this section, the identity of the transferor and of the

transferee and the nature of the transaction. The Commissioner may require such additional

information as he deems necessary to determine if the transfer would be detrimental to the security

or ﬁnancial solvency of the international banking entity or if it would violate any law, rule or

regulation governing the international banking entity, in which case the Commissioner may deny

the authorization for such transaction; Provided, that any person to whom such authorization is

denied shall have the right to request a hearing pursuant to the regulations provided in Section 21

of this Act [Note: Current Section 23 renumbered by Act 110-2013, Art. 9].

Section 12. — No Transfer of License — (7 L.P.R.A § 232i) [Note: Act No. 45-2024 amended this

Section but the official translation is not available. Please consult the Spanish version]

No license issued in accordance with this Act may be sold, assigned, transferred, pledged,

used as security, or otherwise encumbered.

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Section 13. — Permitted transactions; Prohibited Transactions — (7 L.P.R.A § 232j) [Note:

Act No. 45-2024 amended this Section but the official translation is not available. Please consult the Spanish version]

(a) Upon receipt of a license to operate an international banking entity in accordance with Section

7 of this Act, an international banking entity may:

(1) Accept deposits from foreign persons in checking accounts as well as demand or ﬁxed

term deposits and interbank deposit of funds, or otherwise borrow money from

international banking entities and from any foreign person pursuant to the regulations

adopted by the Commissioner.

(2) Accept properly collateralized deposits or otherwise borrow duly secured money from

the Government Development Bank for Puerto Rico and the Economic Development Bank

for Puerto Rico.

(3) Make or place deposits in, and otherwise give money as a loan to, the Government

Development Bank for Puerto Rico, in the Economic Development Bank for Puerto Rico,

in any international banking entity, or in any bank, including banks organized under the

laws of Puerto Rico, and branches in Puerto Rico of banks that are foreign persons.

(4) Make, procure, place, guarantee, or service loans; Provided, that none of such loans

may be granted to a domestic person, except as provided in subsection (3)(a) of this section

and in the cases of ﬁnancial securities for debt issue transactions in Puerto Rico.

(5)

(A) Issue, conﬁrm, give notice, negotiate or reﬁnance letters of credit; Provided,

That the client and the beneﬁciary requesting the letter of credit is not a domestic

person, or;

(B) issue, conﬁrm, give notice, negotiate, or reﬁnance letters of credit in

transactions for the ﬁnancing of exports, even if the beneﬁciary is a domestic

person.

(6) Discount, rediscount, deal or otherwise trade in money orders, bills of exchange and

similar instruments, provided that the drawer and the original debtor, is not a domestic

person.

(7) Invest in securities, stocks, notes and bonds of the Caribbean Basin Projects Financing

Authority, in securities of the Government of Puerto Rico, its public agencies and

instrumentalities, its municipalities, and its political subdivisions, or in other local

securities, if there should exist any, exempted from the payment of taxes in Puerto Rico.

(8) Carry out any banking transactions permitted by this Act in the currency of any country,

or in gold or silver, and participate in foreign currency trade.

(9) Underwrite, distribute, and otherwise trade in securities, notes, debt instruments, drafts

and bills of exchange issued by a foreign person for ﬁnal purchase outside of Puerto Rico.

(10) Engage in insurance brokerage for risks or objects that reside, are located or that will

be executed outside of Puerto Rico, subject to the regulations established by the

Commissioner of Insurance of Puerto Rico.

(11) Underwrite insurance for risks or objects that reside, are located or that will be

executed outside of Puerto Rico, subject to the regulations established by the Commissioner

of Insurance of Puerto Rico.

(12) Engage in trade ﬁnancing of import, export, barter and exchange of raw materials and

ﬁnished products activities with domestic persons, when the Commissioner has determined

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through regulations or order, that the international aspects of the underlying transaction

override any involvement of the local ﬁnancial and business community, and that such

activities would be appropriate for the international banking entity; Provided, that these

transactions allowed by exception shall not enjoy the exemption granted by subsection (25)

of Section 9 of Act No. 113 of July 10, 1974, as amended [21 L.P.R.A. § 651h].

