Puerto Rico Gov’t Launches 2nd Entrepreneur Challenge to Incentivise Young Adults


SAN JUAN — The secretary of Puerto Rico’s Economic Development & Commerce Department (DDEC by its Spanish initials), Manuel Laboy, announced Tuesday the launch of the “Entrepreneur Challenge,” which seeks to train and incentivize people 21- to 29-years-old to develop their own companies.

The DDEC said it was motivated to renew the Youth Development Program initiative again because of the positive results of its first generation, which saw the endorsement of 20 business ideas and the development and establishment of four companies.

After the training concludes, the 10 best ideas will be chosen for an intensive counseling process. After the advisory process, those selected will have the opportunity to showcase their ideas before a panel of experts who will select the four winners of the financial incentives.

This year, the challenge will be accompanied again with a digital platform, a training tour across the island, business coaching for those selected and a final competition with $25,000 in incentives to be awarded from the DDEC’s Economic Development Special Fund. In addition, those selected may apply for microloans and benefit from Act 135, the Financing for Young Entrepreneurs Incentives.

The application period ends March 27.

“This year, we are once again joining efforts with the INprende organization to launch for the second time the ‘Entrepreneur Challenge,’ which will allow young entrepreneurs to make their business idea possible with the help of experts and along with the aid we will provide, those selected will be able to establish their companies,” Laboy said in the announcing release. “Gov. Wanda Vázquez’s administration is committed to offering the best possible tools and opportunities for the…development of youth and this initiative is aimed at fulfilling this purpose.”

While 100 entrepreneurs were selected for training last year, 125 will be selected this year.

“We received the tools to develop our business and think big with it through this program,” said 2109 winner Rebeca Pérez, who now works full-time on her new endeavor.

Pérez and her partner are the founders of Limberland, an innovative container used to eat the Puerto Rican limber, a fruit-juice infused ice treat whose name resembles Charles Lindbergh’s, the first person to fly over the Atlantic Ocean.

The young adults, who are close to opening an establishment to sell their products in the north coast town of Arecibo, highlighted the education provided at each stage of the program offered by INprende.

“We are establishing partnerships with various sectors to join efforts and provide better opportunities for our young people, who are an important part of the island’s workforce, to direct their business proposals,” said DDEC’s Youth Development Program director, Roberto Carlos Pagán

“The winners of the last edition are the best example of what can be achieved from the mentors and the aid we provide them with to be part of Puerto Rico’s economic development,” Pagán added. “Young people are the island’s present; therefore, it is important to guide them in the initial stage of their lives as entrepreneurs.”

To participate in the Entrepreneur Challenge, visit www.jovenemprendedorpr.com and apply to join one of the four workshops that will be made available in different island locations.

Puerto Rico Agriculture Secretary details changes to incentives


To be issued quarterly based on production estimates

SAN JUAN — The secretary of the Puerto Rico Department of Agriculture, Carlos Flores Ortega, described Tuesday the parameters under which the new production incentive will be granted, replacing after more than 30 years the subsidy granted by the agency to producers.

“With the code, we have a tool to measure the effectiveness of the incentive on agricultural production and adopt the strategies that are necessary after an analysis of the results, so that the money of the people of Puerto Rico that is put into agriculture, has a return on investment and promotes growth in the local food production,” Flores Ortega said in a statement.

The secretary’s remarks regarding the transition from subsidy to incentive come after the recent signing of Act 60 by Gov. Ricardo Rosselló Nevares, which formalized the new Puerto Rico Incentives Code and joins the efforts of the Economic Development and Commerce Department, the Department of Agriculture and other agencies to measure the return on investment after granting public funds and to stimulate, through various strategies, the development of the local economy.

With regard to the documents needed to process a payment certification, the Agriculture official explained that agency agronomists will require the following documents from farmers to process the payment of the production incentive, corresponding from January to March and April to June:

  1. The monthly Sales and Use (IVU by its Spanish acronym) Tax Form (Model SC 2915) of sales made.
  2. The Farmer Sales Report (ADEA-PSS-05). This document is provided by Administration for the Development of Agricultural Enterprises (Adea by its Spanish acronym), so an accountant can break down the direct sales of agricultural products. In addition, the document details the names, postal address and telephone number of the buyers and the signature of the accountant who completes the said document.
  3. Tax return for quarter 19-1 and 19-2 of the Department of Labor and Human Resources of the Government of Puerto Rico (unemployment policy), at the time of certifying the production corresponding to the third and fourth quarter 2019.
  4. At the beginning of the fiscal year or when the farmer begins to participate in the program, the documents evidencing compliance with the provisions of Act 46 of Aug. 5, 1946, must be delivered. In addition, evidence of having acquired crop, plantations and/or agricultural structure insurance for which payment of the incentive is requested.

