AN ACT (H. B. 1785) (No ) (Approved December 16, 2014)

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1 (H. B. 1785) (No ) (Approved December 16, 2014) AN ACT To create the Vending Machine Electronic Registry attached to the Permit Management Office; provide for the powers and duties of the Permit Management Office; establish definitions, application and rules; establish prohibitions and fines; in order to establish a registration sticker to be affixed to every vending machine located in the jurisdiction of the Commonwealth of Puerto Rico, which shall display all the pertinent and necessary information relating to the identification, permits, certifications, or licenses and location, among others, that apply to vending machines in order to keep the people better informed and improve government oversight; among other purposes. STATEMENT OF MOTIVES The mission of the State is, in modern society, to guarantee its constituents the highest quality of life. Issues such as housing, health, security, education, employment, and economy, among others, are essential elements to achieve such goal, since they have an impact on all of aspects of the citizen s individual, family, and professional lives. Our people deserves and demands a strong government entity with financial resources to provide the people with tools, and with the vision and strength to face the challenges of the 21 st century. The economic and fiscal crisis undergone by the island is quite alarming. In view of this situation, the State has focused on searching for tools to attract new revenues to the government s treasury. Strengthening the Island s economy ensures its constituents that they may continue receiving the essential services they need from government agencies.

2 The vending machines industry dates back to the fifties. In said industry, the owners of these machines generate a considerable income vis-à-vis their investment. Many businessmen benefit daily from the income generated by these machines sale; however, many fail to pay income taxes or remit the sales and use tax thus collected to the Department of the Treasury, among other violations of law. This warrants the creation of an effective mechanism that allows the State to identify businessmen that fail to comply with the applicable legal provisions. This Act creates a Vending Machine Electronic Registry along with a registration sticker to be affixed to every vending machine established in the Commonwealth of Puerto Rico. The purpose of said sticker is to allow the Government to continuously monitor such machines in order to efficiently collect Commonwealth s revenues. The Vending Machine Electronic Registry shall be attached to the Permit Management Office. The Registration Sticker shall display the vending machine s unique identification number, name of the facility and the location where the placement of the vending machine has been authorized, and the owner s name and address, among others. Registration stickers shall provide the State and its agencies with all the information related to vending machines. Said stickers shall also provide layers of information that will allow agencies such as the Department of the Treasury, the Municipal Revenues Collection Center, the Office of the Commissioner of Financial Institutions, the municipal finance and collections offices, among others, to determine the geospatial information of vending machines that fail to comply with the corresponding payments and permits, and to carry out the appropriate collection efforts. Let us assume that, throughout the Island, there are two hundred thousand (200,000) vending machines, most of which have not been accounted for tax purposes. Thus, the revenues generated from the oversight thereof would be of great benefit to strengthen the services provided by the Government to its people.

3 It is worth noting that this Act does not impose additional taxes nor creates a new excise tax. The Electronic Registry is an efficient mechanism that will help in reducing the duplication of efforts between government agencies; simplify and expedite oversight efforts; and allow business to be properly informed of their duties and responsibilities. With this oversight measure, the State seeks to access the money that feeds the underground economy. We are currently unable to do so, due to the lack of appropriate technological controls that we would implement with the approval of this measure. There is no doubt that this Act is one of the tools the Government needs to eradicate tax evasion, which prevents it from providing services to the people. BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF PUERTO RICO: Section 1.- Title.- This Act shall be known as the Vending Machine Electronic Registry Act. Section 2.- Definitions.- For purposes of this Act, the following terms shall have the meaning stated below: A) Registration Sticker: The electronic code affixed to a vending machine that displays its identification and any other information related thereto. B) Vending Machine: The machines described in Section 4 of this Act. C) Registry: The Vending Machine Electronic Registry. Section 3.- Creation, Electronic Sticker, and Rules.- The Vending Machine Electronic Registry is hereby created attached to the Permit Management Office.

4 For such purposes, the Registration Sticker shall at least include, but is not limited to, the following information: A) The unique identification number of the vending machine. B) The name of the facility where the placement of the vending machine has been authorized. C) The exact location of the vending machine within the authorized facility. D) Any license, certification, municipal license, permit, or document required to operate or carry out the business activity, including date of effectiveness, issue, and expiration. E) The name and telephone number of the owner of the vending machine. F) Any other information that, in the judgment of the Permit Management Office, may be necessary to achieve the purposes of this Act. Without it being construed as a limitation, the Permit Management Office shall establish by regulations all that pertains to the size, display, location and technology of the Registration Sticker. A Registration Sticker shall be affixed to each individual machine subject to the Registry established herein. In the case of Adult Entertainment Machines, as such term is defined in Act No. 11 of August 22, 1933, as amended, and video game or arcade machines, the following notice shall be attached thereto in a conspicuous place: Any person who uses any gambling machine outside of casinos located in hotels shall be guilty of a felony and subject to imprisonment for not less than five (5) years nor more than ten (10) years. The machines in this establishment are Adult Entertainment, video game or arcade machines and in no way are authorized to award any prize whatsoever; awarding or collecting prizes from these machines may entail a fine of up to ten thousand dollars ($10,000).