(13) Engage in any activity of a ﬁnancial nature outside of Puerto Rico which would be

allowed to be done, directly or indirectly, by a bank holding company or by a foreign office

or subsidiary of a United States bank under applicable United States law.

(14) After obtaining a special permit from the Commissioner, act as ﬁduciary, executor,

administrator; registrar of stocks and bonds, property custodian, assignee, trustee, attorney-

in-fact, agent or in any other ﬁduciary capacity; provided, that such ﬁduciary services shall

not be offered to, nor inure to the beneﬁt of domestic persons.

(15) Acquire and lease‘ personal property at the request of a lessee who is a foreign person,

pursuant to a ﬁnancial lease agreement which complies with the regulations of the

Commissioner.

(16) Buy and sell securities outside Puerto Rico, on the order of, or at its discretion, for

foreign persons and provide investment advice in relation to such transactions or separate

therefrom, to such persons.

(17) Act as a clearinghouse in relation to ﬁnancial contracts or instruments of foreign

persons, as authorized by regulations adopted by the Commissioner.

(18) Organize, manage and provide management services to international ﬁnancial entities

such as investment companies and mutual funds, provided that the stock or participation in

the capital of such companies is not distributed directly by the international banking entity

to domestic persons.

(19) Engage in such other activities as are expressly authorized by the regulations or order

of the Commissioner, or are incidental to the execution of the services authorized by this

Act and the regulations of the Commissioner.

(20) Participate in the granting and securing of loans that originate and/or are secured by

the Government Development Bank for Puerto Rico and the Economic Development Bank

for Puerto Rico.

(21)

(A) Finance, through loans or ﬁnancial securities, projects in those areas of priority

for the Government of Puerto Rico in those cases designated as extraordinary by

the Secretary of the Treasury and the Commissioner.

(B) The Commissioner shall adopt the pertinent regulations to implement this

provision. However, said regulations shall require, in all cases, the prior

authorization of such loans by the Secretary of the Treasury and the Commissioner.

(22)

(A) Establish, with the Commissioner’s authorization, branches outside of Puerto

Rico, in the United States mainland and its possessions, or in other foreign

countries. The Commissioner of Financial Institutions is hereby empowered to

provide, through regulations, the procedure to obtain said authorization, and the

amount payable for application investigation expenses and annual quota fees for

each one of said branches.

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(B) The Commissioner is hereby empowered to authorize an international banking

entity to establish a service unit or ofﬁce in Puerto Rico, in which only speciﬁc

operations related to the services of the international banking entity shall be

conducted, in the manner and form provided through regulations, but by no means

shall said service unit or ofﬁce constitute a branch.

(23) With the prior authorization of the Commissioner, provide to other international

banking entities or to foreign persons or entities outside of Puerto Rico, those services of

ﬁnancial nature, as these are deﬁned and generally accepted in the banking industry of the

United States and Puerto Rico and which are not listed in this section.

(b) The international banking entity shall not:

(1) Accept deposits nor borrow money from domestic persons, except from the

Government Development Bank for Puerto Rico, the Economic Development Bank for

Puerto Rico and the international banking entities.

(2) Make, procure, place, secure, or service loans, unless all loan proceeds are to be used

outside of Puerto Rico, with the exception of the cases permitted in clauses (20) and (21)

of subsection (a) of this section.

(3) Issue, conﬁrm, or give notice of letters of credit, unless all proceeds of the letter of

credit are to be used outside of Puerto Rico, and that both the issuer and the beneﬁciary are

foreign persons, with the exception of export ﬁnancing transactions in which the

beneﬁciary is a domestic person.

(4) Discount bills of exchange, unless all the proceeds of the bills of exchange would be

used outside of Puerto Rico and that both, the drawer and the beneﬁciary, are foreign

persons.