The secretary said each enterprise will have a formula for the payment of their incentives after a study is conducted by an agricultural economist and the value of hours, tons, pounds, quintals (46 kilograms), cuerdas (0.97 acres) and any other measurement used is determined.

Flores said the department’s agronomists will be visiting farms throughout the year to estimate the production of each and issue the corresponding incentives every three months based on a production estimate.

Puerto Rico Incentives Code requires tax breaks be made public

Rep. Antonio “Tony” Soto (CB file)

Benefits by individual, entity and sector to be published online

SAN JUAN — Puerto Rico Economic Development Secretary Manuel Laboy confirmed to Caribbean Business that language introduced by the House of Representatives to the Incentives Code was included in the measure the governor enacted Monday. 

The Incentives Code contains a number of amendments introduced by the lower chamber. Some call for greater transparency regarding individuals and companies that receive tax breaks having to submit information that would be made public in a government website. 

House Treasury, Budget and Promesa Committee Chairman Antonio “Tony” said the new code centralizes the incentives under the Economic Development & Commerce Department’s (DDEC) Puerto Rico Business Incentives Office, which will manage the site that will group current and future incentives and publish reports with data on who requests and has received a tax decree. 

“That was included in the final measure that is now Act 60 of 2019, and it has two important aspects. The first establishes the cyber portal, which we had already launched that part last year with the Single Business Portal that works on various permits and incentives. So now the Incentives Code will be fully implemented in the Single Business Portal,” Economic Development Secretary Manuel Laboy replied to Caribbean Business when asked about the changes Wednesday during an unrelated press conference. “The second aspect is that it establishes certain parameters on what information will be made public, which includes publishing the sectors that benefit from incentives, how many incentives each sector receives a year and the return on investment, so everyone knows whether the investment made by the government has a return on investment.”

DDEC is required to publish three reports yearly on the portal. These will include the incentives requested and awarded under the code or any other law previously enacted that awarded a decree, such as Act 22 of 2012, known as the Individual Investors Act, for whom new requirements were established.

“All those people who are established under Act 22 are going to have to purchase a home in Puerto Rico, and the donation made to a nonprofit is being raised from $5,000 to $10,000,” Soto explained. 

“For us, it’s very important that the people of Puerto Rico have complete and updated information,” Soto said. “We are demanding for reports to be drafted by the Incentives Office that will publish the most extensive information on the decrees that have been awarded and those that will be granted in the future.” 

The so-called “Incentives Reports” must, “at a minimum” contain “the name of the exempt business, the principal shareholders, date the decree was requested and granted, preferential rates, the municipality where the business is operating, the municipal exemptions it enjoys, the number of jobs generated or retained in Puerto Rico in comparison to jobs said exempt business committed to maintaining,” Soto stressed. 

The majority party lawmaker further said “we are emphasizing” that the tax decrees are contracts and reiterated that those who receive a decree must “comply with the contractual responsibility.”

On June 21, Soto announced that some of the amendments in the Incentives Code would establish an easier process when requesting an incentive, and that a “mechanism is being incorporated so that we can determine if the investment made by the government has a return on investment.” 

He explained that he believes the newly required disclosure “strengthens the fulfillment and oversight of the incentives and offers a level of fiscal transparency, accountability and risk management, among others.” 

Language was also introduced in the amended Incentives Code to help boost the development of land-based and online betting on sports and esports.

Puerto Rico House-passed Incentives Code bill requires disclosure of firms with tax breaks

New Progressive Party Rep. Antonio “Tony” Soto (Juan J. Rodríguez/CB)

Rep. Soto says gov’s office on board making all related data public

SAN JUAN — Puerto RIco’s House of Representatives passed Friday an Incentives Code bill amended to provide that all government tax decrees given to businesses be published in a government portal.

The information was provided by House Treasury, Budget and Promesa Committee Chairman Antonio Soto Torres at a news conference Thursday, where he spoke about amendments made to the bill. Currently, the names of the companies operating in Puerto Rico and their tax decrees are considered confidential.

