Few places on earth offer a return on investment the way Puerto Rico does. With an ever-growing array of services and emerging industries, part of your success will be directly attributable to the available incentives. In order to bolster the manufacturing sector and other strategic areas, the local government has created aggressive economic and tax incentives programs with the purpose of helping operations on the island become more profitable to those companies who manufacture here.
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.
The government of Puerto Rico is composed of three branches: the executive, legislative, and judicial branch. The executive branch is headed by the governor. The legislative branch consists of a Legislative Assembly, made up of a Senate as its upper chamber and a House of Representatives as its lower chamber. The Senate is headed by the President of the Senate, while the House of Representatives is headed by the Speaker of the House. The governor and legislators are elected by popular vote every four years.The island is divided into 78 municipalities (counties) with various degrees of autonomy from the central government. San Juan is the capital and most populated municipality, combined with nine other municipalities which form the San Juan Metropolitan Area. Within the 78 municipalities, 4 are considered major cities.
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 carry the Made in USA label.
In 2008, a new Economic Incentives Act for the Development of Puerto Rico (hereinafter, Act 73 or Economic Incentives Act) went into effect. Also during the year 2012, two additional laws were enacted: Act 20 and Act 22, promoting the export of services from Puerto Rico and the transfer of wealthy individuals to Puerto Rico. These new laws established a legal framework of incentives designed to stimulate the establishment and development of a wide array of ventures, among them manufacturing, social media, other internet-based operations, commercial businesses, and the export of services.
|Puerto Rico Tax Incentives|
|The Export Services Act 20 (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 Individual Investors Act 22 (Act 22 of 2012) seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on allPASSIVE INCOMErealized 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 6-year’s preceding the enactment of the Act on January 12, 2012|
The Act provides the following benefits to new Puerto Rico bona-fide residents on qualified investments:
Bona fide farmers qualify for the following tax benefits:
For more information on the Agro incentives or how to apply: businessinpuertorico.com
International Finance & Insurers
|International Insurers, Branches, and International Insurer Holding Companies receive attractive tax treatment: International Banking Entities (IBE) incentives:|
Tax & Rate
Film & 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:
Film Investment Fund:
For more information on the Film incentives or how to apply: puertoricotaxincentives.com
Hospitality & 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:|
Education & 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:|
Renewable Energy (Green Energy Fund)