Few places on earth offer a return on investment the way Puerto Rico does. With an every-growing array of services and emerging industries, part of your success will be directly attributable to the incentives available.
In order to bolster the manufacturing sector as well as other strategic areas, the local government has created an aggressive economic and tax incentives program with the purpose of helping operations on the island become more profitable to those companies who manufacture here.
For example, Law 73, 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. Another example is 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.
These incentives were created to ensure Puerto Rico’s competitiveness in attracting investments and they are an opportunity for companies all over the world, particularly those dedicated to state-of-the-art technologies and added value.
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.
Below is a brief overview of incentives based on the following key business sectors:
The new Export Services Act (Act 20 of 2012) looks to establish and develop in Puerto Rico an international export services center. This act seeks to encourage local service providers to expand their services to persons outside of Puerto Rico, promote the development of new businesses in Puerto Rico and stimulate the inbound transfer of foreign service providers to Puerto Rico.
The tax benefits are as follows:
Almost all services provided for export are eligible including research and development, advertisement and public relations, consulting, investment banking, asset management and other financial services, and professional services such as legal, accounting, architectural and engineering services.
The new Individual Investors Act (Act 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. To qualify, the new resident must not have been a resident of Puerto Rico at any time from January 16, 1997 through January 16, 2012. The incredible benefits are as follows:100% tax exemption on interest and dividend income for New Residents of Puerto Rico100% tax exemption on all long-term capital gains accrued after becoming a New Resident.
For more information on the Agro incentives or how to apply, click here.
International Finance and Insurers
International Insurers, Branches, and International Insurer Holding Companies receive attractive tax treatment:
International Banking Entities (IBE) incentives:
Tax & Rate
Income Tax – 0%
Branch Profit Tax – 0%
Dividends/Other distributions of profits – 0%
Distributions in liquidation – 0%
Municipal License Tax – 0%
Property Tax – 0%
In addition, they are not required to file tax returns, and the revenues to non-residents are also exempt from taxation. A response to a complete application presented to the Insurance Commissioner’s Office is granted within 60 days.
Film and Creative Services
Our amazing locations, state-of-the-art equipment, post-production and sound recording facilities, along with one of the highest tax credit programs in the world, allow you to produce your film in Puerto Rico from start to finish.
Act for the Development of the Film Industry Production Incentives
Requirements to receive the 40% and 20% tax credit:
Any project in the development, pre-production, production, or post-production phase that is carried out in Puerto Rico partially or fully is eligible. Qualifying media projects: feature films; short films; documentaries; television programs; series in episodes; mini-series; music videos; national and international commercials; video games; recorded live performances; and original sound track recordings and dubbing.
Preferential Tax Treatment:
Persons engaged in qualifying media and infrastructure projects as well as operators of studios and other purpose-built media facilities with a budget equal to or greater than $50 million (including their suppliers), are eligible for the following preferential tax rates or exemptions:
Film Investment Fund
For more information on the Film incentives or how to apply, click here.
Hospitality and Hotel Development
Puerto Rico’s tax incentives package offers hotel developers a competitive advantage over other destinations. The “Tourism Development Act of Puerto Rico” – (Act No. 74 of 2010) depicts the parameters of such benefits: Benefits under this law will remain valid for a period of 10 years from the starting date of the eligible tourism-related project, and the business operation will be entitled to a 10-year extension:
For more information on other Tourism development incentives, click here.
Education and Training
The Workforce Investment Act includes incentives such as:
Foreign Trade Zones
Puerto Rico has the largest noncontiguous Foreign Trade Zone (FTZ) system in the United States. The system allows companies to obtain significant financial savings, since raw material, components, and packaging can be transported tax-free throughout these zones and items shipped abroad after processing are exempt from U.S. taxes. Benefits include:
If you’re looking for the ideal home-buyer market, look no further than Puerto Rico. With the current incentives, this type of opportunity just doesn’t happen twice. The extension of the Housing Stimulus Program is amplified in phases until June 2013. The new Transition Law of the Housing Stimulus Program, seeks to:
2013: Incentive Legalities Defined | Click Here