(5) Purchase or hold any of its own capital stock, or the capital stock of or the interest in

the capital of the person of which it is a unit, except when previously authorized by the

Commissioner.

(6) Grant any kind of ﬁnancing or credit to any of its directors, ofﬁcers, employees or

stockholders, except when previously authorized in writing by the Commissioner.

(7) Directly or indirectly place, underwrite, insure or reinsure risks or objects that reside,

are located or will be executed in Puerto Rico, or participate in reciprocity or retrocession

arrangements or agreements covering or relating to such risks or objects, or assign

insurance to, or assume reinsurance from any insurer authorized to do or who is doing

insurance business in Puerto Rico.

separated all transactions made or conducted by such unit, from every other transaction made or

conducted by the person of which the international banking entity is a unit.

Section l4. — Responsibilities of the Holders of a License to Operate an International

Banking Entity — (7 L.P.R.A § 232j-1) [Note: Act No. 45-2024 amended this Section but the official

translation is not available. Please consult the Spanish version]

Every holder of an International Banking Entity license shall:

(a) Adopt written business policies and procedures to ensure that the international banking entity

complies with the applicable state and federal laws, including this Act, the Bank Secrecy Act, and

the USA Patriot Act;

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(b) Faithfully comply with the applicable state and federal laws and the regulations applicable to

the international banking entity, including this Act, the Bank Secrecy Act, and the USA Patriot

Act;

the USA Patriot Act, when necessary;

(d) Follow the practice rules and procedures that are necessary in the business to meet the

requirements of OFAC, as applicable.

Section 15. — Personnel. (7 L.P.R.A § 232k) [Note: Act No. 45-2024 amended this Section but the official

translation is not available. Please consult the Spanish version]

(a) The international banking entity shall employ on a full-time basis a minimum of four (4)

persons at its business ofﬁce or offices in Puerto Rico. Provided, That the Commissioner may

authorize a lesser number of employees upon request of the interested party, for which

authorization the Commissioner shall evaluate factors such as the powers conferred by the license

granted under this chapter, the nature and complexity of its operations in Puerto Rico, and those

other criteria established in the regulations of the Commissioner.

(b) The full-time employees of a person of which an international banking entity is a unit which

render some services to such entity, shall be deemed to be full-time employees of such entity for

purposes of the employment requirements set forth in subsection (a) of this section.

Section 16. — Accounts and registers — (7 L.P.R.A § 232l) [Note: Act No. 45-2024 amended

Subsection 16(a) but the official translation is not available. Please consult the Spanish version]

(a) The original of the account books and registers of the international banking entity shall be kept

in its main business ofﬁce in Puerto Rico and shall reﬂect such details and be kept in such a manner

as may be required by the regulations of the Commissioner.

(b) Such account books and registers have to be segregated and kept separately from the account

books and registers of any other person.

deemed as belonging to such international banking entity regardless of Whether such entity is a

person or constitutes a unit of another person, and a duplicate thereof may be kept and maintained

in its country of origin.

Section 17. — Reports — (7 L.P.R.A § 232m) [Note: Act No. 45-2024 amended this Section but the official

translation is not available. Please consult the Spanish version]

Every international banking entity shall submit to the Commissioner all such reports as

may be required by the regulations of the Commissioner, including an annual ﬁnancial statement

prepared by certiﬁed public accountants, licensed to practice in Puerto Rico, as well as interim

ﬁnancial statements.

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Section 18. — Revocation, Suspension or Surrender — (7 L.P.R.A § 232n) [Note: Act No. 45-2024

amended this Section but the official translation is not available. Please consult the Spanish version]

(a) The license issued under Section 7 of this Act shall be subject to revocation or suspension by

the Commissioner, upon previous notice and hearing pursuant to the regulations provided in

Section 21 of this Act [7 L.P.R.A. § 232s] [Note: Current Section 23 renumbered by Act 110-2013, Art. 9] if:

(1) An international banking entity or the person of which said international banking entity

is a unit, contravenes or fails to comply with any of the provisions of this Act, any

regulations of the Commissioner, or any of the terms and conditions of the license to

operate an international banking entity.

