Concerns over Incentives Code cleared up, Puerto Rico official says
Governor announces arts-related amendments
SAN JUAN – Puerto Rico Economic Development Secretary Manuel Laboy Rivera has provided more details regarding potential amendments to the administration’s proposed incentives code.
“There are the concerns that had been outlined by the agricultural sector. We already sat down with them and we believe that we have been able to address their concerns. We have also met with different heads of agencies to try to be as inclusive as possible, to ensure that their concerns are addressed,” Laboy said.
In the original bill, introduced last year, several incentives for the farming sector and the youth were slated to be repealed such as Act 42 of 1971, or the Agricultural Worker’s Bonus Law; Act 46 of 1989, the Law to Establish a Wage Subsidy Program for Eligible Farmers; and Act 225 of 1995, the Agricultural Tax Incentives Law.
The bill was also expected to repeal Act 26 of 2008, known as the Program for Financing Research & Development of Agricultural & Food Technology Law, and also section 1033.12 of Act 1 of 2011, known as the Internal Revenue Code for a New Puerto Rico, to eliminate 90% deduction to the net income of agricultural business.
The amendments to the original bill were presented to the legislature earlier this week and Laboy and his team have met with the chairs of the House and Senate Treasury committees.
“I hope that in the next two or three weeks, possibly earlier, the public hearings begin in order to have this broad discussion. There must be a good discussion. I would say that once we have this code duly approved and enacted into law, it will possibly be the biggest change in the way we handle incentives and subsidies in past decades in Puerto Rico,” he said.
The original bill could not be passed in the previous session but officials wanted to amend it to include new subsidies. For example, the legislation will include a subsidy for medical students to allow them to pay their student debt if they commit to practicing for seven years in Puerto Rico. In addition, the code includes a $1,000 contribution to public school students known as Cuenta Mi Futuro, or My Future Accounts.
Last year, the island’s Financial Oversight and Management Board told the government it had to reduce incentives, raising concerns among the manufacturing sector, which has been hurt by the U.S. tax reform.
Music industry benefits
Meanwhile, Gov. Ricardo Rosselló said some of the amendments include incentives for the arts, design and music services, providing benefits to turn the island into the hub of the human cloud, or the workforce that performs tasks or projects remotely.
“We must continue to look for the tools that develop that potential and that allow us to retain our residents, as well as attract anyone who has an interest to return or reside in Puerto Rico,” the governor said.
The export of art-related services is included in the amendments, such as sales of event tickets abroad; the sale of tickets that tourists buy on the island; income related to online broadcasts; and the rights to recordings for audiences abroad, as well as shows and musical productions on the island.
In addition, a proposal for a new section of incentives for the music industry, establishing a financial incentive “aimed at promoting the ideal conditions to turn Puerto Rico into a world-class center,” the governor’s release says.
“These new incentives will allow the artists and producers of the creative industries – which includes both locals and those who want to establish themselves in Puerto Rico – to have the opportunity to develop, present and expand their work and talent,” the document further reads. “Any natural or juridical person dedicated to presenting or producing musical events will be eligible for these incentives.”
For his part, the governor’s chief of staff and director of the Puerto Rico Trade & Export Co., Ricardo Llerandi, added that, “in Puerto Rico, we have a lot of artistic talent to export. We see it every time one of our artists gains worldwide recognition. To prevent our artists from moving, to attract those who left and others to come from abroad, we have pushed these incentives” for the music industry, which “allow royalties, monetization of content and others to be covered by the decree. That is precisely what we are doing to convert Puerto Rico into the human cloud of jobs with geographic independence.”
–CyberNews and CB’s Eva Lloréns Vélez contributed to this report.