Small Inns identify gaps in fiscal, individual duties for short-term rentals
The Association of Owners of Paradores and Puerto Rican Small Inns revealed several myths and realities regarding the citizen and fiscal responsibility that short-term rentals (STRs), commonly called “the Airbnbs,” must comply with.
“The discussion in the press of House Bill 1557, and the public hearings of San Juan’s Municipal Ordinance Bill 26, have unveiled the sad reality that we live with the fiscal gaps and inconsistencies, and the multiple unfavorable effects reported by the municipalities, condominiums and residential communities, mainly caused by the commercial investors of STRs, and that were confirmed in the study of the Center for a New Economy (CNE),” said Xavier A. Ramírez, president of the association.
In addition, he pointed out that several legislators and mayors, “committed to the well-being of their constituents,” have recognized the need to give specificity to the current regulatory system, and promote its consistent implementation and control; so, they have proposed legislation to regulate this commercial activity, such as House bills 1446 and 1613, Senate Bill 936, and Isabela’s Municipal Ordinance Bill 21.
According to the small-inn owners, Puerto Rico’s regulatory framework requires that all small lodgings receive a patent, and comply with multiple requirements, permits, registrations and licenses to ensure the health, safety and well-being of their guests.
And that, as businesses, they contribute equitably to maintaining and strengthening the infrastructure and public services that they use to advance their businesses. In addition, they are governed by dozens of other laws, ordinances and regulations — state and municipal — applicable to all commercial activities, regardless of their sector, size and location.
“Consequently, given that close to 84% of the [more than] 30,000 STRs on the island are professionalized commercial entities, operating dozens and even hundreds of rentals, some as illegal hotels, it would be fair and appropriate that they comply with the requirements, permits, registrations and licenses, as well as other laws and ordinances applicable to all patented lodgings, and that the government can collect the more than $100 million that escapes annually from the state and municipal coffers,” said Tomás Ramírez, treasurer of the association.
The small-inn owners listed some of the laws and regulations applicable to all small lodgings that STR businesses and professional hosts should be complying with:
- Tourism Lodgings Regulation 8856 – 2016
- Act 272 – 2003 and Regulation 8395 – 2013, on the Room Tax.
- Act 107 – 2020 or Municipal Code of Puerto Rico, requiring the registration of all commercial activities, regardless of their size.
- Municipal Ordinances and Codes of Public Order to ensure a safe and healthy community coexistence.
- Regulations of the General Permits Office (OGPe), applicable to all commercial activities.
- Municipal Revenue Collections Center (CRIM in Spanish) – Personal and Property Contributions for a business.
- Internal Revenue Code for a New Puerto Rico – 2017, of the Treasury, and all related articles and applicable to all commercial activities.
- Regulation 7364 – 2007 of the Fire Department.
- Department of Health Regulation 135 – 2008, on environmental health and swimming pools.
- ADA Act – 2010, on accessible facilities for people with special needs.
- Basic retentions for laws, insurance and taxes of the Labor Department; the State Insurance Fund; and the Internal Revenue Service as employers, or as self-employed, as applicable.
“We trust that these data will provide our legislators, pertinent government agencies and the community with a more balanced picture of the prevailing reality and the serious gaps in compliance carried by STRs’ commercial operations, versus the myths created by rigged communications from the digital platforms and the organizations that promote these STR businesses,” the CNE’s Ramírez said.
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