Biggins Lacy Shapiro & Company, LLC

Puerto Rico Economic Development Incentive and Financing Programs

TAX EXEMPTIONS

MANUFACTURING ACTIVITIES:  Act 73-2008 (Economic Incentives for the Development of Puerto Rico) provides a series of incentives available for qualified manufacturing activities, including production, scientific R&D, and software development.  A partial list includes:

  • Corporate income tax rate – Reduced from 20-39% to 0-4% based on product manufactured and location of facility
  • Real and personal property tax reductions – generally a 90% reduction
  • Excise, sales and use tax exemptions on materials and machinery/equipment used in production
  • Accelerated depreciation
  • Job creation tax credits – equivalent to $1,000-$2,500 per new job based on facility location
  • Tax credits for purchases of products made in Puerto Rico
  • 50% R&D tax credit

These incentives are “as-of-right,” provided by statute, but only if the project applies for and receives the 15-year tax exemption decree. Further, the company will be expected to comply with certain employment, investment, production and/or sales requirements. 

EXPORT SERVICES:  Act 20-2012 (Act to Promote the Exportation of Services or Export Services Act) provides tax incentives for export service operations exporting services.  Eligible activities include R&D; call centers, shared service centers; professional services; consulting; investment banking and financial services; and hospital and labor services, among others, but they must be entirely export-oriented (i.e., no nexus in Puerto Rico).

  • Corporate income tax rate – Reduced to 3-4%
  • Tax exemption on distributions from earnings and profits – 100% exemption
  • Real and personal property tax exemption – 100% exemption initially, falling to 90% after five years
  • Exemption from municipal license taxes – 60%

These incentives are “as-of-right,” provided by statute, but only if the project applies for and receives the 20-year tax exemption decree. Further, the company will be expected to comply with certain employment, investment, production and/or sales requirements. 

DIRECT FINANCIAL ASSISTANCE

The Puerto Rico Industrial Development Company (PRIDCO), the economic development entity representing Puerto Rico, has discretionary ability to provide direct grant assistance for job creation and infrastructure improvement for preferred projects.

Additionally, PRIDCO has a portfolio of owned properties across the island, which it can make available to preferred projects at below-market lease rates.

TRAINING PROGRAMS

Reimbursable grants for on-the-job and customized job training are available for qualified projects.



 
Biggins Lacy Shapiro & Company, LLC
609-924-9775
info@blsstrategies.com