PUERTO RICO ACTS 20 & 22 (now all falling under Act 60 - Puerto Rico Tax Incentive Code)

Puerto Rico Export Services Act (Act 20 of 2012)

 

Puerto Rico Export Services Act, also known as the Export Services Act (Act 20), encourages certain existing service centers, professionals and other operatives from outside of the island to relocate themselves and/or their operations to Puerto Rico, and supports local service providers in exporting their service. The Export Services Act applies to any bona fide office or establishment located in Puerto Rico and engaged in “eligible businesses,” which include, but are not limited to: (i) professional services, such as legal, tax and accounting services; (ii) research and development; (iii) consulting and advisory services; (iv) advertising and public relations;  (v) corporate headquarters; (vi) educational and training centers; (vii) call centers, (viii) technology services and development of computer programs; (ix) storage and distribution centers and (x), electronic data processing centers, among others.

 

Puerto Rico Individual Investors Act (Act 22 of 2012)

 

Puerto Rico Individual Investors Act, also known as the Individual Investors Act (Act 22), pursues to attract new residents and investment to the Puerto Rico by providing a total exemption from Puerto Rico income tax on all passive income realized or accrued after such individuals become bona fide residents of the island. The tax benefits of Act 22 apply to any individual that becomes a bona fide resident of Puerto Rico on or before the taxable year ending December 31, 2035 (the “Tax Exemption Period”), provided such individual has not been a resident of Puerto Rico at any time during the 15-year period prior to the effective date of the Act.

 

In addition to a full tax exemption on passive income, under Acts 20 and 22, service providers desiring to expand into foreign markets can significantly reduce their tax burden by establishing their businesses in the Commonwealth of Puerto Rico, since a Puerto Rico entity will generally not be subject to federal taxes while benefiting from a reduced tax rate in Puerto Rico.

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For more information, please contact us at info@mongeslaw.com or visit http://www.ddec.pr.gov/en/invest/

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The information contained in this communication, including discussion of U.S. federal income, Puerto Rico income or other tax related matter, is not intended or written to be used, and it cannot be used, for purposes of avoiding U.S. federal, Puerto Rico or local tax penalties. In order to comply with requirements imposed by the U.S. Internal Revenue Service (IRS Circular 230 notice), we inform you that any U.S. tax advice contained in this communication, including any attachments, is not intended or written by the practitioner to be used, and that it cannot be used by any taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) supporting the promotion or marketing of any transactions or matters addressed herein.