(2) An international banking entity fails to pay the annual license fee of ﬁve thousand

dollars ($5,000).

(3) The Commissioner ﬁnds that the business or affairs of an international banking entity

are conducted in a manner that is not consistent with the public interest.

(b) An international banking entity or the person of which said international banking entity is a

unit, may at any time, and in the manner provided by the regulations of the Commissioner,

surrender its license to operate an international banking entity.

Section 19.—Dissolution — (7 L.P.R.A § 232o) [Note: Act No. 45-2024 amended Subsection 19(a) and

19(c) but the official translation is not available. Please consult the Spanish version]

(a) The Commissioner may appoint a receiver and order the dissolution of an international banking

entity if the license of said international banking entity or of the person of which the international

banking entity is a unit, is revoked or surrendered pursuant to Section 16 of this Act.

(b) The receiver appointed shall be a person of recognized moral qualities, with vast experience in

the ﬁeld of banking or ﬁnance, and his performance with the international banking entity shall be

secured by an adequate bond, to be paid by the international banking entity itself.

of this Act and shall:

(1) take possession of the assets and liabilities, books, records, documents and ﬁles which

belong to the international banking entity;

(2) collect all loans, charges and fees owed to the international banking entity;

(3) pay all obligations and debts of the international banking entity, after having paid the

necessary costs of the receivership; and (4) supervise the dissolution and liquidation of the

international banking entity.

Section 20.— Penalties — (7 L.P.R.A § 232p) [Note: Act No. 45-2024 amended Subsections 20(a), 20(b)

and 20(e) but the official translation is not available. Please consult the Spanish version]

(a) If any director, ofﬁcial or individual acting in a similar capacity of an international

banking entity or of a person of which the international banking entity is a unit, violates, or

voluntarily or negligently permits any director ofﬁcer, agent, or employee of the international

banking entity or of the person of which the international banking entity is a unit, to violate this

Act, the regulations of the Commissioner, or any provision of the certiﬁcate of incorporation,

partnership agreement or other written document establishing the international banking entity, the

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Rev. 17 de abril de 2024 www.ogp.pr.gov Página 17 de 22

Commissioner shall schedule and summon the interested parties to an administrative hearing

pursuant to the regulations provided in Section 21 of this Act [Note: Current Section 23 renumbered by Act

110-2013, Art. 9]. Once the hearing is held and after the Commissioner determines that a provision

mentioned in this subsection has been violated, he shall take the corresponding action, including

the suspension or dismissal of such director, ofﬁcer or individual.

(b) Any ofﬁcial or employee of an international banking entity, or of a person of which it

is a unit, who on behalf of such international banking entity receives any deposit or contract for a

loan with the knowledge that the international banking entity or the person of which it is a unit is

insolvent, shall commit a felony and, if convicted, shall be punished with imprisonment for not

less than three (3) years nor more than seven (7) years, or with a ﬁne of not less than ﬁve thousand

dollars ($5,000) nor more than ten thousand dollars ($10,000) or with both penalties at the

discretion of the Court.

of which the international banking entity is a unit, who illegally appropriates, embezzles, removes

or voluntarily misuses any moneys, funds, credits or securities of an international banking entity,

or who, without due authorization, issues or draws any certiﬁcate of deposit, draws any order or

bill of exchange, carries out any type of acceptance or assignment of a note, bond, money order,

bill of exchange, and any person who, with the same intention, aids or abets any director, ofﬁcial

or employee to violate any provision of this section, shall commit a felony and, if convicted, shall

be punished with imprisonment for a term of not less than ten (10) years nor more than twenty (20)

years, or with a ﬁne of not less than ﬁfteen thousand dollars ($15,000) nor more than thirty

thousand dollars ($30,000), or with both penalties at the discretion of the Court.

