You won't find professionals with the breadth of expertise and experience regarding Puerto Rico’s incentives program that Predco’s professionals bring to the table. Predco professionals established, implemented and supervised a series of ground breaking incentives that have re-written the book on Puerto Rico’s incentives with new and novel incentives programs, including in the areas of manufacturing, tourism, finance, insurance, film, renewable energy, and many others. Furthermore, Predco's Pérez-Riera was the person responsible for the conception, drafting, approval and implementation of Laws 20 & 22 of 2012, and all regulations related thereto.
● Acts 20 & 22 of 2012: There has recently been a growing trend from businesses and individuals outside of Puerto Rico to look for opportunities in Puerto Rico. This trend has been heightened by the approval of several tax incentive laws in Puerto Rico that incentivize the exportation of services from the island, as well as bring Foreign Direct Investment into Puerto Rico. Mr. Pérez-Riera was the main architect and drafter of these two groundbreaking laws as well as their regulations, and has been their biggest proponent to date. The new Governor of Puerto Rico, Hon. Alejandro Garcia Padilla, has adopted these incentives laws and is pursuing aggressive strategies to promote them to generate economic activity in Puerto Rico. These efforts have been successful in attracting investors from outside of Puerto Rico to invest in Puerto Rico, as has been the case with John Paulson and many others. However, doing so is not a simple affair. Difficulties always arise when it comes to engaging in a new jurisdiction. Predco is ready to help companies and individuals make their moves to Puerto Rico by analyzing the incentives that will work for each client, and helping the client go through every single step that is necessary to complete a successful move.
● Air Access Incentives: Predco's professionals were directly responsible for the development of Puerto Rico's air access strategies, which have resulted in a substantial increase in Puerto Rico's access to the United States and to the rest of the world during their tenure. New routes were established by under the supervision of Predco professionals by various airlines. Furthermore, British Airways established flights to Gatwick (2011), Condor established flights to Frankfurst (2011), and West Jet established flights to Toronto (2011), all new airlines to Puerto Rico throughwhich Puerto Rico's access to foreign countries has improved. In addition, there was an increase in connectivity and access to Boston, New York, Atlanta, Baltimore, Hartford and Panama, and a new direct flight to Washington, DC was established. Puerto Rico's position as hub of the Caribbean was also strengthened with new routes to the Caribbean.
● Cruise Industry Incentives: In Act 113 of 2011, Puerto Rico established a series of novel and aggressive incentives to promote the growth of the cruise industry on the island, where the incentives increase depending on the volume of passengers brought to Puerto Rico for the cruises, and where the passenger experience is augmented by stimulating the creation of local tours in Puerto Rico and by providing incentives for ships to make additional stops in Puerto Rico other than in San Juan. This resulted in new cruiseships coming to Puerto Rico, such as the Celebrity Solstice and the Azamara Journey, as well as the addition of Royal Caribbean's Jewel of the Seas to Puerto Rico's homeport offering, among others.
● Film Incentives: Through Act 27 of 2011, Puerto Rico established best-in-class incentives for the film industry that are revenue neutral, and that provide a framework for the development of human capital in Puerto Rico. The incentives also provide stimulus for the construction of film related infrastructure to help bring more film productions to the island. In recent years, Puerto Rico has hosted over 50 film projects that have resulted in over $170 million spent on the island, for over 30,000 jobs created during the filming of the films, with over 49,000 hotel room nights generated. Film projects brought to Puerto Rico in recent years include Fast Five ($27 million / 13,381 jobs), Runner Runner ($23 million / 713 jobs), Big Moves ($7 million / 239 jobs), and Pirates of the Caribbean 4 ($1.5 million / 65 jobs).
● Gaming Incentives: The government of Puerto Rico approved new incentives to stimulate the creation of tourism and gaming infrastructure at a very high scale in underpopulated areas of Puerto Rico that could be the sites of major casinos. The incentives, created in Act 118 of 2010, increase the higher the investment in the casinos, and culminate with a tax rate of 8% on gaming and tourism activities for a 30 year period, with possible extensions for up to 20 additional years. The law requires that some of the investment made be focused on the improvement of infrastructure in the area.
● International Financial Entity Incentives: The International Financial Entity Incentives Act was approved through Act 273 of 2012, with the purpose of regulating the organization and operation of International Financial Entities, and stimulating activity in this field by way of tax incentives for qualifying financial activities, the creation of tax decrees to ensure the benefits for the entities, and establishing a framework that promotes certain activities with penalties for violations of the framework established. An entity can apply for an International Financial Entity license with the Office of the Commissioner of Financial Institutions, and then get a tax exemption decree by applying with the Department of Economic Development and Commerce in order to guarantee such benefits for 15 years, with the possibility of up to two additional 15-year extensions.
