Chapter 3 of ACT 60 represents an important milestone in Puerto Rican legislation focused on turning Puerto Rico into a hub for trade and service provision globally. This legal section aims to encourage the export of services from the island, providing an appealing framework for U.S. companies to consider Puerto Rico to reside and strategically reach international markets.
Strategies to Encourage Trade and Export Services
Chapter 3 of Act 60 outlines clear strategies to encourage the relocation and establishment of U.S. businesses in Puerto Rico. These businesses must provide services from the island to off-island customers, ensuring the service provided is not directly related to business activities in Puerto Rico. This distinction is crucial to maintaining the focus on export and international trade.
Benefits and Exemptions under the Tax Exemption Decree
In order to access the benefits of Chapter 3, companies must apply for a tax concession, formalized through a tax exemption decree. This decree, which extends for an initial period of 15 years and is renewable, offers stability and legal certainty to companies against possible legislative changes in Puerto Rico. Some of the most significant incentives include:
- A reduced tax rate to 4% on income tax.
- Complete exemptions in the tax on profit sharing.
- Significant reductions in property taxes, both for real estate and personal property used in the business.
- Reductions in municipal taxes, providing a more favorable tax structure for companies established under this regime.
Selection Criteria for Incentives
Selection to benefit from these incentives extends to a wide range of services and export trade activities, ranging from research and development to consulting in various areas, educational, health, financial services, and more. The diversity of services covered reflects the breadth of Puerto Rico’s vision to become an international business magnet.
Conclusion
Chapter 3 of ACT 60 in Puerto Rico represents an unprecedented window of opportunity for companies intending to expand their global scope from a strategic location in the Caribbean. The proposed tax incentives and exemptions are not only attractive for foreign investment but also highlight Puerto Rico’s commitment to promoting the global economy and international trade. With this legal framework, Puerto Rico is firmly positioned as the preferred destination for the establishment of global trade and service hubs, inviting companies worldwide to be a part of its future vision.