Act 60 of July 1, 2019 known as the Tax Incentives Code of Puerto Rico (“Incentives Code”) incorporated in a single code the tax incentives formerly granted under Act 20 and Act 22 of 2012 as well as many other tax incentives. The Incentives Code continues to provide the appropriate environment and opportunities to make Puerto Rico a center of international services, to encourage eligible businesses to offer their services from Puerto Rico to clients who are located outside of Puerto Rico.
Main changes to Act 20 of 2012:
Act 20 new code of incentives (Act 60)
Old 60% exemption on municipal license taxes
New 50% exemption on municipal license taxes.
Old 90% exemption on real and personal property taxes on property used in the Act 20 business
New 75% exemption on real and personal property taxes on property used for the export, promotion, and or trade services.
Old No employee requirement
New One (1) employee required if the company’s projected or actual volume of business exceeds three million ($3,000,000)
Old 20-year decree term, renewable for 10 years
New 15-year decree term, renewable for 15 years.
Main changes to Act 22 of 2012:
Act 22 new code of incentives (Act 60)
Old Individual should not have been a resident of PR six (6) years prior to January 17, 2012.
New Individual should not have been a resident of PR ten (10) years prior to July 1, 2019.
Old Annual $5,000 contribution to a certified 1101.01 PR nonprofit organization
New Annual $10,000 contribution to a certified 1101.01 PR nonprofit organization. $5,000 has to be donated to a nonprofit that works with the eradication of child poverty and that is listed in the annual legislative funds list released by the Joint Special Commission of Legislative Funds for Community Impact.
Old No residential property purchase requirement
New Purchase required within 2 years after the effectiveness of the Grant. Must be purchased from an unrelated person and be of exclusive domain and residential use. Can be purchased as a sole owner or jointly with a spouse.
Old No definition on “Securities” or on “Other Assets”
New Definitions are now created and capital gain exemptions are applicable to: “Securities”, which means any note, bond, promissory note, debt evidence, options, futures contracts, forward contracts, stock, and any other similar instrument or with similar characteristics, including derivative instruments adopted by circular letter, administrative determination, regulation or any other pronouncement made jointly by the Secretary of DEDC and the Secretary of Treasury. “Other Assets” means commodities, coins, and digital assets based on blockchain technology.
Old Decree effective until December 31, 2035
New 15-year decree term, renewable for 15 years.
Eligible Services
Chapter 3 applies to businesses that have a “bona fide” office or establishment in Puerto Rico and conduct eligible services as an export service provider or an export commerce business.
- Among the eligible Export Serviceactivities are the following:
- Advertising and Public Relations
- Call Centers
- Consulting
- Corporate Headquarters
- Creative Industries (design, art, music, publications, development of apps and video games, creative education)
- Development of Computer Programs
- Distribution in Physical Form, through the Internet, Cloud Computing or Blockchain, Income from Licensing, Subscriptions or Charges for Services.
- Education Services and Training
- Electronic Data Processing Centers
- Engineering, Architecture, Project Management
- Hospital and Laboratory Services, including Telemedicine
- Investment Banking and other Financial Services (including advisory and broker dealer operations)
- Marketing Centers
- Professional Services (law and accounting)
- Research and Development
- Shared Service Centers
- Voice and Data Telecommunications
- Among the eligible Export Commerceactivities are the following:
- Assembly, Bottling and Packaging of Products for Export
- Commercial and Mercantile Distribution of Products Manufactured in P.R.
- Commissions on the Sale of Products to Customers outside P.R.
- Purchase of Products for Resale to Customers outside P.R.
- Sale of Intangible Products to Customers outside P.R.
- Storage and Distribution Centers