● Manufacturing Incentives: In manufacturing, Predco professionals have been the main contacts with the manufacturing sector, which includes the top echelon of pharmaceutical manufacturers, medical devices companies, software companies, machine manufacturing, and textiles. Predco professionals have personally negotiated new tax incentive decrees allowed under Act 73 of 2008 for many manufacturing companies, which has allowed for them to grow in Puerto Rico, while allowing for Puerto Rico to collect its fair share of taxes from them. Furthermore, as Chairmen of the Board of the Puerto Rico Science, Technology & Research Trust, several of Predco's professionals were involved in designing policies that have increased Puerto Rico’s presence in the life sciences field and its share of next generation manufacturing processes. Many major manufacturing companies expanded their Puerto Rico operations under Predco professionals watch, including Honeywell ($1.35 million / 35 jobs), Patheon ($12.2 million / 485 jobs), Medtronic ($50 million / 200 jobs), Merck ($43 million), Bard ($40 million / 200 jobs), Sartorius Stedim ($20 million / 270 jobs), Bristol-Myers Squibb ($165 million / 100 jobs), and Jansen ($226 million / 308 jobs).
● Renewable Energy Incentives: By Executive Order, the Governor of Puerto Rico appointed one of Predco's professionals as President of the Renewable Energy Public Policy Committee, which had the responsibility of coordinating intergovernmental efforts to comply with the government’s Renewable Energy Reform, which was enacted on July 19, 2010 through Acts 82 & 83 of 2010. The Reform aims to stimulate the development of renewable energy generation through the creation of a $290 million Green Energy Fund, significant tax benefits through a 4% tax rate, and the creation of a Renewable Portfolio Standard requiring renewable energy production targets of 12% by 2015, and 15% by 2020. The Reform also provides for the creation of Renewable Energy Credits to stimulate the renewables sector. The Reform has created a new landscape in Puerto Rico regarding renewables and has transformed Puerto Rico into a leader in this field, including the current and future investment of $2 billion in renewable energy projects, including AES Illumina’s 20 MW $98 million photovoltaic project (the largest in Latin America) and Pattern Energy’s 75 MW $215 million wind energy project (the largest in the Caribbean).
● Research & Development Incentives: Puerto Rico has made great progress in continuing to develop a knowledge based economy. Act 208 of 2011 created the Science District, which provides incentives for construction and investment that were missing from Puerto Rico's offering for the research and development field. The law also increases the amount of funds designated for research and development by 75%. Furthermore, qualifying scientists engaged in research and development inside of the Science District shall have income tax exemptions of up to $250,000. Also, Act 150 of 2010 was approved to facilitate the commercialization of research by professors of the University of Puerto Rico.
● Rum Industry Incentives: On December 1, 2010, Puerto Rico enacted Act 178 of 2010, which provides additional benefits to rum producers in Puerto Rico as part of the Federal Rum Excise Tax Cover-Over Program. These incentives are in addition to tax exemptions and tax credits available to certain rum distilleries under Act 73 of 2008, also known as the “Economic Incentives for the Development of Puerto Rico Act”, as described herein. To avail itself of the benefits under the Federal Rum Excise Tax Cover-Over Program, a rum distiller must make rum that is produced and bottled in Puerto Rico and sold in the United States mainland. Also, rum exported should be aged in Puerto Rico at least one year in oak barrels, unless a waiver is sought from the Secretary of the Treasury of Puerto Rico.
● Tourism Incentives: In 2011 Puerto Rico implemented incentives for the tourism sector through Act 74 of 2010, as well as through other incentives laws. Predco professionals led efforts to revamp Puerto Rico’s tourism incentives by adding incentives for sub-sectors of the tourism industry, including for the cruiseship industry, gaming, medical tourism, nautical tourism, condo hotels, residential tourism, and for public-private partnerships within tourism projects. Several major hotels were built recently, under Predco professionals' tenure, including the Ritz-Carlton Reserve (a 6 star $342 million resort that is the first Ritz-Carlton Reserve in the Americas) and the Vanderbilt Hotel (a 5 star $100 million, 93 room property), as well as the St. Regis Hotel and the W Resort in Vieques.
● Vieques & Culebra Incentives: The Government of Puerto Rico has a policy of promoting the economic development of the island municipalities of Vieques and Culebra. Accordingly, most of the recently enacted incentive laws provide greater benefits to entities establishing a business in Vieques and/or Culebra, than to businesses established in the main island. Some of these incentives laws and the special incentives designed for Vieques and Culebra that are contained herein. Under most of the incentives laws, benefits provided are included in a tax exemption decree.