By Robert E. Feiger, JD, LLM, Friedman & Feiger, LLP. Dallas, Texas USA and San Juan, Puerto Rico and Richard J. Alan Cahan, JD, LLM, Becker & Poliakoff, P.A., Coral Gables, Florida, USA
This article focuses on both certain tax incentives that Puerto Rico has successfully used to spur economic development and job creation, and those asset protection tools that can be deployed to protect the assets of those individuals who may chose to conduct business and/or reside in Puerto Rico.
Exportation of Services Incentives Act of 2012
On 17 January 20 12, Puerto Rico enacted Act No. 20 of 2012, also known as the Act to Promote the Exportation of Services (Act 20). Act 20 provides tax exemptions to businesses engaged in certain eligible activities in Puerto Rico. To take advantage of such benefits, a business needs to become an exempt business by obtaining a tax exemption decree through the Department of Economic Development and Commerce (“DEDC”).
Eligibility of Qualified Services Under Act 20 Act 20 provides benefits for certain qualified services provided from Puerto Rico to outside markets, that is, to the US and other foreign countries. Eligible activities to receive benefits under Act 20 are services in the following areas:
- research and development;
- advertising and public relations;
- economic, scientific, environmental, technological, managerial, marketing, human resources, engineering, information systems technological auditing and consulting services;
- commercial art and graphic services; consulting services for any trade or business;
- production of engineering and architectural plans and designs and related services;
- professional services such as legal, tax and accounting services;
- centralized managerial services, including, but not limited to, strategic direction, planning and budgeting, provided by regional headquarters or a headquarters company engaged in the business of providing such services;
- services performed by electronic data processing centres;
- development of licensable computer software;
- telecommunications voice and data between persons located outside of Puerto Rico;
- call centres;
- shared service centres;
- medical, hospital and laboratory services;
- investment banking and other financial services, including, but not limited to, asset management, management of investment alternatives, management of activities related to private capital investment, management of coverage funds or high risk funds, management of pools of capital, trust management that serves to convert different groups of assets into securities and escrow accounts management services;