Film & Audiovisual

tax credits

  • Section 3050.01 of the Puerto Rico Incentives Code provides for production incentives in the form of transferable tax credits equal to the sum of:

    • 40% of payments to residents of Puerto Rico;

    • 20% of payments to non-residents;

    • 15% of payments to residents of Puerto Rico, when a local producer controls the IP of the project, is responsible for its financing and production, and is entitled to 30% or more of the “producers’ net”, and either the director, cinematographer, editor, production designer, post-production supervisor, or the line producer is a resident of Puerto Rico.

  • Tax credits are allowed to be used against 100% of a person’s tax liability, which maximizes their transfer value.

  • The Film Program will accept physical applications until the Department of Economic Development approves regulations. In the future, online applications will be accepted and attorneys will be allowed to issue “pre-eligibility reports” for an expedited approval process.

  • There is no principal photography requirement.

  • A Grant reserves the tax credit for each project, which is in the nature of a contract with the Puerto Rico Department of Economic Development and Commerce.

  • Grants under Act 27-2011 will be grandfathered, which means that the corresponding tax credits under such grants will be calculated and granted under the rules of Act 27-2011.

  • There is a strong demand for tax credits, which sell for an average of 90% of face value. There is no recapture against buyers.

Puerto Rico

Incentives Code Highlights

R & D

tax credits

  • Exempt Businesses are subject to preferential tax rates:​

    • 4% fixed income tax rate

    • Fixed 1% corporate income tax rate on products manufactured in Puerto Rico by using novel pioneer technologies

    • Fixed 0% corporate income tax rate on products manufactured in Puerto Rico by using novel pioneer technologies and that were developed on the Island.

    • 100% exemption on dividends and distributions 

    • 100% exemption on municipal license taxes, excise taxes, and other municipal taxes

    • 75% exemption on municipal and state property taxes

    • 75% exemption on municipal construction taxes

  • Exempt Businesses may apply for a transferable tax credit equal to 50% of Special Eligible Investments in R&D.

  • The transferable tax credit can be used 100% towards the Exempt Business’ own tax liability, used against the payment of utilities, or sold to third party buyers of tax credits to use against their Puerto Rico tax liability.

  • The tax credit may be used as follows:

    • 50% on the tax return corresponding to the year in which the Special Eligible Investment was made; and

    • 50% in any subsequent years until exhausted.

  • Tax credits sell for an average of 90% of face value, depending on:

    • Demand and supply

    • Taxable year of the credit

    • Moment in the taxable year the credit is being sold

    • Amount of credit to be sold

  • There is no recapture against bona fide buyers.

  • Tax credits may be used as a financing source of repayment or collateral.