International Insurer and Reinsurer (Act 98)

Act 98 which is known as the International Insurer and Reinsurer Act (IIRA) enables the creation of international insurers, reinsurers and holding companies. These companies are eligible for attractive tax treatment. The intent of the act was to facilitate the growth of export insurance and reinsurance sectors by establishing a level playing field for Puerto Rico insurers to compete with Bermuda, Cayman Islands etc. Only insurer/reinsurers or another international insurer holding companies that are approved by the Commissioner of Insurance are eligible for this attractive tax treatment. Generally, the tax treatment is 0% on income tax dividends, distributions from liquidation, as well as other taxes. In addition, revenues for non-residents may also be exempt. 

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

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Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

Treasury, we inform you that any U.S. tax advice contained in this post (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any

 

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.

Puerto Rico Real Estate Investment Trusts (REIT)

Under Puerto Rico law Real Estate Investment Trusts are permitted to be formed allowing real estate ventures to receive a tax designation for corporations investing in real property that reduces or eliminates corporate income taxes.  This is designation is similar to REIT structures in the United States.  The definition of "Real Property" includes, Apartment Buildings, Hospital facilities, Hotels, Manufacturing buildings, Office buildings, Parking facilities, Shopping facilities, etc.

In order to become a REIT one needs to conform with type-of-income and source-of income requirements in the Puerto Rico code.  The rules include but are not limited to a requirement that Puerto Rico REITs must have 95% or more of the gross income be derived from:  

• Dividends; 

• Interest; 

• Rents from real property; 

• Gain from the sale or other disposition of securities or real property (with certain rules)

Additionally, at least 75% of gross income must be derived from:  

•  Rents from Puerto Rico real property;  

•  Interest on obligations secured by mortgages in Puerto Rico;  

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

IRS CIRCULAR 230 DISCLOSURE: 

To comply with requirements imposed by the Department of the 

Treasury, we inform you that any U.S. tax advice contained in this communication (including any 

attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any 

taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer, and (ii) 

supporting the promotion or marketing of any transactions or matters addressed herein.

Export Service Companies - Act 20 Grant

Act 20, which provides incentives for export service companies of bona-fide residents of Puerto Rico provides certain incentives in the form of a grant.  The grant that is issued is actually a form of contract between the Puerto Rico resident and the government of Puerto Rico.  As such, the export services rendered and the services described under the under the contract must be materially be the same.  For the activities described in the contract, a 4% income tax rate is applicable.  However, for the services outside of those described in the contract, the regular Puerto Rico corporate income tax rate applies.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.

***

Disclaimer

The information on this website is general information and is for educational use only and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.