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TAX incentives

Advantages

There aren’t many places on planet Earth that offer the same return on investment as the extraordinary island of Puerto Rico. Since January of 2012, Puerto Rico’s local government has implemented aggressive tax incentives for investors and entrepreneurs, in order to stimulate the economy, and remain competitive as a global investment hub.

Many people are aware of Act 20 (The Export Services Act) and Act 22 (The Individual Investors Act), but there are several others such as Act 73, Act 273, Act 399, Act 185, Act 135, Act 74, Act 14, and Act 83 that offer different options on structuring, incentives for being a young entrepreneur, exporting services, practicing medicine, tourism, and manufacturing.

Whether you’re a high net worth individual, a service exporter, or a multinational corporation, there’s a tax incentive for you in Puerto Rico.
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Export Service Incentive

Formally known as Act No. 20 or the Act to Promote the Exportation of Services, this law provides attractive tax incentives for companies that establish and expand their export services businesses in the island. Moreover, the law promotes investments on research and development and initiatives from the academic and private sectors by granting credits and exemptions for these activities. Furthermore, it helps to decrease operational and energy spending for companies moving to the island in order to help their operations remain profitable and efficient.

  • Incentive Highlights:​

    1. Corporate tax rate - 4%​
    2. Exemption on property taxes - 100%
    3. Tax exemption on dividends or profit distributions - 100%
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Individual Investor Incentive

The idea behind the incentive afforded by Act No. 22 is to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico. This relocation should result in new local investments in real estate, services and other consumption products, and in capital injections to the Puerto Rico banking sector, all of which will accelerate the economy of the island.

  • Incentive Highlights:​

    1. Corporate tax rate - 4%​
    2. Tax exemption on all capital gains - 100%
    3. Tax exemption on all dividends and interest income - 100%
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Incentives For Development

Known as the Economic Incentives Act for the Development of Puerto Rico, Act. No. 73 was established to provide the adequate environment and opportunities to continue developing a local industry, offer an attractive tax proposal, attract direct foreign investment and promote economic development and social betterment in Puerto Rico.

  • Incentive Highlights:​​

    1. Fixed income tax rate - 4%​
    2. Tax exemption on dividend distribution - 100%
    3. Fixed income tax rate for innovative firms introducing "pioneer" activities or operations in Puerto Rico - 1%
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Additional Incentives
  • Private Equity incentive
  • By promoting this investment vehicle used by investors around the world, Act No. 185 promotes the creation of jobs for professionals in the field of securities and financial business in Puerto Rico, as well as the development of the securities industry on the Island.
  • Incentive for Financial Institutions (Act. No. 273)
  • Regulates the organization and operation of international financial institutions authorized by the Office of the Commissioner of Financial Institutions to operate in Puerto Rico, and grants tax exemption decrees, among other benefits. ​
  • Incentive for International Insurers and Reinsurers (Act. No. 399)
  • The law allows companies to organize a captive insurance in Puerto Rico and may incorporate a holding company for the interest in another company. Tax exemptions for insurers that qualify for an international insurer license are 100% exempt on all income, including liquidation and dissolution of its operations in Puerto Rico.
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