For decades, one of the most effective programs in promoting
the economic development of Puerto Rico has been the
industrial development incentives laws. Act No. 73 of 2008,
as amended, known as the “Economic Incentives for the
Development of Puerto Rico Act” (the “Act”), is the current
industrial development incentives law in effect. The Act
provides economic incentives, tax exemptions and tax credits
to businesses engaged in eligible activities 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.
Eligibility
Eligible activities that may qualify for the benefits of the Act
include the following:
• Industrial units dedicated to the manufacture on a commercial
scale;
• Subcontracted services rendered in Puerto Rico that are
essential to a manufacturing unit that belongs to “a high
economic impact cluster,” as designated by the Puerto Rico
Industrial Development Company’s Executive Director in
consultation with the Puerto Rico Planning Board;
• Services rendered in Puerto Rico by key suppliers of exempt
businesses;
• Owners of property, real or personal, used by an exempt
business in its exempt operations, such as a lessor of real
estate used in operations of an exempt business;
• Operations engaged in the breeding of animals for
experimental use in laboratories for scientific and medical
research, and other similar uses;
• Recycling activities that involve: (i) a transformation of
recyclable materials into raw material or ingredients used
for the elaboration of a product (partial recycling), (ii) the
preparation of such recycled raw material for local sale or
use or for exportation, or (iii) the transformation of recycled
materials mainly collected in Puerto Rico into commercial
articles (total recycling);
• Operations engaged in the planting and cultivation
through the process of hydroponics;
• The development of licensed or patented software that
may be reproduced on a commercial scale;
• Operation of certain specified strategic projects;
• The licensing of intangible property, whether developed or
acquired by the exempted business that has a decree
under the Act;
• An industrial unit that produces bottled purified water;
• The construction of social interest housing and planning
and development of self-sustainable or partially sustainable
communities; and
• Certain research and development activities conducted
in laboratories.