(d) Any director, ofﬁcial, or employee of an international banking entity or of the person

of which the international banking entity is a unit, who voluntarily misrepresents the ﬁnancial

condition of an international banking entity or about any transaction to be carried out by, or carried

out by the international banking entity, or who declines to provide information legally requested

by the Commissioner, shall commit a felony and, if convicted, shall be punished with

imprisonment for not less than ﬁve (5) years nor more than ten (10) years, or with a ﬁne of not less

than eight thousand dollars ($8,000) nor more than seventeen thousand dollars ($17,000), or with

both penalties at the discretion of the Court. (e) The preceding provisions of this Section shall not

be construed in any manner whatsoever to limit the power of the Commissioner to impose

administrative ﬁnes for violations of this Act or the regulations of the Commissioner.

Section 21.—Conﬁdentiality — (7 L.P.R.A § 232q)

(a) The information that the international banking entity provides to the Commissioner under the

provisions of this Act and the regulations adopted by the Commissioner pursuant to the same, shall

be kept conﬁdential, except: (i) when disclosure of such information is required by law or judicial

order, or (ii) through a formal petition of a domestic or foreign government agency in the course

of the exercise of its supervisory function, when the Commissioner has grounds to believe that it

is in the best public interest. In such case, the information shall be delivered under a binding

agreement with the concerned government entity of maintaining the conﬁdential nature of said

information. Provided, That the exception under the preceding clause (2) shall under no

circumstances be extended to information regarding clients of the international banking entity.

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Section 22.—Transitional Provisions — (7 L.P.R.A § 232r) [Note: Act No. 45-2024 amended this

Section but the official translation is not available. Please consult the Spanish version]

An international banking entity, to which a license was issued pursuant to Section 10 of

Act No. 16 of July 2, 1980, as amended, known as “International Banking Center Regulatory Act”

herein repealed, shall be deemed on the effective date of this Act as an international banking entity

organized pursuant to this Act and shall enjoy all the rights, privileges, powers and authority and

shall be subject to the duties, obligations, penalties, responsibilities, conditions and limitations

provided in this Act.

Any regulations adopted pursuant to said Act No. 16 not in conﬂict with this new Act, shall

remain in effect until amended or repealed.

Section 23. — Administrative Hearings, Adjudication Proceedings and Judicial Review —

(7 L.P.R.A § 232s) [Note: Act No. 45-2024 amended this Section but the official translation is not available.

Please consult the Spanish version]

All matters related to administrative hearings procedure, adjudicatory proceedings and

judicial review shall be set forth by regulations to be promulgated by the Commissioner pursuant

to the provisions of Act No. 170 of August 12, 1988, known as “Uniform Administrative

Procedures Act of the Commonwealth of Puerto Rico” [Note: Repealed and replaced by Act No. 38-2017].

Section 24.—Inapplicabi1ity of Existing Laws.

The provisions of Act No. 55 of May 12, 1933, as amended, known as the “Banking Law”,

nor the provisions of Act No. 1 of October 15, 1973, which ﬁxes the maximum interest rates or

charges permitted on loans, nor Article 1649 of Act No. 5 of August 17 ,-1933, as amended, which

ﬁxes the interest rates in the absence of an agreement and the maximum interest rates that can be

ﬁxed by special agreements. Notwithstanding the above, nothing in this Act shall be understood

to be a limitation of the powers of the Governor of Puerto Rico or of the person designated by him,

conferred in Section 42 of Act No. 55 of May 12, 1933, as amended; Act No. 2 of March 21, 1933,

as amended; Act No. 17 of April 18, 1933; Act No. 12 of July 15, 1935, and in Act No. 10 of May

7, 1951, shall not be applicable to the inter- national banking entities created by this Act.

Section 25.—Property Tax Exemption — (7 L.P.R.A § 232u)

The real and personal property belonging to an international banking entity duly authorized

under this Act, shall be exempt from the levying of property taxes.