5 The registration of a machine and the registration sticker, if no other circumstances arise, shall be issued one time. If there is a change in the placement or location of a machine, the owner shall notify the Permit Management Office within a term that shall not exceed seven (7) days after making such change. If a natural or juridical person owns several vending machines, he/she register and obtain a registration sticker for every machine he/she owns in a single transaction upon filling an application therefor with the Permit Management Office, which in turn, shall issue the registration stickers within twenty four (24)-hours. The Permit Management Office may only impose a fee, ranging from five (5) to fifteen (15) dollars per machine, which shall cover the cost of registration, the registration sticker, and any other expense related to the Registry provided herein. This fee shall be collected once, unless the machine is changed from its location or when any other situation that may require a new registration before said agency arises. The Executive Director of the Permit Management Office is hereby empowered and authorized to regulate all that pertains to the implementation of this Act. Section 4.- Machines Subject to the Registry.- The following machines shall be registered in the Registry herein created: A) Machines that dispense snacks or meals, drinks, candy, toys, movies or video games rentals, cigarettes, among others, in exchange for coins, bills, or any credit. This also includes machines that dispense information related to weight, health, horoscope and other entertainment-related information in exchange for coins, bills, or any credit. B) Automated Teller Machines or ATMs. C) Jukeboxes, pool tables, mechanical or electronic amusement machines or devices operated with coins or tokens, or video games for children and youth when the ability or skill of the player significantly affects the outcome of the game.

6 D) Electronic video and arcade machines operated with coins or tokes with violent or sexual content, when the skills or abilities of the player significantly affect the outcome of the game. E) Adult Entertainment Machines, as such term is defined in Act No. 11 of August 22, 1933, as amended, better known as the Games of Chance Act. Machines provided in and governed by the provisions of Act No. 221 of May 15, 1948, as amended, and Act No. 83 of July 2, 1987, as amended, are hereby exempt from the Registry herein established. Section 5.- Prohibition and Fines.- As of the effective date of this Act, owning or maintaining vending machines that are not duly registered in the Vending Machine Electronic Registry is hereby prohibited. The Executive Director of the Permit Management Office may impose on business owners that operate these machines administrative fines of not less than five hundred dollars ($500) nor more than five thousand dollars ($5,000) per violation, as well as initiate proceedings in any agency relating to the suspension or revocation of other licenses or permits that the owner of or the business where the vending machine is located may hold. The volume of business of the natural or juridical person that owns the vending machine or of the business where vending machine is located as well as the nature of the violation shall be taken into account at the time of imposing fines. In the case of recurrent patterns of violations, the Executive Director of the Permit Management Office may impose fines up to twenty thousand dollars ($20,000). A ninety (90)-day moratorium is hereby granted as of the effective date of the Registry created in this Act, so that the owners of vending machines and/or the owners of the business where these machines are located may take the necessary steps to register and obtain the appropriate electronic registration sticker without

7 being subject to any fine whatsoever. In the case of the placement of new vending machines, the owners thereof shall have thirty (30) days from the placement or start of operations of the vending machines to register the same and obtain the electronic registration sticker provided in this Act. Section 6.- Interpretation with Other Laws.- Registration in the Registry established in this Act shall in no way be construed as a license, certification or permit; it shall be required only for purposes of this Registry, thus, it shall be the responsibility of the owner or person in charge of said vending machine to pay and keep licenses, certifications, and permits in effect. Registration of a vending machine in accordance with this Act shall not be construed as a validation or certification as to the legality of the machine, if it fails to comply with other laws. It is hereby reasserted that, in the case of Adult Entertainment Machines, as such term is defined in Act No. 11 of August 22, 1933, as amended, and electronic video and arcade machines, the award of prizes to players, whether directly or indirectly, is hereby prohibited and may entail penalties to both the owner and/or operator of the machine as well as the prize winner. Section 7.- Severability.- If any section, provision, paragraph, subsection, or part of this Act were held to be null or unconstitutional by a competent Court, the remaining provisions thereof shall remain in full force and effect. Section 8.- Effectiveness.- This Act shall take effect immediately after its approval; however, the provisions related the Registry shall become effective one hundred and eighty (180) days after the approval of this Act.

8 CERTIFICATION I hereby certify to the Secretary of State that the following Act No (H. B. 1785) of the 4 th Regular Session of the 17 th Legislative Assembly of Puerto Rico: AN ACT to create the Vending Machine Electronic Registry attached to the Permit Management Office; provide for the powers and duties of the Permit Management Office; establish definitions, application and rules; establish prohibitions and fines; in order to establish a registration sticker to be affixed to every vending machine located in the jurisdiction of the Commonwealth of Puerto Rico, which shall display all the pertinent and necessary information relating to the identification, permits, certifications, or licenses and location, among others, that apply to vending machines in order to keep the people better informed and improve government oversight; among other purposes. has been translated from Spanish to English and that the English version is correct. In San Juan, Puerto Rico, on this 17 th day of November, Juan Luis Martínez Martínez Director