Act 60 of July 1, 2019 (Act 60-2019), also known as the Tax Incentives Code of Puerto Rico (hereinafter “Incentives Code”) provides several tax incentives previously granted under various Laws, like Act 20-2012, Act 22-2012, Act 14-2017, and other tax incentives laws.
The Incentives Code, under Chapter 2, provides the Resident Individual Investor Tax Incentives (formerly known as Act 22-2012). Such Tax Incentives promote the transfer of individual investors to Puerto Rico by offering tax incentives to nonresident individuals and encourages them to move to Puerto Rico by granting 100% Puerto Rico income tax exemption on passive income in the form of interests and dividends. Also, subject to certain conditions, a reduced capital gain rate may apply from the sale or exchange of securities and other assets.
Below is a summary of the major income tax benefits under the Resident Individual Investor Tax Incentives:
The individuals eligible to avail themselves to the benefits of Act 60 are those Unites States citizens and Green Card or Visa holders that establish their domicile in Puerto Rico on or before December 31, 2035 to the extent they have not been domiciled in Puerto Rico at any time between January 17, 2006 and January 17, 2012.
The Resident Individual Investor Tax Incentives include additional requirements to individuals who obtain a tax grant under this Act:
To request the tax exemption, the taxpayer must file an electronic application with the Department of Economic Development and Commerce (hereinafter “DEDC”). The application fee for the Resident Individual Investor Tax Incentives is $750. Further, to obtain access to the approved and signed Tax Exemption Decree under Act 60, the Grantee must make a one-time payment of $5,000. Also, once the Grantee evaluates and agrees with the Tax Exemption Decree, he/she needs to file a Sworn Statement accepting the terms of the Decree and make a final payment of $50.
Furthermore, the Incentives Code, under Chapter 3, provides the Exportation of Goods and Services Tax Incentives (formerly known as Act 20-2012). Such Tax Incentives encourage eligible business to offer their services from Puerto Rico to clients who are located outside of Puerto Rico.
Any entity with an office or bona fide establishment located in Puerto Rico which carries out, or may carry out, “eligible services” that are, in turn, considered services for export or promoter services shall be considered an “eligible business”. Eligible services include the following services which are, in turn, considered services for exportation: research and development, distribution of programs, advice on matters related to any industry or business, advertising and public relations services, consulting services, centralized management services, centers for electronic data processing, development of computer programs, call centers, shared service centers, export trading companies, among others.
Below is a summary of the major income tax benefits of Act 60 under Chapter 3:
There is a minimum employment requirement of at least one (1) employee if the annual volume business is greater than three million dollars ($3,000,000). Such employee is required to be a resident of Puerto Rico.
To request the tax exemption, the taxpayer must file an electronic application with the DEDC. The application fee for the Exportation of Goods and Services Tax Incentives is $750. Once the Grantee evaluates and agrees with the Tax Exemption Decree, a Sworn Statement accepting the terms of the Decree must be filed and submit a final payment of $50.
Other types of tax incentives that are covered under the Incentives Code are Agroindustry (previously Act 225-1995), Aerial and Maritime Transport, Manufacturing (previously Act 73-2008), Entrepreneurship, Creative Industries (previously Act 27-2011), Tourism (previously Act 74-2010), Infrastructure, and Green Energy (Act 83-2010), among others.
Contact us if you need further information and/or assistance on Act 60.
Sary Iglesias, Tax Principal, firstname.lastname@example.org