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DDEC seeks to link local business to Acts 20, 22 ecosystem

By on August 15, 2016

SAN JUAN – The Economic Development and Commerce Department (DDEC) is hosting “Ecosistema 20/22” on Friday, Aug. 19, at the Sheraton Puerto Rico Hotel & Casino, an event that seeks to link local businesses to the so-called “new economy” created by Acts 20 and 22.

“They began as two separate laws, then they became a promotion tool and now they are a movement,” Economic Development Secretary Alberto Bacó Bagué said.

Act 20 of 2012 promotes the export of services through incentives that include a 100% tax exemption on earnings and profit distributions on income generated from export services; a 4% flat income-tax rate on income generated from export services or a 3% tax when more than 90% of a service provider’s gross income is from export services; and a 100% property-tax exemption for the initial five years of operation for certain export services.

Along with Act 20, the government enacted Act 22, the “Act to Promote the Relocation of Individual Investors,” which offers nonresident individuals 100% tax exemptions on all interest, dividends and long-term capital gains to entice them to move to Puerto Rico. An individual’s 183-day physical presence in Puerto Rico establishes a presumption of residency under the Puerto Rico Tax Code.

LOGO-ECOSISTEMA-20-22-01-1024x522A study unveiled in January on the impact of Acts 20 and 22 found that while the laws have attracted millions in investments, private and public sectors had yet to benefit more from their spillover effects.

Bacó said there are now three “ecosystems” in Puerto Rico, created not only by Acts 20 and 22, but also by the Medical Tourism Act, which allows visitors to obtain medical care at lower prices than they would in the mainland U.S. or Europe, and by Parallel18, an acceleration program for startups to scale globally from Puerto Rico.  

“We have the ecosystems in place, and now we are going to bring professionals, associations and businesses to the chain so they can learn about available opportunities. What is going to make young people in startups and medical tourism want to stay is precisely Acts 20 and 22,” Bacó said.

The activity, he said, is the forum that will connect local business with foreign firms and investors who already enjoy the incentives. Already, certain groups are benefitting from the incentives, such as lawyers who provide advice to the new investors.

Bacó said the topics will include a program in which investment promoters get 7.5% of what the company or firm brought to Puerto Rico pays in taxes. “This is a win-win program for Puerto Rico and businesses…. It is like a finder’s fee,” he said.

The program already has 10 certified promoters and is looking for more.

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