Section 26.—Municipal License Tax Exemption — (7 L.P.R.A § 232v)

The international banking entities duly authorized by this Act, shall be exempt from the

payment of municipal license taxes levied by Act No. 113 of July 10, 1974, as amended, known

as the “Municipal License Tax Act” [Note: Repealed and replaced by Act No. 107-2020, “Municipal Code”.

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Section 27.—Income Tax Exemption — (7 L.P.R.A § 232w)  
 
(a) Income derived by the international banking entities duly authorized under this Act, from 
activities described in subsection (a) of Section 12 of this Act [7 L.P.R.A. § 232j], shall not be 
included in the gross income of said entities and shall be exempt from the tax imposed by Act No. 
120 of October 31, 1994, [13 L.P.R.A. §§ 8006 et seq.], known as the “Puerto  Rico  Internal 
Revenue Code of 1994” or its preceding law, except for the provisions of subsection (b) of this 
section. 
(b) General Rule.— 
(1) Excess net income derived in the taxable year by every international banking entity 
subject to taxation, as said term is deﬁned in paragraph (A) of this clause, shall be subject 
to the tax rates established in the Puerto Rico Internal Revenue Code of 1994, as amended 
[Note: Repealed and replaced by Act No. 1-2011, known  as  the  “Puerto Rico  Internal Revenue  Code of 
2011”], for corporations and partnerships. For the purposes of this subsection, the following 
terms shall mean:  
(A)  “Taxable  international  banking  entity”.  —Means  an  international  banking 
entity that operates as the unit of a bank organized under the Puerto Rico Banking 
Act, whose net income derived from activities described in subsection (a) of Section 
12 of this Act [7 L.P.R.A. § 232j] exceeds twenty percent (20%) of the net income 
derived in the taxable year by said bank (including income derived by said unit). 
Said net income shall be computed pursuant to the provisions of Subchapter B of 
Chapter 2 of Subtitle A  of the “Puerto Rico  Internal Revenue Code of 1994” as 
amended [13 L.P.R.A. §§ 8421-8428 et seq.] [Note: Repealed and replaced by Act No. 1-
2011, known as the “Puerto Rico Internal Revenue Code of 2011”] 
(B)  Excess  net  income.—Means  the  net  income,  computed  pursuant  to  the 
provisions of Subchapter B of Chapter 2 of Subtitle A of the “Puerto Rico Internal 
Revenue  Code  of  1994”  as  amended  [13  L.P.R.A.  §§ 8421-8428 et seq.] [Note: 
Repealed and replaced by Act No. 1-2011, known as the “Puerto Rico Internal Revenue Code of 
2011”],  derived  by  the  taxable  international  banking  entity  from  the  activities 
described in Section 13(a) [7 L.P.R.A. § 232j], which exceeds twenty percent (20%) 
of the total net income derived in the taxable year by the bank of which it operates 
as a unit (including the income derived by said unit).  
(2) The income generated by the international banking entities that, as determined by the 
Commissioner, function as an afﬁliated unit or entity of a business that operates under the 
industrial incentive laws, as said terms are deﬁned in Act No. 135 of December 2, 1997, as 
amended [13 L.P.R.A. §§ 10101 et seq.], known as the “Tax Incentives Act of 1998”, or 
any preceding or successor act thereof, shall not be included in the gross income of said 
entities and shall be exempt from the tax imposed in clause (1) of this subsection (b) and 
in Act No. 120 of October 31, 1994, as amended, known as “Puerto Rico Internal Revenue 
Code of 1994” [Note: Repealed and replaced by Act No. 1-2011, known as the “Puerto Rico Internal 
Revenue Code of 2011”]. 
(3) Taxable years beginning  after December 31, 2008,  and before  January  1,  2012.—
Notwithstanding the provisions of Subtitle A of the “ Puerto Rico Internal Revenue Code 
of 1994” as amended [13 L.P.R.A. §§ 8401-8697] [Note: Repealed and replaced by Act No. 1-
2011, known as the “Puerto Rico Internal Revenue Code of 2011”], and this Act, during each of the 

