Nearly 1,400 companies have settled in Puerto Rico since Act 20 was enacted
SAN JUAN– A total of 1,387 companies have moved to Puerto Rico since Act 20, known as the Export Services Act, was enacted in 2012, according to a release issued by tax and accounting consulting firm BDO Puerto Rico.
The latest data, BDO said, shows that in 2018 some 610 established themselves on the island, the largest number for a year yet. Last year’s data contrasts with 2017, when Hurricane Maria struck the island and the number of companies that settled in Puerto Rico numbered 161.
Act 20 aims to promote the island as an international export business hub to spur its development. It grants a tax exemption decree to local service companies that export services abroad. Benefits include a 4% corporate tax rate and a 100% tax exemption on dividends from business earnings derived from export services.
Act 20 covers such sectors as consultancy, legal services, call centers, health services, advertising, construction, engineering, architecture and electronic data processing services.
“Puerto Rico tax exemption laws work in conjunction with Section 933 of the U.S. Internal Revenue Code. The code establishes that the income that a Puerto Rico bona fide resident receives from sources within the island throughout the taxable year is not subject to U.S. federal tax,” the release explained, with BDO Puerto Rico partner and head of its Tax Advisory Services division, Gabriel Hernández, CPA, saying the island now has more opportunities “following the approval of federal funds for the reconstruction of Puerto Rico.”