VISITOR ECONOMY INCENTIVES
TAX INCENTIVES FOR HOTEL DEVELOPMENT ACT 60-2019: VISITOR ECONOMY INCENTIVES
Puerto Rico’s competitive tax incentives make this world-class destination a no-brainer for investment in tourism projects.
INCENTIVES IN BRIEF 75% Exemption on personal
4% Fixed preferential income
and real property taxes for property used on eligible activities; exemption on construction excise taxes applicable to the Exempt Business and contractors and subcontractors.
tax rate on eligible tourism development income.
50% Exemption from municipal
100% Exemption on dividend distributions of earnings and profits from tourism development income.
license and other municipal taxes on tourism development income.
Up to a 100% exemption on excise tax and sale and use tax for articles acquired and used by an Exempt Business in eligible activities, including property purchased by a contractor or subcontractor to be used in the construction works of the Exempt Business.
Exemption period; may be extended for 15 additional years
ALTERNATIVES OF THE TRANSFERABLE TAX CREDITS FOR TOURISM PROJECT
30% TAX CREDIT
on eligible investment. 10% of eligible investment may be taken as a credit on the year that the Exempt Business secures the financing for the construction of the tourism project, with remaining balance taken in three (3) equal installments: 1/3 when the Exempt Business receives its first paying guest; and the remaining 2/3 in equal portions on subsequent years. Maximum amount will be 30% of Total Project Cost.
40% TAX CREDIT on eligible investment. Under this alternative, the Tax Credit can be taken in three (3) equal installments, commencing on the Exempt Business’ second year of operations. Maximum amount will be 40% of total Project Cost.
ELIGIBLE TOURISM ACTIVITIES INCLUDE: CHECKLIST
Hotels, including casino operations (at least 15 rooms) Condo hotels (at least 15 rooms) Puerto Rican hostels (Paradores in Spanish) Agro-lodges Guesthouse (at least 7 rooms) Timeshares and vacation clubs Inns belonging to the “Posadas de Puerto Rico” program Duly certified Bed and Breakfasts (B&B) (up to 25 rooms) Thematic parks and golf courses operated or associated with a hotel or resort Marinas (at least 10 vessels) eSports and Fantasy Leagues Medical tourism Nautical tourism Sustainable and ecotourism businesses Any other program promoted by the Department of Economic Development and Commerce of Puerto Rico ("DEDC'") Any other activity the Secretary of the DEDC determines as necessary and convenient for the development of tourism in Puerto Rico
EVALUATION CRITERIA FOR THE ISSUANCE OF A TAX EXEMPTION GRANT INCLUDE: Creation of new jobs and investment on the Island Design and conceptual planning of the tourist activity considering its environmental, geographical, and physical aspects, as well as the availability and abundancy of materials and products in the place where the project will be developed Commitment to local economic activity, local financial services, and local agriculture Knowledge transfer – acquisition of services from local professionals or entities incorporated or authorized to do business in Puerto Rico
GRANT APPLICATION AND APPROVAL PROCESS Eligible business who is interested in a grant of tax exemption must request a pre-application conference with the with the Office of Incentives for Businesses in Purto Rico (”OI”) prior to filing the application. During the pre-application conference, the eligible business shall present the proposed tourism project, its location, explain and present the merits of the proposed tourism project, its contribution to the development of the Puerto Rico tourism industry, a description of the proposed tourism activity or activities to be carried out, the estimate of the costs expected to be incurred in the development and construction of the project, the sources of financing, and any other information that the DEDC Secretary may require. Eligible Businesses must hold a grant of tax exemption issued by the DEDC. To obtain a grant, the business must complete the following procedures established under Act No. DEDC 60-2019, as amended, known as the Puerto Rico’s Incentives Code: ORDINARY applications are submitted, evaluated, and granted using standardized formats through the Single Business Portal.
EXTRA ORDINARY requires conditions not contemplated in standard grants. Involves a negotiation between the applicant and the DEDC, and any necessary consultation or recommendation of any other agency of the Government of Puerto Rico.
EXPEDITED application qualifies under the ordinary procedure, but applicant submits it with a certificate of pre-eligibility prepared by a Certified Professional. Tax exemption grant will be issued within 30 days from the date of application.
FEES AND ANNUAL REPORTS When the application is filed through the Single Business Portal, the Secretary of DEDC will collect the fees for the corresponding procedure, which will be paid electronically. An Exempt Business is required to submit an Annual Report to the Office of Incentives for Businesses in Puerto Rico on or before the 15th day of the 11th month after the close of the taxable year (November 15 for calendar year taxpayers) with the applicable filing fee. If you need additional information, please contact the Office of Incentives for Businesses in Puerto Rico at 1-787-764-6363 or visit ogpe.pr.gov.
For more information:
email@example.com Planning and Development Director