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taxable  years  beginning  after  December  31,  2008,  and  before  January  1,  2012,  every 
international  banking  entity  shall  be  subject  to  a  special  ﬁve-percent  (5%)  tax  on  the 
amount of its net income for the taxable year, to be computed in accordance with the 
provisions of Subtitle A of the “Puerto Rico Internal Revenue Code of 1994” as amended 
[13 L.P.R.A. §§ 8401-8697] [Note: Repealed and replaced by Act No. 1-2011, known as the “Puerto 
Rico  Internal  Revenue  Code  of  2011”], but only to the extent that said net income does not 
constitute an excess net income for the purposes of clause (1) of this subsection. Unless 
otherwise provided by the Secretary of the Treasury by regulation, circular letter or other 
administrative  determination  or  communication  of  a  general  nature,  such  tax  shall  be 
reported, paid, and collected in such form and manner as established in Subtitle A of the “ 
Puerto  Rico  Internal  Revenue  Code  of  1994”  as  amended  [13  L.P.R.A.  §§ 8401-8697] 
[Note: Repealed and replaced by Act No. 1-2011, known  as  the  “Puerto  Rico  Internal Revenue  Code of 
2011”], for corporations to pay general income taxes. 
(c) The interest, ﬁnance charges, dividends or shares in partnership proﬁts received by international 
banking entities duly authorized by this Act shall not be deemed gross income from sources in 
Puerto Rico for the purposes of Section 1123(a)(1) and (2) of the “Puerto Rico Internal Revenue 
Code of 1994” as amended [13 L.P.R.A. §§ 8523] [Note: Repealed and replaced by Act No. 1-2011, known 
as the “Puerto Rico Internal Revenue Code of 2011”], or of any analogous provision from any preceding 
or subsequent Act.  
(d)  The  provisions  of  Section  1147  of  the  “Puerto  Rico  Internal  Revenue  Code  of  1994”  as 
amended [13 L.P.R.A. §§ 8547] [Note: Repealed and replaced by Act No. 1-2011, known as the “Puerto Rico 
Internal Revenue Code of 2011”], or of any analogous provision from any preceding or subsequent act, 
which imposes the obligation to withhold income taxes at source in the case of payments made to 
nonresident  individuals,  shall  not  apply  to  interest,  ﬁnance  charges,  dividends  or  shares  in 
partnership proﬁts received from international banking entities duly authorized by this Act. 
(e) The  provisions  of  Section  1150  of  the  “Puerto  Rico  Internal  Revenue  Code  of  1994”  as 
amended [13 L.P.R.A. §§ 8550] [Note: Repealed and replaced by Act No. 1-2011, known as the “Puerto Rico 
Internal Revenue Code of 2011”], or of any analogous provision from any preceding or subsequent act, 
which imposes an obligation to withhold income taxes at source in the case of payments made to 
resident  or  foreign  corporations  and  partnerships  which  have  not  received  income  actually 
connected with a trade or business in Puerto Rico, shall not apply to interest,  ﬁnance charges, 
dividends  or  shares  in  partnership  proﬁts  received  from  international  banking  entities  duly 
authorized by this Act. 
(f) Income derived by a nonresident foreign individual consisting of interest,  ﬁnance  charges, 
dividends  or  shares  in  partnership  proﬁts  received  from  international  banking  entities  duly 
authorized by this Act, shall not be subject to the tax levied by Section 1221(a)(1) of the “Puerto 
Rico Internal Revenue Code of 1994” as amended [13 L.P.R.A. § 8605(a)(1)] [Note: Repealed and 
replaced by Act No. 1-2011, known as the “Puerto Rico Internal Revenue Code of 2011”], or by any analogous 
provision from any preceding or subsequent Act.  
(g) Income derived by a foreign corporation or partnership consisting of interest, ﬁnance charges, 
dividends  or  shares  in  partnership  proﬁts  received  from  international  banking  entities  duly 
authorized by this Act, shall not be subject to the tax levied by Section 1231(a)(1)(A) of the “Puerto 
Rico Internal Revenue Code of 1994” as amended [13 L.P.R.A. § 8615(a)(1)(A)] [Note: Repealed 
and  replaced  by  Act  No.  1-2011,  known  as  the  “Puerto  Rico  Internal  Revenue  Code  of  2011”],  or  by  any 
analogous provision from any preceding or subsequent Act. 

