Puerto Rico Act 73
Tax Grants / Act 73
What is Act 73?
In Act 73, Puerto Rico has created a very attractive incentive for research and development endeavors. Imagine being able to have your R&D efforts almost totally exempt from tax, while getting tax breaks for creating jobs and purchasing materials, and then being able to also sell the product you develop at an extremely low tax rate.
Benefits of Act 73
- Passive Income Tax Exemptions
- 0% US federal tax on dividend and interest income that qualifies as Puerto Rico sourced income
- 100% tax exemption from Puerto Rico taxes on all dividend and interest income
- Option to reduce any tax that may be owed on non-Puerto Rico sourced income to 0% or 10% through certain Puerto Rico investment vehicles
- Capital Gains Tax Exemptions
- 0% US federal tax on capital gains earned after becoming a Puerto Rico resident
- 100% tax exemption on these same capital gains
- 5%-10% tax on capital gains accrued prior to becoming a Puerto Rico resident
- Corporate tax credits for:
- Job creation ($1K, $2.5K, or $5K, depending on the location of the operations)
- 50% income tax credit on qualifying expenses
- 50% income tax credit for investments in equipment used for the production of renewable energy
- 25% income tax credit for the purchase of locally manufactured products
- Up to 10% credit if the business can show evidence of reducing their electrical energy cost
How long is an Act 73 grant valid?
Act 73 grants are effective for 15 years, regardless of the economic development of the zone where the Act 73 business operates.
How to Qualify for Act 73
The following business activities are eligible under Act 73, when performed in Puerto Rico:
- Industrial businesses that manufacture on a commercial scale
- Subcontracted services essential to manufacturing defined as being in a “high economic impact cluster”
- Services rendered by key suppliers of Act 73 businesses
- Owners of property used by an Act 73 business for its Act 73 operations
- The breeding of animals for use in scientific and medical research
- Recycling activities
- Hydroponics operations
- Software product development intended to be sold on a commercial scale
- Operation of certain specified strategic projects
- Licensing of intangible property developed or acquired by an Act 73 business
- Production of purified bottled water
- Construction of social interest housing, and the planning and development of self-sustainable communities
- Certain laboratory research and development activities
Application Process for Act 73
We have the ability to streamline the process of obtaining your Act 73 grant by assisting you with developing all of the necessary documents to apply.
We Can Help
We have the ability to streamline the process of obtaining your Act 73 grant by assisting you with developing all of the necessary documents to apply and answer any questions you might have.
Contact us for a free consultation!
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