Film & Media Tax Incentives ACT 27

Legislation in Puerto Rico

On March 4, 2011, Puerto Rico enacted Act No. 27 of 2011, as amended, known as the “Puerto Rico Film Industry Economic Incentives Act” (the “Act”) to solidify its position as one of the leading jurisdictions for the production of film, television and other media projects. The Act provides tax exemptions and tax credits to businesses engaged in film production in Puerto Rico. To avail from such benefits, a business needs to become an exempt business by applying for a tax concession and obtaining a tax exemption decree. Since 1999, close to 90 productions have taken advantage of Puerto Rico’s film and media incentive programs, including most recently: Fox/New Regency’s “Runner, Runner,” Disney’s “Pirates of the Caribbean 4,” Universal Picture’s “Fast 5,” Warner Brothers’ “The Losers,” ABC’s “The River” and “Off the Map,” USA Network’s “White Collar” and “Royal Pains,” HBO Film’s “Eastbound and Down” and Showtime’s “The Big C”. As a result of this depth of experience, Puerto Rico has developed the necessary technical expertise to film projects in Puerto Rico, from location scouting to permit clearances to credit financing. This includes four U.S.-trained, bilingual crews working year round and specially dedicated infrastructure provided by the Government of Puerto Rico to guide investors, studios, production companies and independent producers through everything necessary to film in Puerto Rico. Eligibility Eligible media projects and related requirements are as follows: • Feature films; short films; documentaries; television programs; series in episodes; mini-series; music videos; commercials, both international and national; video games; recorded live performances; and original soundtrack recordings and dubbing; • $100,000 minimum spend requirement per project ($50,000 for short films); • No principal photography requirement: full development, partial development, pre-production and post-production are eligible activities; and • No per project or individual wage caps. Recognizing the importance of complementing a low cost structure with a state-of-the-art infrastructure specially dedicated to the industry, the Act also provides incentives for eligible infrastructure projects, which include: • the development, construction and operation of studios, laboratories, post-production, animation and special effects facilities, transmission facilities and related infrastructure.