The road for the social and economic transformation of Puerto Rico has been well underway since 2017.
Don’t just take my word for it, instead, look at the latest Economic Activity Index and the recent economic indicators, which show that we are diminishing unemployment substantially, we have a more robust tourism industry, employment in the construction sector is rising and bankruptcies are declining.
However, a key piece of the puzzle was missing. Puerto Rico still lacked a uniform, transparent and effective set of laws that would incentivize rather than subsidize the different sectors that the island wanted to see grow. After months of work from my cabinet colleagues and legislative leadership, last week, Governor Rosselló signed into law the Incentive Code for Puerto Rico.
The Incentive Code is an economic development tool because it provides greater certainty to investors, clearer rules, more agile, efficient processes and consolidates the main laws of economic incentives. In addition, it works as a promotional tool to attract investment to Puerto Rico.
It establishes the foundations for the reestablishment of certainty and trust. The code is an integral part of the economic development plan proposed by this administration and will allow for the improvement of our competitiveness as a destination to do business.
Over 50 economic incentive laws that existed from the 1960s to the present were analyzed and evaluated. As the referred act states, the evaluation of incentives that was carried out for the preparation of this code was done under the guiding principle of a combination between the fundamentals defined by the government and the industries that must be encouraged to ensure the growth of our economy. The Incentive Code will assist Puerto Rico in achieving favorable conditions to foster competitiveness, innovation and support emerging industries which will translate into sustainable economic development and the creation of jobs.
But what does this mean for someone that wants to invest in Puerto Rico? I’ll try to be as precise as possible in this limited space. First, it significantly simplifies the processes for obtaining all the incentives through a digital portal. Locating all the incentive laws in a single law facilitates the process of discovery and analysis of the investment opportunities provided by Puerto Rico. Before this code, you probably needed a battery of attorneys and accountants just to identify which incentives you could potentially benefit from. Now it’s all in a single document: The Code.
Also, the Incentive Code for Puerto Rico created the Office of Business Incentives and a Portal for the Granting of Incentives, which uniforms, centralizes, standardizes and streamlines the processes related to the request and approval of decrees, cash grants, tax credits, subsidies, and other incentives.
Another key element of this code is that, with certain exceptions, tax rates are harmonized as much as possible across industries.
The Incentive Code is an additional tool for economic development that’s added to multiple measures already adopted, such as: (1) labor reform; (2) permit reform; (3) new tax model; (4) The Golden Standard P3 Act; and (5) the Privatization of the Electrical Grid in Puerto Rico.