“International Banking Center Regulatory Act” [Act No. 52 of August 11, 1989, as amended]

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(h) The provisions of Section 1232 of Act No. 120 of October 31, 1994, as amended [13 L.P.R.A.

§ 8616], known as the “Puerto Rico Internal Revenue Code of 1994” [Note: Repealed and replaced by

Act No. 1-2011, known as the “Puerto Rico Internal Revenue Code of 2011”], or any analogous provision from

any preceding or subsequent act, shall not be applicable to international banking entities duly

authorized by this Act.

(i) The interest and other income derived from [ﬁnance] granted to projects in areas of priority for

the Government of Puerto Rico, that have been designated as extraordinary by the Secretary of the

Treasury and the Commissioner pursuant to Section 12 of this Act [7 L.P.R.A. § 232j] , shall be

treated as [non-exempt] for the exclusive purpose of assigning deductions to income exempt under

Sections 1018, 1023 and 1024 of Act No. 120 of October 31, 1994, as amended [13 L.P.R.A. §§

8418, 8423, and 8424], known as the “Puerto Rico Internal Revenue Code of 1994” [Note: Repealed

and replaced by Act No. 1-2011, known as the “Puerto Rico Internal Revenue Code of 2011”]. Furthermore, the

obligations resulting from said ﬁnancing shall not be considered exempted obligations for the

purposes of the above indicated sections of the Puerto Rico Internal Revenue Code of 1994.

[(j)] None of the provisions of this section shall be construed as a limitation to the power of the

Secretary of the Treasury to apply to the international banking entity or to any other person the

provisions of Act No. 120 of October 31, 1994, as amended known as the “Puerto Rico Internal

Revenue Code of 1994” [Note: Repealed and replaced by Act No. 1-2011, known as the “Puerto Rico Internal

Revenue Code of 2011”], or of any analogous provision from any preceding or subsequent act.

Section 28.—-Effect of Existing Legislation — (7 L.P.R.A § 232x)

(a) Insofar as the laws of Puerto Rico are not inconsistent with the provisions of this Act, the laws

of Puerto Rico shall prevail.

(b) Insofar as the provisions of this Act are inconsistent with any other laws of Puerto Rico, the

provisions of this Act shall prevail.

Section 29.—Severability of Provisions — (7 L.P.R.A § 232 note)

The provisions of this Act are independent and severable; should any of its provisions be

declared unconstitutional by a Court of competent jurisdiction, the other provisions of this Act

shall not be affected, and the Act so modiﬁed by the decision of such Court shall continue in full

force and effect.

Section 30.—Construction — (7 L.P.R.A § 232 note)

This Act shall be liberally construed in order to achieve its objectives in view of its beneﬁts

for the People of Puerto Rico.

Section 31.—Repeal — (7 L.P.R.A § 232 note)

Act No. 16 of July 2, 1980, as amended,3 is hereby repealed.

“International Banking Center Regulatory Act” [Act No. 52 of August 11, 1989, as amended]

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Section 32.—Effective Date — This Act shall take effect immediately after its approval.

Note. This compilation was prepared by the Puerto Rico Office of Management and Budget staff

who have striven to ensure it is complete and accurate. However, this is not an official compilation

and may not be completely free of error. It contains all amendments incorporated for reading

purposes only. For accuracy and exactitude please refer to the act original text and the collection

of Laws of Puerto Rico Annotated LPRA. The state links acts are property of Legislative Services

Office of Puerto Rico. The federal links acts are property of US Government Publishing Office

GPO. Compiled by the Office of Management and Budget Library.

See also the Original version Act, as approved by the Legislature of Puerto Rico.