Puerto Rico is a US territory that has been grappling with economic challenges for years. One of the ways that the island's government has sought to address these challenges is by offering tax incentives to businesses and individuals who invest in Puerto Rico. One of the pieces of legislation aimed to incentivize investment in the island is Act 60, known as the Puerto Rico Tax Incentive Code (“the Code”) , which was signed into law in July 2019. The Code compiles many of the existing Puerto Rico tax incentives laws in an effort to establish a new transparent and efficient way for granting and overseeing all incentives.
Act 60 offers a wide range of tax incentives which are outlined in different Chapters of the Code. Chapter, 2 for example, promotes the relocation of individuals investors to Puerto Rico and Chapter 3 governs the exportation of goods and services. In general, these tax incentives include, among others, a 4% corporate tax rate, a 0% tax on interest and dividends, and a 100% tax exemption on certain eligible capital gains. The goal of Act 60 is to attract new investment to Puerto Rico and to encourage businesses and individuals who are already investing in the island to expand their operations.
The Office of Incentives for Businesses (OI) is responsible for overseeing the implementation of Act 60 and ensuring that individuals and businesses who receive tax incentives are in compliance with the law. The OI works closely with the Puerto Rico Treasury Department to monitor compliance and ensure that tax incentives are being used appropriately.
Since Act 60 went into effect, the OI has been focused on ensuring that individuals and businesses are in compliance with the law. The OI has been monitoring tax filings and conducting audits to identify businesses and individuals who are not complying with the requirements under the Act 60. So far, over 300 decrees have been revoked due to non-compliance.
The OI's efforts to focus on the fiscalization of these incentives grants are essential to ensuring that Puerto Rico's tax incentives are being used appropriately. By revoking decrees for those who are not in compliance, the OI is sending a message that they are serious about enforcing the law and ensuring that tax incentives are being used to benefit Puerto Rico's economy.
Overall, Act 60 and the OI's efforts to ensure compliance with its provisions represent an important step in Puerto Rico's economic development. By offering tax incentives to businesses and individuals, the island is creating a more attractive environment for investment and helping to stimulate economic growth. At the same time, the OI's efforts to ensure compliance with the law are critical to ensuring that tax incentives are being used appropriately and that Puerto Rico is able to maximize the economic benefits of these incentives.