Proposed Act 20 & 22 amendments- March 2017
The new Secretary of the Department of Economic Development (DDEC), Manuel Laboy, recently announced amendments to Act 20 and Act 22 with the purpose of boosting the economy in Puerto Rico, published in metro.pr
Key changes to Act 20:
- Remove the 5 employee requirement*
- Include medical tourism as an eligible service
- Include telemedecine as an eligible service
*Mr. Laboy indicated that an employee clause may be required when it makes sense to demand the jobs but that removing this requirement for all companies will make it easier for individual professionals to operate from Puerto Rico.
There are many large companies that have moved operations to Puerto Rico and benefit from Act 20's 4% corporate tax rate. however, there are also a number of small business entrepreneurs who would qualify as an export service but may not be able to commit to hiring 5 employees.
Key changes to Act 22:
- Eliminate the certificate of compliance, instead simply require the individual to follow the rules of IRS form 8898 to become a bona fide resident of Puerto Rico
- Contribute $5,000 per year to local non-profit organizations
Senator Manuel Natal of the PDP (minority party) introduced House Bill 840 to repeal Act 22 altogether, arguing that it has not led to the economic redevelopment that was intended when the law was passed.
Learn more about Act 20 & 22 tax incentives (with the existing requirements).