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Tax Incentives Seek To Attract Corporate Headquarters To The Island
BY MARIALBA MARTINEZ
July 18, 2002
"U.S. and foreign companies may soon be incentivized to establish headquarters in Puerto Rico if Gov. Calderon signs an amendment to the Tax Incentives Law of 1978 providing lifetime 2% to 4% tax exemptions to qualifying companies and 100% municipal tax exemptions," said William Riefkohl, Puerto Rico Industrial Development Co. (Pridco) executive director.
"For years Puerto Rico has been described as the bridge to the Americas, yet no one was paying a toll. The island needed to come up with strategies that would strengthen its position as an ideal operations centercreate powerful incentives to convince companies not to bypass the island for other cities such as Miami and San Diego and for other islands such as Barbados that are currently filling this role."
The amendment provides companies a fixed 2% or 4% tax exemption on generated income. Established headquarters for the Americas (North and South America) and for any global operations would be granted a 2% tax exemption. A 4% tax exemption would be granted to headquarters covering Latin America, meaning South or Central America.
The amendment also grants a 100% tax exemption on real estate and furnishings, municipal taxes (patentes), and excise taxes during the companies first five years in operation. After five years, companies would qualify for a 10% to 20% tax exemption, depending on the region they represent.
"Companies requirements to qualify for these tax incentives will include having a minimum of 12 employees, 80% of whom must be Puerto Rico residents. In addition, each companys income must be derived from markets outside Puerto Rico," said Riefkohl.
Riefkohl, whom the governor assigned to head the Port of the Americas value-added component on June 17, said he was leaving Pridco with the satisfaction of having contributed to the creation and promotion of economic development strategies that should restore the islands manufacturing industry pipeline.
"I am satisfied with the efforts made by our U.S. mainland promotions office to restore our pipeline of new U.S. prospects," said Riefkohl. "We now have a strong inventory that should encourage new companies to establish operations in Puerto Rico."
During the past year, several multinational as well as local operations announced expansions, some of them taking advantage of 18 economic development laws approved in 2001. Among them are Eli Lilly, Amgen, Baxter, Bristol-Myers Squibb, Hewlett-Packard, and Medtronic.
In addition, local companies were given a hand from government laws that provide tax credits and exemptions on the purchase and export of local goods. Pan American Grain, Lanco, and Manufacturing Technology Systems began selling their products to multinational companies. Other manufacturers such as Adchem Pharma Operation, MTS, Flexible Packaging, Nypro, and R.D. Medical continue expanding their facilities in response to growing sales.
This Caribbean Business article appears courtesy of Casiano Communications.