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Economic Incentives Act for the Development of Puerto Rico (Act 73 of 2008)

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What is Act 73?

Act 73 of 2008 was established to help promote economic development in Puerto Rico, improve the local industry and attract foreign investment by providing numerous tax incentives to businesses that are engaged in eligible activities in Puerto Rico.

Act 73 - Economic Incentives Act for the Development of Puerto Rico

Act 73 of 2008 was established to help promote economic development in Puerto Rico, improve the local industry and attract foreign investment by providing numerous tax incentives to businesses that are engaged in eligible activities in Puerto Rico. Eligible activities that may qualify for the benefits of this Act are: industrial units dedicated to the manufacture on a commercial scale; subcontracted services rendered in Puerto Rico that are essential to a manufacturing unit; services rendered by key suppliers of exempt businesses; owners of property used by an exempt business; operation of certain specified strategic projects; the licensing of intangible property; an industrial unit that produces bottled water; among other activities.

To learn more about Act 73, contact us at (787) 641-8447 or use our contact form.

ECONOMIC INCENTIVES ACT FOR THE DEVELOPMENT OF PUERTO RICO (Act 73 of 2008)


TAX EXEMPTIONS
Act 73 provides remarkable tax exemptions. Such tax exemptions are the following:

  • An extraordinary 100% tax exemption on dividend distributions and on municipal construction taxes;
  • 100% tax exemption on excise taxes and sales and use tax on raw material and certain equipment used in the production process;
  • An impressive 100% first-year bonus depreciation;
  • A 90% tax exemption from personal and real property taxes;
  • 60% tax exemption on municipal license taxes, with the first 3 semesters being 100% exempt;
  • 12% fixed income tax rate on royalties paid to foreign entities;
  • 4% fixed income tax rate on gains derived from the sale of ownership interests or substantially all the assets of the exempt business; and
  • 1% fixed income tax rate for innovative firms introducing pioneer operations in Puerto Rico.
TAX CREDITS
Act 73 also provides various tax credits that are highly beneficial, such as:

  • A 50% tax credit on eligible research and development activity costs;
  • An impressive 35% tax credit on purchases of products manufactured in
  • Puerto Rico that are made from recycled materials;
  • A 25% tax credit on purchases of products that are manufactured in Puerto Rico;
  • 12% tax credit for royalties paid to foreign entities; and
  • A tax credit for job creation during the first year. The tax credit ranges from $1,000 per job created in an industrial area of intermediate development to $2,500 for jobs created in an industrial area of low development. If the business is located in the municipalities of Vieques or Culebra this tax credit will be of $5,000 per job.

Puerto Rico - America's Last Tax Haven

Mr. Castellanos is personally supervising all legal and consulting work done by Castellanos Group, P.S.C., including but not limited to, client development and client communication, among other areas of the law, including all new investment tax exempt laws (including Act 73) in Puerto Rico. He’s available to our clients 24/7.

Mr. Castellanos’s diverse professional experience has entailed extensive work in the following areas of law: litigation, corporate law, arbitration and mediation, constitutional law, licensing agreements, entertainment law, franchise, intellectual property, construction, health care, copyright, trademark, distribution agreements, estate planning, asset protection, estates, construction agreements, patent related work, bankruptcy (Chapter 7, Chapter 11, Chapter 13, numerous adversary proceedings and contested matters, including jury trial rights in bankruptcy proceedings, security law and regulations and FINRA arbitration, administrative proceedings, among other fields of law.

For more information or an appointment please call us at (787) 641-8447 or use our contact form.

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