The Incentives Code has more than 530 pages and is slated to be the island’s economic foundation, Soto said.

“When we asked for information, it came to us fragmented and was unreliable. This code seeks transparency. The manner in which this would work is there is going to be a single portal that all applicants will use to submit all documents. For the Department of Economic Development and Commerce [DDEC by its Spanish acronym] to evaluate it, the data have to be there,” Soto said.

The lawmaker said “everyone,” including those that have decrees and the ones that seek decrees, will have to be published.

The proposed code strengthens the office that will monitor the incentives to ensure businesses comply with what they committed to do in exchange for the incentives, and that these provide the legislature with regular reports on their return on investment.

“A tax decree is a contract,” he said.

A business that has incentives will have to disclose its name, preferential rate, the date on which the decree was requested, the municipality where the exempt business will operate and the list of municipal exemptions it enjoys.

“We feel confident that the information that we are demanding will be made public. La Fortaleza [the governor’s office] has agreed with what we are requesting. Everyone has to be registered in the single system with all the information and list the decrees granted and those that will be given,” the representative said.

The bill will now goes to the Senate for consideration. If the upper chamber further amends the measure, a conference committee would be formed to reconcile the differences between the legislative bodies.

Puerto Rico gov’t disburses $16 million to farmers


To foster recovery through Hydroponics Program; gov commits to doubling food production

SAN JUAN – Puerto Rico Gov. Ricardo Rosselló and Economic Development Secretary Manuel Laboy announced Tuesday the disbursement of $16 million to help boost the development and recovery of the island’s agriculture industry through the Hydroponic Program.

The incentives, which were awarded to 150 farmers that cultivate using hydroponics and aquaponics, are derived from the Special Economic Development Fund of the Puerto Rico Industrial Development Co. (Pridco).

“These farmers will receive 75 percent of the reimbursement, up to a maximum of $300,000, for established hydroponic projects, for the recovery of their productive structures or for efficiency improvement projects through automation; and 50 percent of the reimbursement, up to a maximum of $250,000, for new farmer projects to establish operations,” the governor said.

Laboy said that in addition to the incentive the agency grants farmers, a private investment of about $33.9 million will be made so that they can complete their developments.

“DDEC’s Hydroponics Program had an impressive reception,” Laboy said. “Initially, we announced that we had $7 million available for the recovery of hydroponics affected by Hurricane Maria, as well as for the farmers interested in venturing in this farming style.”

The official added that “given the avalanche of requests received and after passing the evaluation process, today we announce this multimillion-dollar disbursement and the retention of 490 jobs and the creation of 136 positions in agriculture.”
The incentive could be used as financing guarantee for the project developed and could be combined with federal incentives received, but cannot be combined with incentives received from the Puerto Rico Agriculture Department or its affiliates.

“We know the need to increase our food production, as well as its export in a more certain environment,” the governor said. “Our commitment as an administration is to double the 15 percent production of food in the island within an eight-year period.”

He added that “following the public policy to establish efforts to create resilient structures in the event of the arrival of another hurricane,” Pridco established a special price of $2 per square feet at Industrial Development Parks, regardless of their area’s market prices.

“At DDEC [Spanish acronym for Economic Development & Commerce Department], we are working so the Hydroponic Program becomes permanent to drive the growth of the agricultural industry and the export of our products harvested by experienced farmers, generating investment and job creation,” Laboy said.

CB reporter María Miranda contributed.

Concerns over Incentives Code cleared up, Puerto Rico official says

Pridco Director Manuel Laboy (Screen capture of www.businessinpuertorico.com)

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.

Puerto Rico government to hold Opportunity Zone Summit on March 5

SAN JUAN – Puerto Rico’s Federal Affairs Administration and Central Office for Reconstruction, Recovery and Resiliency (COR3) announced Tuesday that they are holding a Puerto Rico Opportunity Zone Summit in San Juan’s convention center on March 5.

Nearly 98% of Puerto Rio has been designed as an Opportunity Zone, where certain new investments may be eligible for preferential tax treatment.

Puerto Rico’s governor, U.S. Treasury officials, sponsors and investors will focus on boosting Puerto Rico’s economic recovery through the Opportunity Zone program. The summit agenda also includes several networking sessions.

