Puerto Rico publishes list of qualified commercial activities for Opportunity Zones
SAN JUAN – Puerto Rico’s Opportunity Zones Priority Projects Committee has released the list of qualified commercial activities under the federal legislation that provides tax benefits for investing in low-income communities. Ninety-seven percent of the island was designated an Opportunity Zone.
Puerto Rico Chief Financial Officer Omar Marrero, who chairs the committee, said in a press release by the Fiscal Agency and Financial Advisory Authority that the list “is an important step towards facilitating this investment mechanism and reinforcing the efforts aimed at furthering the economic development of the Island.”
Marrero explained that the list will be in effect for at least one year; however, “it could be amended to include a new list of commercial activities or geographical areas, taking into account the needs for a commercial activity in Puerto Rico or of a geographical area, and the economic impact of awarding decrees in the region.”
Economic Development Secretary Manuel Laboy adds in the release that the Opportunity Zones initiative, which now forms part of the Puerto Rico Incentives Code, “is a positive step towards improving Puerto Rico’s economy in a holistic way. It represents an opportunity to promote the development of several economic sectors throughout 98 percent of the Island, which will allow the most vulnerable zones to have a more just and favorable economic situation. Laboy Rivera pointed out that the positive impact of Opportunity Zones is calculated at more than $600 million in investments.”
The Incentives Code of Puerto Rico provides for the following incentives to opportunity funds that invest in Puerto Rico:
• A fixed 18.5% income tax rate and 0% on eligible distributions to its owners
• A transferable investment credit of up to 25% of the amount invested on an Opportunity Fund
• 25% exemption on real and personal property taxes (which may be increased to 75%)
• 25% municipal license and municipal construction tax exemption (which may be increased to 75%)
• An expedited permits process
The list of activities that qualify as priority projects within Opportunity Zones follow:
1. Development (acquisition of property and construction thereon and/or substantial improvement of existing property) of residential real property that is a Low-Income Housing Project as defined in Section 42(g) of the United States Internal Revenue Code of 1986, amended, or by the Puerto Rico Department of Housing, for sale or rent.
2. Development (acquisition of property and construction thereon and/or substantial improvement of existing property) of residential and/or commercial real property for sale or rent.
3. Development (acquisition of property and construction thereon and/or substantial improvement of existing property) of industrial real property for sale or rent.
4. Substantial improvement of an existing commercial property for sale or rent.
“We must now meet with the mayors to explain to them the scope of the local Opportunity Zones legislation. The mayors will then be able to establish, through municipal ordinances, additional tax exemptions at the municipal level for the commercial activities that they wish to promote in their municipalities as they will be informed of the whole the process,” the release quotes Rep. Antonio “Tony” Soto as saying.
Source: Caribbean Business