Law 60

The Incentives and Investments Division plays a central role in the economic development of Puerto Rico, through the administration of incentives that promote investment in tourism activities that stimulate the economy and the creation of jobs, among others.

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Incentives and Investments

This entails advising on incentives for tourism developments, under the applicable laws and regulations, such as Chapter V or the Visitor's Economy in Act No. 60-2019.

Anyone who is interested in establishing new incentives should direct said procedure through the Secretary of the DDEC so that he analyzes the impact of such incentives based on the Return on Investment (ROI) formula.

Return on Investment or ROI — Is the financial index that measures and compares the benefit or utility of an incentive in relation to the investment made by the Government of Puerto Rico. In addition, it measures the profitability of each government incentive and its ability to recover, and exceed that value to the treasury.

Law No. 22-2016, as amended, empowers the Electric Power Authority (PREPA) to grant a credit of up to 11% on the electric power bill. This benefit is available for Hotels and Paradores with more than 15 endorsed rooms, and that obtain the CTPR certification. (the application is filed with the CTPR);

Tax Exemptions and Credits under Act 60-2019;

Visitor Economy, Law No. 60-2019

The provisions below support tourism investment in Puerto Rico through cost relief, clean energy, and long-term tax treatment.

Reduce the high construction and operating costs of tourist businesses in Puerto Rico.

Take action to reduce energy costs, through the different alternatives of renewable sources.

Provides for 15 years of tax exemptions, renewable for an additional 15 years.

Who qualifies

Hotels, Condohotels, Paradores, Bed and Breakfasts, Guest House, Vacation Clubs (Time Shares), Tourist Marina, Golf Courses in Hotels.

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Other facilities or activities, such as: Medical Tourism, Sustainable Tourism, Natural Resources, Nautical Tourism, Casinos, Agro-hostels, Theme Parks, and facilities that, due to their special attraction, are a stimulus to internal or external tourism.

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ESports activities and Fantasy Leagues.

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Incentives

Eligible tourism investment

The amount of cash that has been contributed to an Exempt Business to be used in a Tourist Activity, in exchange for:

  • Shares in the corporation, of this being a corporation;
  • Participation or increase in participation in a partnership or joint venture, of this being a partnership or joint venture; or
  • A unit in a Condohotel.

Eligible business

  • All New or Existing Business are eligible:
  • Holder (owner);
  • Tourist Activity Manager (operator);
  • Landlord of property to Exempt Business;
  • Condohotel unit.

Existing business

  • The expenses incurred in its renovation or substantial expansion.
  • An Existing Business will keep separate accounting related to tourism activity, and taxes on tourism development income will be computed separately.

Total eligible cost

All expenses and disbursements incurred by the Exempt Business, including salaries paid, the acquisition of land, construction, habilitation, opening expenses and opening ceremony. In addition, marketing expenses, interest, financing charges and payroll up to the first 12 months of operation are eligible.

Tax credits

Tax credits are instruments of value that are used against income taxes and can be sold on the stock market as if it were a bond or a stock. Its value can range from 80 cents to 95 cents on the dollar. It is used to repay debt or to defray the total cost of the project.

Exemptions

The Law grants the following five (5) exemptions:

Income tax

  • Overall, up to 4%
  • Vieques and Culebra up to 2% the first 5 years
  • New Business - Tourism Activity Starts
  • Existing Business - Starts with the proper filing of the application

Personal and real property

  • Up to 75% exemption
  • Vieques and Culebra up to 100% the first 5 years

Municipal construction excise tax

  • Up to 75% exemption on any contribution, tax, right, license, excise duty, rate or fee for the construction of tourist works.

Licence fees, excise taxes and other municipal taxes

50% exemption

Articles of use and consumption

Up to 100% exemption in the payment of contributions, with respect to articles acquired and used in an exempt business, and in relation to tourist activity, including articles and construction materials.

Exclusion (inventory / sale of ordinary business course; "Room Tax")

The Hotel Development Corporation is a subsidiary of the Puerto Rico Tourism Company. The HDC was created in 1992 in order to promote investment, development, and construction of hotel projects.

For information, please contact 787-721-2400, x-2063.

For information, please contact 787-721-2400, x-2063.

Selection of projects

The order of receipt of complete applications and that comply with all the established requirements.

The availability of funds and financial commitments already achieved with Investors that demonstrate the financial viability of the project.

The permits already obtained to start the project or the proposed activity that demonstrate the regulatory viability of the project.

The level of Tax Credit requested as a percentage of the investment or corresponding expense.

The return on investment of the Tax Credit, as a primary criterion and essential, as well as the contribution of the company to the Government of Puerto Rico and the multiplier effect on jobs and income of the activity to be encouraged.

The purchase of Manufactured Products.

The process established by the Incentive Regulations for the selection of projects may, without being understood as a limitation, include the following criteria:

Single business portal

Pre-application

It is located in the Single Business Portal of the Department of Economic Development:

  • Meeting that establishes the beginning of the date of the Total Cost of the Project;
  • The development of the Tourist Activity is conceptually explained;
  • Information on investors, project financing, estimated total cost, jobs, business operator, estimated date of commencement of construction, and income projections for the first year of operation must be submitted.
  • Charges
  • After you receive the Pre-Application letter, you have 18 months to file an Application.
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Application

It is located in the Single Business Portal of the Department of Economic Development:

  • Negative debt certificates from the Department of the Treasury (DH), Department of Labor and Human Resources (DTRH), Corporation of the State Insurance Fund (CFSE), Center for Municipal Tax Collection (CRIM), and any other document and/or permission that the CTPR deems necessary;
  • Provisional Filing (must mediate an Affidavit);
  • Charges: Original application and amendments (if not for clerical error in processing);
  • The Secretary of the DDEC will evaluate, for compliance with tax laws, or other law under his jurisdiction and will send his recommendation to DE of the CTPR, in a maximum of 60 days from its due filing.

For additional information, call (787) 764-6363.

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Contact

To coordinate services or inquiries:

Tel. (787) 721-2400

Extensions:

Planning, Sustainable Tourism and Nautical Tourism: 2063 or 2067

Tourism Quality and Educational Affairs: 2089

Incentives: 2207

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Law 60

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