Miami, Florida – 03-04-2019 (PRDistribution.com) — A total of 1,387 companies have moved to Puerto Rico since Act 20 was enacted in 2012. According to the latest data, 2018 experienced the largest influx of businesses to the island, a total of 610. The data is a contrast to 2017, when hurricane Maria hit the island and the number of companies that settled in Puerto Rico declined to 161.
Act 20 aims to promote the island as an international export business hub, helping its development. It grants a tax exemption decree to local service companies that export their services to persons or entities outside of Puerto Rico.
Benefits include a 4% corporate tax rate and a 100% tax exemption on dividends from business earnings derived from export services.
Act 20 allows a variety of sectors to benefit from these exemptions, including, consultancy, legal services, call centers, health services, advertising, construction, engineering, architecture and electronic data processing services among others.
Puerto Rico tax exemption laws work in conjunction with Section 933 of the U.S. Internal Revenue Code. The code establishes that the income that a Puerto Rico bonafide resident receives from sources within the island throughout the taxable year is not subject to U.S. federal tax.
The law has served to boost the island’s role as an export hub, thanks to its excellent strategic location, between Latin America and the U.S., and a bicultural bilingual population.
Since 2012, BDO Puerto Rico has advised companies of all types on their arrival to the island with the approval of Act 20. As Gabriel Hernández explains, the opportunities that open up to the future are immense following the approval of federal funds for the reconstruction of Puerto Rico after hurricane Maria.
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