Puerto Rico Tax Incentives
Puerto Rico offers the security and stability of operating in a US jurisdiction with an array of special tax incentives for foreign direct investment that can be found nowhere else in the world. Puerto Rico offers a highly attractive incentives package that includes a fixed corporate income tax rate one of the lowest in comparison with any US jurisdiction various tax exemptions and special deductions, training expenses reimbursement and special tax treatment for pioneer activities.
Export Services Act of 2011 (Act 20)
The Export Services Act of 2011 seeks to turn Puerto Rico into an international hub of export services, retain local talent, attract foreign talent and foreign capital and create a special fund for promoting the establishment of new businesses to export services from Puerto Rico. The act includes, but is not limited to, the following designated services: research and development; advertising and public relations; economic, environmental, technologies, scientific, managerial, marketing, human resources, information systems, engineering, auditing, and other consulting services; advising and consulting on matters related to any industry or business; commercial art and graphic services; production of engineering and architectural blueprints and designs; advanced professional services such as legal, tax and auditing services; centralized managerial services including, but not limited to, strategic direction, planning and budgeting performed for affiliated entities and by a regional headquarters; and electronic data processing centers.
Tax rate and incentive period:
- 4% income tax.
- 0% income tax rate on dividends or profit distributions.
- 100% exemption of real and property taxes on call centers, corporate headquarters and distribution centers, on the first five years of operations. After said 5-year period, a 90% exemption will apply during the term remaining under the Tax Exemption Grant.
- 20-year grant, which can be extended by a period of 10 years, when: designated businesses fulfil the requirements of employment, income, investment and other factors mentioned in the grant that prove the DDEC Secretary that the extension of the grant will benefit the economic