In Puerto Rico, Act 60 of 2019, also known as Act 60 or the “Puerto Rico Economic Development Incentives Code,” has been an important tool to foster economic growth and development on the island.
This law establishes a variety of tax incentives for companies that invest in Puerto Rico’s economy, with the objective of attracting new investments and retaining existing companies on the island.
One of the most important chapters of Act 60 is Chapter II, which establishes the requirements and limitations to access the tax incentives, and recognizes a wide variety of eligible goods and services.
Below, we will explain in detail the goods and services that may be eligible for the tax incentives established in Chapter II of Law 60.
Manufactured products:
Manufactured products are one of the goods eligible for the tax incentives established in Act 60. This includes consumer products, industrial products, electronic products, among others. Companies that manufacture these products may be eligible for a variety of tax incentives, such as property tax exemption and income tax rate reduction.
Professional and technical services:
Professional and technical services, such as consulting, engineering and architecture, are another type of asset eligible for established tax incentives. Businesses that provide these services may be eligible for a variety of inducements, such as property tax exemption and income tax rate reduction.
Research and development:
Research and development are fundamental to Puerto Rico’s economic growth. For this reason, this Act recognizes them as important, and therefore, companies that invest in and represent this area may be eligible for a variety of incentives, such as tax credits and tax reductions.
Construction and property improvement services:
Construction services and property improvements are also eligible for the tax incentives set forth in Chapter II of Act 60. This includes the construction of commercial, residential and industrial buildings, as well as the renovation and improvement of existing properties. Businesses that provide these services and meet all of its guidelines can benefit through property tax exemption and income tax rate reduction.
Logistics and distribution services:
Puerto Rico is a strategic location for logistics and distribution, so this Act recognizes this area as a favorable investment point on the island. Companies that provide these services may be eligible for a variety of tax incentives, such as tax credits and tax reductions.
Tourism Services:
Tourism is an important industry in Puerto Rico and is recognized as eligible for the tax incentives of this Act.This measure seeks to encourage local and foreign investment in Puerto Rico, promoting job creation and economic development on the island.
The tax incentives of Chapter II of Act 60 apply to a wide variety of goods and services, which makes them an attractive tool for investment.
The following are some simple requirements to be eligible for the benefits offered by Chapter II of Act 60:
- Capital Investment: To be eligible for Chapter II tax benefits, a minimum investment of $10,000 must be made in an eligible enterprise in Puerto Rico.
- Job Creation: The business is required to create and maintain jobs in Puerto Rico. The minimum number of jobs to be created depends on the size of the business and the amount of investment. For example, if the investment is $10,000 to $20,000, at least two jobs must be created.
- Licenses and permits: The company must have all the necessary licenses and permits to operate legally in Puerto Rico. This includes environmental, construction, health and safety permits, among others.
- Operations in Puerto Rico: The company must conduct its operations in Puerto Rico. This means that it must have an office or physical space on the island and conduct its business activities from there.
- Puerto Rico Internal Revenue Code: The company must comply with all provisions of the Puerto Rico Internal Revenue Code. This includes filing all required tax returns and complying with accounting and reporting standards.
- Business Eligibility: The business must be a legally incorporated entity in Puerto Rico. In addition, it must be engaged in one of the eligible business activities as set forth in Act 60. Some of the eligible activities include manufacturing, tourism, research and development, among others.
It is important to note that the specific requirements may vary depending on the size and type of the business, as well as the amount of investment. Therefore, it is advisable to consult with an attorney or an accountant specialized in taxes in Puerto Rico to obtain personalized advice on the requirements necessary to be eligible for the tax benefits of Law 60.
At Gierbolini Consulting Group we have a highly trained team to guide you through each process and provide you with the best advice with ethics and professionalism.