Attractive Business Incentives in Puerto Rico

09 / 14 / 2015  By Puerto Rico Sothebys International Realty

With 2016 rapidly approaching, it’s time to start gearing up for the next tax season, and with the advantageous Business Incentives that Puerto Rico’s economic development team has put into place, Tax Laws  Act 20 / Act 22 / Act 27 / Act 73 / Act 273 / EB5  might be just be the perfect way to spend a 183 days in paradise…

Puerto Rico Sotheby’s International Realty can offer assistance with these Incentives, introductions to our financial consulting partners and insight on navigating Puerto Rico’s Luxury Real Estate Market in 2016.

Listed below is information about Puerto Rico and brief overview's of the many Tax Advantages Puerto Rico has to offer.

Puerto Rico, officially the Commonwealth of Puerto Rico, is a self- governing, territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the US Virgin Islands and the British Virgin Islands.

Puerto Rico has authority over its internal affairs unless US law is involved. The major differences between Puerto Rico and the 50 states are exemptions from some aspects of the Internal Revenue Code, its lack of voting representation, and the ineligibility of Puerto Rican’s to vote in presidential elections.

The island has been part of the U.S. since 1898 and those born in Puerto Rico have been citizens of the U.S. since 1917. Yet, because Puerto Rico is not a state, federal taxes do not apply generally to income generated by individuals or corporations within the Commonwealth. Puerto Rico corporations are treated for federal tax purposes as foreign corporations and are not generally subject to U.S. corporate taxes. Individual bona-fide residents of Puerto Rico are not subject to federal taxes on income derived from Puerto Rico sources. In addition, Puerto Rico has provided incentives for manufacturing operations for over four decades. Products manufactured in Puerto Rico will carry the Made in USA label.

Act 20 › Export Services Act

Act No. 20 of 2012, known as the Act to promote the exportation of services, provides attractive tax incentives for companies that establish and expand their export services businesses in the island.

In addition, the law promotes investments on research and development and initiatives from the academic and private sectors by granting credits and exemptions for these activities. Furthermore, it helps to decrease operational and energy spending for companies moving to the island in order to help their operations remain profitable and efficient.

Act 22 › Individual Investors Act

Act No. 22 of 2012, Seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona-fide residents of Puerto Rico. This relocation should result in new local investments in real estate, services and other consumption products, and in capital injections to the Puerto Rico banking sector, all of which will accelerate the economy of the island.

Act – 27 › Film Industry Economic Incentives

On March 4, 2011, Puerto Rico enacted Act No. 27 of 2011, as amended, known as the “Puerto Rico Film Industry Economic Incentives Act” (the “Act”) to solidify its position as one of the leading jurisdictions for the production of film, television and other media projects. The Act provides tax exemptions and tax credits to businesses engaged in film production in Puerto Rico. To avail from such benefits, a business needs to become an exempt business by applying for a tax concession and obtaining a tax exemption decree.

Act 73 › Economic Incentives for the Development of Puerto Rico

Act No. 73 of 2008, known as the Economic Incentives Act for the Development of Puerto Rico, was established to provide the adequate environment and opportunities to continue developing a local industry, offer an attractive tax proposal, attract direct foreign investment and promote economic development and social betterment in Puerto Rico.

Act 273 › International Financial Center Regulatory Act

On September 25, 2012 (“Act 273”), Puerto Rico enacted Act No. 273, also known as the “International Financial Center Regulatory Act”. Act 273 provides tax exemptions to businesses engaged in eligible activities in Puerto Rico. To avail from such benefits, a business needs to become an International Financial Entity (“IFE”) by applying for a permit and license and obtaining a tax exemption decree.

EB5 › Immigrant Investor Program

The U.S. Congress created the fifth-employment based EB-5 immigrant visa category in 1990 for the qualified foreigner willing to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs. 

The investment requirement is typically US $1,000,000 per foreign investor. A minimum investment of US $500,000 is accepted if the investment is made in a designated Target Employment Area, such as a rural or high unemployment area, and through a designated EB-5 Regional Center. Puerto Rico is a Target Employment Area and therefore all projects offered by Iconic-Caribbean EB-5 Regional Center requires only the minimum of $500,000 in investment by the foreign investor.

Learn more about these Tax Advantages, and how to invest your business in Puerto Rico.

[fc id=’2′][/fc]

—  —

ALSO SEE  ›  Puerto Rico Investment Summit — 2016

2016 Puerto Rico Investment Summit


Join the 2016 PRIS series as we bring together tax experts, government officials, early adopters, innovators, and business leaders to share their experiences and expertise on all the opportunities that Puerto Rico has to offer. From panels led by early adopters, and multi-national CEO’s, to one-on-one interviews and networking opportunities, attendees enjoy two days of learning and unique networking events created in the most beautiful venues in Puerto Rico.


Secretary of Economic
Development and



CEO of Paulson & Co.





Learn More ›

You might also like

More Story