Based on Fiscal Responsibility, Transparency Provides Tools to Ease Doing Business on Island


To advance the Rosselló administration’s public policy to foster the necessary conditions to attract investment in current and new strategic industries, support small and midsize businesses, address challenges in healthcare and education, as well as simplifying, streamlining and providing greater transparency, Gov. Ricardo Rosselló Nevares signed Act No. 60-2019, which establishes the Puerto Rico Incentives Code.

The main purpose of this law is to promote economic development for our island. It provides certainty regarding what kind of incentives Puerto Rico offers to attract investment and creates the retention of talent in very important sectors, such as manufacturing, tourism and agriculture, as well as aerospace, biosciences, medical services, energy, entrepreneurship and export services. Equally important, the law defines new incentives to support emerging sectors such as creative industries, e-sports and entertainment, which are expected to grow into multibillion-dollar global markets in the short- and medium future. All the above is based on continuous measurement of the effectiveness and return on investment of all incentives granted.

One of the benefits of Act No. 60-2019 is that it consolidates in one place dozens of previously approved incentive laws related to the promotion of economic development—rationalizing, harmonizing and standardizing to the extent possible, tax incentives applied to income, royalties, dividend and interest distributions, and capital gains. It also adjusts municipal taxes to provide more participation to municipalities, and increases their revenue collection capacity while maintaining the level of competitiveness deemed necessary for Puerto Rico to be successful at attracting investment. Moreover, small and midsize businesses now are eligible under the new act, as well as exempted from some municipal obligations in the municipalities of Vieques and Culebra, may receive greater tax incentives if they create jobs and meet other criteria. It is important to note that all changes are applied prospectively and do not impact current incentives contracts.

Another benefit is the addition of new incentives. For example, the new act incentivizes export services in the form of tickets sold to nonresidents or tourists for events and concerts held in Puerto Rico, as well as sales from streaming services or broadcasting rights for events outside Puerto Rico. This may include entertainment events, concerts, music festivals, movie theaters, e-sports and Fantasy Leagues. The latter may qualify for tourism-related incentives, as long as they are promoted outside of Puerto Rico and comply with specific requirements as defined by both the secretary of Economic Development and the executive director of the Tourism Company of the Puerto Rican Culture.

Furthermore, new incentives are included to support the healthcare industry. The benefits of Act No. 14-2017, the Incentives Act for the Retention & Return of Medical Professionals, were extended within the Incentives Code until Sept. 30, 2019, for those medical professionals who are currently residing in Puerto Rico, and until June 30, 2020, for those who are nonresidents. Additionally, a new program was created to pay student loans for medical professionals, dentists, veterinarians and scientific health researchers with Ph.D.s in exchange for establishing and maintaining their practice in Puerto Rico for at least seven-consecutive years. Act No. 14-2017 has been highly successful in retaining medical professionals on the island. Since launching the program, more than 3,110 medical professionals, as defined in the law and regulations, have been granted tax-exemption grants. Therefore, we expect that the new student loan forgiveness program will continue to successfully minimize and even reverse the outmigration of this key human capital for Puerto Rico.

Certainly, talent retention and attraction are main focuses in the Incentives Code. In addition to medical professionals, and the consolidation of previous programs to incentivize scientists, youth development, young entrepreneurs and to attract individuals, Act No. 60-2019 includes new incentives to support education (savings accounts for students in the public K-12 school system, still in study) and broadband job creation in rural and underserved areas; and the identification of incentives for hard-to-source job creation in highly specialized areas. These new incentives are being defined together with industry stakeholders.

The Incentives Code is the result of a long-term vision to achieve sustainable economic development, and must be viewed as a living document, subject to revisions and improvements to adapt to the evolving global market. With proper execution, it will promote job creation, innovation, value-added exports, and productivity. It is a key tool to boost economic opportunities and prosperity for the people of Puerto Rico.