The summit’s keynote speakers include Gov. Ricardo Rosselló, Chief Investment Officer Gerardo Portela, Puerto Rico Federal Affairs Director Carlos Mercader, U.S. Treasurer Jovita Carranza and Daniel Kowalski, counselor to Treasury Secretary Steven Mnuchin.

The conference agenda includes topics covering best practices for utilizing the Opportunity Zone incentive and an overview of investment opportunities. The following were listed in the government’s release:
– Opportunity Zone fundamentals, including the latest guidance from Treasury and IRS;
– Insight on combining this incentive with federal and local tax credits;
– Prospective project pipeline to support long-term local investment in Puerto Rico and provide tangible benefits with immediate community impact;
– Recommendations for addressing tax, legal, and regulatory challenges.

Puerto Rico gov’t banks on Opportunity Zone incentives to spur economic development

SAN JUAN – Puerto Rico officials said the government will pass its own version of the Opportunity Zones program for the island, which is expected to bring about economic prosperity for the next 10 years that is comparable to the now-eliminated U.S. Tax Code section 936 credits.

Chief of Staff Raúl Maldonado said he does not expect opposition from the island’s Financial Oversight and Management Board because the panel is supposed to provide economic development tools to Puerto Rico.

“We believe this is it,” he said. “This will allow local investors to have the same benefits as outside ones.”

The government sent the legislation for introduction Monday after the U.S. Treasury Department issued regulations for Opportunity Zones, which are designated low-income areas that offer financial incentives to potential investors to build up the distressed communities.

The areas must have at least a 20 percent poverty rate to be nominated to be an Opportunity Zone, and average income must be lower than 80 percent of the state’s median income.

About 98 percent of Puerto Rico was designated as an Opportunity Zone. Certain areas San Juan metropolitan areas such as Condado and Miramar do not qualify for the program. Opportunity Zones come with certain tax incentives. For instance, investors can put their unrealized capital gains in opportunity zones, where they gain tax deferral.

Maldonado said that after 10 years, they can also use many of the other incentives offered by Puerto Rico or get an extension, which lets them step up their basis. They help provide capital for housing, small businesses and infrastructure.

The bill filed Monday would extend the tax benefit to investors who live in Puerto Rico. For tax purposes, the island is considered a foreign jurisdiction by the U.S. government.

The idea is that individuals with capital in Puerto Rico can establish funds that are invested in new businesses such as the creation of commercial establishments, factories, hotels or homes, among many others.

Maldonado said Puerto Ricans who took their investments abroad now have a financial incentive to bring that money back to the island and invest it in the Puerto Rican economy. Locally, the benefit would be for about 15 years.

The chairpeople of the island’s House and Senate Treasury committees, Antonio “Tony” Soto and Migdalia Padilla, respectively, support the measure.

“I don’t think it’s something that we would take too long to pass like the tax reform,” Padilla said, adding that because Thursday is the last day to pass bills, she expected the bill to be voted on by the Senate. Soto said the legislation is an important economic development tool that could bring millions of dollars in investments to Puerto Rico.

Maldonado urged the legislature to evaluate the bill as soon as possible to allow Puerto Rico to gain a competitive edge over the states.

“This cannot be seen as a tax bill but as one of economic development. This is a bill to move the economy, to strengthen it,” Maldonado said. “We are competing with other states and our offer should be as broad and attractive as in other states.”

He stressed that there are a number of investors already willing to immediately put more than $600 million into the island.

Puerto Rico gov sends legislation to enable Opportunity Zones

Puerto Rico legislative leaders close ranks on inventory tax

Senate President Thomas Rivera Schatz, second from right; and House Speaker Carlos “Johnny” Méndez Núñez (Courtesy)

CEIBA, Puerto Rico – The House of Representatives’ speaker and the Senate president, Carlos “Johnny” Méndez Núñez and Thomas Rivera Schatz, respectively, said Wednesday that the issue of the tax on stored inventory should be part of the discussion over tax reform.

“We can differ with the governor with a lot of respect, but the opinions I hear on the street is that with the inventory tax we cannot advance economic development. We have a meeting with the Senate team to talk and see what’s on the table, to then reach an agreement and discuss it with the Executive,” Méndez Núñez replied to questions from the press.

“I agree with the president of the [lower] chamber. This should be the opportunity to address all that has to do with the tax reform, not leave anything pending and not address anything separately,” Rivera Schatz said.

