Manufacture

Act 73 of May 28, 2008 known as the Economic Incentives Act for the Development of Puerto Rico (“Act 73”)

• Act 73 provides tax incentives for companies that establish and expand their operations in Puerto Rico. It also provides tax credits for job creation and investing in research and development, among other activities.
• The benefits of Act 73 are available to eligible businesses dedicated to manufacturing on a commercial scale and value added, and other industrial activities.
• Benefits include:
  • 4% fixed income tax rate on industrial development income.
  • 100% exemption on dividends from Industrial Development Income (IDI), as defined under Act 73.
  • Up to 50% tax credit on qualifying research and development activities.
  • Tax rate of 0% – 1% on income for pioneer or novel products (an activity that has not been carried out in Puerto Rico over a period of 12 months) manufactured on the island.
  • Up to 50% tax credit on purchases of products manufactured or recycled locally.
  • 90% exemption for personal and real property tax.
  • 90% exemption for municipal taxes.
  • Deductions on investments from machinery and equipment.
  • Incentives for each job created as a result of operation.
  • Tax credits for investing in efficient energy use and renewable energy machinery and equipment.
  • The eligible businesses must request and obtain tax exemption decree to enjoy the benefits of Act 73; the same will have a term of 15 years. A decree is a legally binding contract between the grantee and the Government of Puerto Rico.