One of the key objectives of the Code is to convert Puerto Rico in a tourist destination of first order at a global level, as it promotes the strengthening of the Island’s economy through the tourism industry. Chapter 5 of Subtitle B describes how a business may benefit from numerous tax exemptions that are being offered to eligible activities including agrohotels, agrotourism, bed and breakfast (B&B), guest houses, casinos, condo hotels and hotels. It also addresses medical tourism and nautical tourism.
Among the tax benefits that are available is a preferential 4% tax rate on net income, no federal income tax on income sources in Puerto Rico, 100% tax exception on dividends or profit distributions to shareholders, 75% exemption on Property Tax and 50% on Municipal License taxes, 100% exemption on capital gains, to name only a few.
Our White Paper on Visitor Economy Chapter 5 of Subtitle B of the new Code of Incentives (formerly Act 74) summarizes key information as to eligible activities, terms of the Decree, tax benefits, what is considered eligible income subject to preferential rate, the starting date for the exemptions, available tax credits for eligible tourism investment among other important information that businesses operating an eligible tourism activity must be familiar with.