Welcome to the Puerto Rico Information Technology Cluster
The Puerto Rico Information Technology Cluster (PRITC) is an alliance of industry, government and academia committed to positioning Puerto Rico as a national and global leader in information technology services and innovation.
This is a diverse organization composed of software and solution developers, consultants, policymakers, infrastructure companies and academic institutions.
Since the beginning of 2020, the PRITC received the classification of a public charity organization under the Internal Revenue Code (IRC) and became exempt from federal income tax under Section 501 (c) (3). This certification allows donors to deduct their contributions under the IRC Section 170.
The PRITC helps the Puerto Rico IT ecosystem achieve its full potential through collaboration and by demanding a healthy commercial, political, professional, and legal environment. Our clear mission is to position the IT industry as the most important economic pillar in Puerto Rico.
Because Puerto Rico is a United States of America jurisdiction, all of our services are offered by U.S. Citizens under U.S. legal framework and intellectual property protection. Also, local service providers in the Island can benefit from the tax incentives provided by Act No. 20 of 2012, known as the “Export Services Act” (the “Act”).
Act 20 provides tax exemptions and tax credits to businesses engaged in eligible activities in Puerto Rico. To avail from such benefits, a business needs to become an exempt business by applying for a tax concession and obtaining a tax exemption decree. The Act provides benefits for services provided from Puerto Rico to outside markets. To know more about Act No. 20 click here .
All this has spawned a vibrant and dynamic group of companies providing innovative solutions and services.
Act No. 20 Info: (info provided by RSM Puerto Rico – audit, tax and consulting firm)
OBJECTIVE
The export of services is an economic activity that has been identified as essential for the economic development and growth of Puerto Rico. Therefore, the Government of Puerto Rico has adopted as public policy to foster a service industry geared toward the export of all types of services. In order to do so, Act 20 is focused on encouraging local service providers, through the concession of tax exemptions, to expand their businesses by offering their services to clients outside of Puerto Rico.
ACT 20 TAX INCENTIVES
- 4% Flat income tax rate on income related to such services (can be reduced to 3% if the services rendered are considered Strategic Services)
- 100% Exemption on distributions from Earnings and Profits derived from the export services
- 60% Exemption on the volume of business tax
- 90% Exemption on personal and real property taxes (Only for Centralized management services, call centers and share services).
ELIGIBLE BUSINESS
To become exempt, the entity must be considered as an eligible business, which is described as an entity that provides export or promoter services from Puerto Rico, solely to customers outside Puerto Rico.
ELIGIBLE SERVICES
Eligible services include the following services, which are, in turn, considered services for export: (1) research and development, (2) professional services (such as legal, tax and accounting), (3) shared service centers, (4) advertising and public relations, (5) centralized management services, (6) storage and distribution centers, (7) consulting, (8) centers for electronic data processing, (9) educational and training services, (10) advice on matters relating to any trade of business, (11) development of computer programs, (12) hospitals and laboratory services, (13) commercial arts and graphic services, (14) telecommunication voice and data between persons located outside of Puerto Rico, (15) commercial distribution outside of Puerto Rico of products manufactured in Puerto Rico, (16) production of construction drawings, architectural and engineering services and project management, (17) call centers, (18) investment banking and other financial services, (19) trading companies, and (20) medical and laboratory Services (including medical tourism services and telemedicine facilities) or any other service that the Secretary of the Treasury determines must be treated as an eligible service upon deeming it to be in the best interest of Puerto Rico.
REQUIREMENTS
An eligible service shall be deemed a service for export when such service is rendered for the benefit of:
- An individual who is not a resident of Puerto Rico
- A trust whose beneficiaries, grantors, and trustees are not residents in Puerto Rico
- An estate whose testator, heir, legatee, or executor is not, or in the case of the testator, was a resident of Puerto Rico
- A foreign entity that has no nexus with Puerto Rico.
DECREE REQUEST
Entities that wish to request the benefits of Act 20 need to apply and obtain a tax exemption decree under the Act, which is granted by the Secretary of the Department of Economic Development and Commerce. The request has a one-time filing fee of $750, and the decree will have a term of 20 years with a possible 10-year extension, regardless of changes in the law itself.
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Puerto Rico at a Glance
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Puerto Rico is the 32 most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report published by the World Economic Forum.
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The Island offers incentives by Act 20 that provides tax exemptions and tax credits to businesses engaged in eligible activities in Puerto Rico.
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The PRITC is a Section 501 (c) (3) certified organization under the Internal Revenue Code (IRC).
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Puerto Rico’s value proposition includes a strong pipeline of certified consultants and IT talent with solid past performance in the private and public sector.
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Over 10,000 engineers, scientists and IT professionals graduate every year.
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Puerto Rico offers 25% – 38% lower wages over any region under U.S. jurisdiction as per the US Bureau of Labor Statistics (2018).
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U.S. Citizens since 1917
- U.S. legal protection
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Languages: English and Spanish
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Berry Amendment & Buy American Act compliance
- Our location in the Caribbean makes it a short flight from New York (3 hours) and Washington, DC (3.5 hours).
