A key aspect to promote the economy and welfare of the people of Puerto Rico is to provide greater facilities for freight transportation services by sea between ports located in the Island and harbors located in foreign countries. An eligible activity for which an incentive may be granted include sea freight transportation between ports located in Puerto Rico and harbors in foreign countries, activities of income from or related to the use, rental or lease for use, of any vessel or part used in the transportation of cargo between ports in Puerto Rico and ports located in foreign countries or any property of any class, movable and immovable used in the operation of a vessel. It may also include activities such as repair, maintenance and general conditioning of maritime vessels, as well as their parts and components.
Among the tax benefits that are available are: 100% income tax exemption on the net income from those eligible activities during the entire exemption period, no federal income tax on income sources in Puerto Rico, 100% tax exemption on dividends or profit distributions, 100% tax exception on movable and immovable property, and 100% exemption on Municipal License taxes.
Refer to our White Paper on Exemptions to Porters of Maritime Transport Services, Chapter 11 of Subtitle B of the new Code (formerly Act 126) for a summarized briefing of the contents of this exemption.