Act 60-2019 Puerto Rico Tax Incentives Code: Important notes and considerations vs Act 20 and previous incentives

The following are important notes and considerations when contrasting previous tax incentives vs the Puerto Rico Tax Incentives Code which is the Act 60-2019.

  • Previous Incentives not included are Act 168-1968 (Hospitals) and Act 173-2014 (Creative Industries)
  • Terms are granted for 15 years, with options to extend 15 additional years (30 years total)
  • Decree acceptance and related Chapter will be considered public information. In other words, your company’s name and under what kind of tax incentive it is will be publicly information available (no personal information will be published)
  • Act 60-2019 effectiveness is July 1st, 2019. Now, its benefits can be claimed and applied for from January 1st, 2020.
  • All applications processed before December 31st, 2019 will be grandfathered, unless the applicant explicitly requests Act 60 of 2019 terms and rights.
  • Applicants and decree holders rights
    • Right to be considered and treated impartially and respectfully 
    • Decrees are considered a contract with Puerto Rico government, therefore it will be honored during the Tax Exemption Decree terms agreed while decree-holder is in compliance
    • Decree are valid within the whole island, there is no need to request an amendment if the decree-holder moves or begins to operate in a new/different place
    • Decree holders can negotiate economic development topics and decrees with  Secretary of the Economic Development Department
    • Decree holders can request changes in cases where new laws or regulations are adopted which provides favorable terms and conditions (subject to the discretion of the Secretary of the DDEC and the endorsement of the Secretary of the Treasury), among others.
  • EMPLOYMENT – Business with top-line revenue of $3,000,000 or more
    • The entity shall maintain at least 1 employee if it is an export of service grantee (previously Act 20-2012)
    • The entity shall maintain at least 3 employees if it is an industrial incentive grantee (previously Act 73-2008)
      • All other eligible businesses are not subject to this requirement
  • 4% income tax rate for applicable to exempt income generated by exempt businesses.

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