“Precisely because several colleagues from both the House and the Senate have particular opinions, which must be respected and listened to, is why I invite the governor to convene the Legislative Conference, which has not been convened in months. Five weeks left and we have the Tax Reform, the Incentives Code, the revision of the Civil Code, the fiscal adjustment that is going to have to be legislated to make the agreement with the bondholders viable, the transformation of the electrical system, among many other measures. I heard the governor wants to meet with the chair of the Senate Treasury [Committee (Migdalia Padilla)] and the chair of the House Treasury Committee [Antonio “Tony” Soto]. I think he should meet with everyone because this will not be decided by the chair of the Senate Finance Committee and the chair of the House Finance Committee,” Rivera Schatz added.

In a press conference, Gov. Ricardo Rosselló Nevares said the elimination of the tax on stored products should be discussed separately from the Tax Reform bill.

“That discussion has to be with the mayors in order to find a solution,” Rosselló Nevares said. “I think we have to find a solution, but it has to be apart from the Tax Reform,” he reiterated.

Meanwhile, Sen. Migdalia Padilla opposed the proposed elimination of the inventory tax.

“We must be very careful with the type of amendments we could make over what was already presented in principle to the [fiscal oversight] board by the governor and that now, with the amendments wanted, it gets vetoed and Tax Reform comes to halt. My position in this is that I cannot take the little that municipalities have,” Padilla said to questions from the press.

Most mayors from both parties oppose the elimination of the tax on inventories.

Puerto Rico government announces ‘significant’ increase in manufacturing

SAN JUAN – In a joint release Friday, Gov. Ricardo Rosselló and Economic Development Secretary Manuel Laboy touted the island’s manufacturing sector gains and employment since coming into office in January 2017, which they said are a result of industrial development measure Act 73 of 2008, as amended, known as the Economic Incentives for the Development of Puerto Rico Act.

During 2017, “74 decrees were granted under Act 73 and 33 amendments were made. While, in the first seven months of…2018, 59 decrees have been granted under the incentives law and 66 amended cases. The amendments to the decrees are an extension of the commitment to permanence by the companies located in Puerto Rico,” reads the release issued by the governor’s office, La Fortaleza.

“The economic growth metrics have increased significantly over the course of these 19 months. From January [2017] to July of this year, the investment commitment totals $360 million and the creation of 6,728 additional jobs. This, compared to last year, when an investment commitment of $48 million and the creation of 1,223 jobs were achieved,” the governor said.

The most recent report of the Puerto Rico Institute of Statistics, La Fortaleza recalled, “revealed that the past month of June the Manufacturing Index [or Purchasing Managers Index (PMI)], increased to 61.1” and “has remained positive or over 50 for the past 7 months.”

“A PMI greater than 50 suggests that the industry is expanding. It shows that entrepreneurs trust in the investment climate of the island. We trust that with the new Incentives Code and other efforts such as Invest Puerto Rico, permits reform, and microgrid projects in industrial parks, among others, we will attract more investors from different parts of the world and we will strengthen the industries of local entrepreneurs, while promoting the island as the best investment destination,” added Laboy, who is also the executive director of the Puerto Rico Industrial Development Co.

Of the 11 board members of Invest Puerto Rico, which began operations this week, three represent the public sector and eight represent such industries as information technology, investment, real estate, manufacturing, life sciences and aerospace.

Besides promoting the island’s benefits as an investment destination, the nonprofit entity also helps businesses establish themselves on the island.

“The structural reforms in the Fiscal Plan address the historic problems that have limited Puerto Rico’s competitiveness and made it more difficult and expensive for companies to invest and grow in Puerto Rico. The Government is also very focused on providing greater certainty to investors by implementing the Incentives Code, which will be one of InvestPR’s main promotional tools,” Laboy said this week.

“By providing greater focus, improved service, and more continuity to Puerto Rico’s marketing and promotional efforts, InvestPR will help maximize Puerto Rico’s potential as an investment jurisdiction. We will partner with other nonprofit organizations and private sector service providers to leverage their networks and expertise to best accelerate and maximize the impact of our new promotional initiatives,” InvestPR’s recently appointed Operations Director Ella Woger-Nieves, said in a release this week announcing the start of the organization’s promotional endeavors.

Recently, Rosselló and Laboy have publicly announced the expansion of companies such as Sartorius in Yauco; Pure Cap in Dorado; Suiza Fruit in Aguadilla; and Original Footwear in Arecibo.