Chapter 3 of ACT 60 marks an important milestone in Puerto Rican legislation, focused on transforming Puerto Rico into a hub for global trade and services. This section of the law seeks to encourage the export of services from the island, providing an attractive framework for U.S. companies to consider Puerto Rico not only as their home, but as a strategic point from which to reach international markets.
Strategies to Encourage Trade and Services Exports
Under Chapter 3 of Act 60, clear strategies are outlined 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 that the service provided does not have direct links to commercial activities in Puerto Rico. This distinction is crucial to maintain the focus on export and international trade.
Benefits and Exemptions under the Tax Exemption Ordinance
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 with an option to renew, offers stability and legal certainty to companies in the face of possible legislative changes in Puerto Rico. Some of the most important incentives include:
- A reduced tax rate to 4% on income tax.
- Complete exemptions in the tax on profit distributions.
- Significant reductions in property taxes, both for real estate and personal property used in the business.
- Reductions in municipal taxes, facilitating a more favorable tax structure for companies established under this regime.
Eligibility Criteria for Incentives
Eligibility to take advantage of these incentives extends to a wide range of service 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 a pole of attraction for international business.
Conclusion
Puerto Rico’s ACT 60 Chapter 3 represents an unprecedented window of opportunity for companies seeking to expand their global reach from a strategic location in the Caribbean. The proposed tax incentives and exemptions are not only an attractive call for foreign investment, but also underscore Puerto Rico’s commitment to fostering the global economy and international trade. With this legal framework, Puerto Rico is firmly positioned as a privileged destination for the establishment of global trade and service centers, inviting companies from around the world to be part of its vision for the future.
