San Juan Incentives

(This Article was first published in February of 2016 on the website of Breazeale, Sachse & Wilson, L.L.P.)

San Juan, the capital of Puerto Rico, recently launched a municipal incentive program that complements the national-level economic development incentives. Qualified businesses can now receive significant municipal tax exemptions for (5) five and (10) ten year periods. The program aims to attract investment from new businesses and qualified existing businesses that operate in designated development zones within the city. San Juan's goal is to promote sustainable economic growth and new commercial activity that result in more jobs and real-estate development. The designated areas are:

• the Santurce Urban Center;

• the Río Piedras Urban Center;

• the Condado area;

• the San Juan islet; and,

• other zones within the municipality's Territorial Plan, such as: La Perla, El Gandul, Parada 27, Villa Clemente, Cantera, Quebrada Arenas, Puerta de Tierra, Trastalleres, Villa Palmeras, Barrio Obrero, and Cupey Alto.

New businesses that begin operations within the above areas will qualify for one hundred percent (100%) exemption from:

• Municipal License Taxes for a period of five (5) years;

• Personal Taxes for a period of five (5); and,

• Real Property Taxes for ten (10) years.

Existing businesses can also request tax incentives under the Program, as long as (i) capital investments in excess of $75,000 are made, and (ii) at least five (5) full-time jobs are created and maintained, or ten (10) part-time jobs (with no less than 900 hours per part-time employee). The benefits for existing businesses are:

• An exemption from Municipal License Taxes for a period of five (5) years (the percentage will be determined on a case-by-case basis); and

• One hundred percent (100%) exemption from Personal and Real Property Taxes for a period of five (5) years.

Businesses whose operations are outside of the designated development areas can also apply for incentives. But, those businesses will be admitted to the program based on their benefit to the community. The city will evaluate factors such as the creation of new jobs (minimum of 75); the construction or rehabilitation of commercial buildings; the construction of parking spaces; and, its capacity for attracting visitors.

For businesses looking to grow or expand to Puerto Rico, San Juan is offering significant incentive to do so within the capital region.

Saul Reinaldo Newsome practices in the areas of international trade, foreign direct investment, and export controls. Saul is an attorney in the Baton Rouge, Louisiana office of the law firm Newsome International Law, L.L.C. For more information, please contact Saul Reinaldo Newsome at info@newsomeinternational.com or (225) 384-0204.