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Governor Rosselló Nevares Signs Economic Development Measures into Law
July 11, 2017
Today Governor Ricardo Rosselló Nevares signed three legislative measures that seek to boost the economy and create new jobs in Puerto Rico, with special emphasis on small and medium enterprises (SMEs).
These measures –introduced by the Executive– include House Bill 878 amending Act 20-2012; and Senate Bills 369 and 284 amending Act 22-2012, and Act 73-2008, respectively.
“In the Plan for Puerto Rico, we committed to encourage SMEs and promote innovation and technology. By signing these measures we continue to strengthen Puerto Rico as an investment destination and foster service export”, the Governor said.
Amendments to Act 20-2012 allow more people to invest in Puerto Rico by relaxing the requirements for passing decrees. They also eliminate the minimum requirement of five employees to export services from Puerto Rico through local companies, thus allowing small and medium-sized enterprises to qualify.
Moreover, they allow physicians to use incentives in order to provide telemedicine and medical tourism services, which makes it more attractive for medical professionals to practice on the Island.
The conference was attended by architect Ricardo Álvarez-Díaz and Cristina Villalón, owners of a construction, design and architecture company that, through Act 20, has been able to export services to the Middle East, Panama and New York, among others, in addition to increasing their payroll from 7 to 15 employees.
“For us, Act 20 has been a mechanism to redirect our efforts towards exporting our services. However, the minimum employee requirement often discouraged many professionals, since most of them are individual practitioners. The recently passed amendment paves the way for most of them to create new professional opportunities instead of becoming yet another name on the list of people leaving Puerto Rico”.
Meanwhile, the amendments to Act 22-2012 seek for resident investors to make an annual contribution of $ 5,000 to nonprofit organizations operating in Puerto Rico. In addition, they eliminate bureaucratic requirements that hindered applications for incentives under the Act.
In turn, Yadira Valdivia, a spokeswoman for Centros Sor Isolina Ferré –a non-profit organization that works with the most disadvantaged communities– stressed that the amendments to Act 22 establish a formal mechanism for this group to undertake social responsibility actions thus contributing to Puerto Rico’s social and economic development by strengthening non-profit organizations.
Finally, amendments to Act 73-2008 encourage economic investment in research and development (R&D) by allowing companies that operate with federal grants –particularly SMEs and startups– to be awarded tax credits under the Act.
Also, Act 73-2008 allows for 10 percent of the monies of the Special Economic Development Fund to be earmarked for special incentives to establish programs encouraging and promoting investment in innovation, science, and technology; export of goods and services in the fields of innovation, science and technology; and training for SMEs.
The Secretary of Economic Development and Commerce, Manuel A. Laboy Rivera, stated that “these amendments are intended to create a program to target incentives and efforts at the development of a high-impact local business class with export potential in strategic areas such as aerospace, aeronautics and advanced manufacturing. For this reason, 10 percent of the economic incentives associated to the Puerto Rico Economic Development Fund is reserved for local companies and SMEs”.
“At the same time, Puerto Rico’s transition towards an economic development model based on the knowledge and innovation economy will be promoted using Puerto Rico’s most attractive incentive: the research and development tax credit under this statute”, added Laboy Rivera.
Rosselló Nevares further added that “these three measures foster investment, development and economic activity in Puerto Rico. In the first six months of our administration, besides addressing the inherited fiscal crisis, we have focused on economic development and on introducing reforms that will make Puerto Rico more competitive to attract investment and encourage the growth of our business community on the Island”, said the chief executive.
The Governor continued that these measures are added to others already approved, such as the amendments to the Public-Private Partnerships Act, the Destination Marketing Organization (DMO), the Enterprise PR, the Labor Reform and the Permit Reform. He also pointed out that the Tax Reform is about to be announced, and that the Energy Reform is on its way so that the Island will once again become an investment attraction to both locals and foreigners.
During the signing of the act, the Governor was joined by Senators Zoé Laboy and Migdalia Padilla, Representatives Antonio “Tony” Soto and Víctor Parés, the Secretary of Economic Development, Manuel Laboy, as well as the Executive Director of the Trade and Export Company, Ricardo Llerandi.