TAX INCENTIVES ACT OF 1998

a. elegible activities i. extensions
b. exemptions j. office of industrial tax exemption
c. exemption period k. filing fees
d. special deductions l. nature of the concessions
e. tax credits or m. interagency consideration
f. sale of shares applications n. special fund for economic development
g. renegotiation o. prior law
h. conversion p. forms

 

On December 2, 1997 the Governor signed into law the Tax Incentives Act of 1998 ("TIA") to replace the Tax Incentives Act of 1987 (the "1987 TIA"). The tax exemption legislation described hereinafter is part of a comprehensive industrial incentives program conferred by the Commonwealth of Puerto Rico. Other benefits include: (i) special cash incentives available through the Puerto Rico Industrial Development Company for training expenses, rental payments, and freight charges to bring equipment to Puerto Rico; (ii) standard and multipurpose buildings owned by PRIDCO that are leased at very competitive rates, depending on the location of the building (see attached map); and (iii) low-cost financing through the Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities Financing Authority (generally referred to in its Spanish acronym as "AFICA"). AFICA is a government instrumentality in charge of the issuance of industrial revenue bonds.

A. elegible activities

Industrial units which manufacture a product on a commercial scale which was not produced in Puerto Rico prior to 1947 or established to manufacture at least one of certain designated articles are elegible for exemption.

The production of certain designated services to be used outside of Puerto Rico also qualify for tax incentives. In this case, at least 80% of all the employees of the service units must be residents of Puerto Rico. Services rendered to another firm in Puerto Rico which is the one that ultimately exports the designated service is deemed to be rendered for markets outside of Puerto Rico.

Designated services include the following activities: