DDEC strips 311 decrees from Act 22 beneficiaries
The Department of Economic Development and Commerce (DDEC, in Spanish) has stripped 311 Individual Resident Investors (known as Act 22 beneficiaries) of their decrees and sent 264 notifications of administrative fines of $10,000 to Act 20 beneficiaries, for non-compliance with the filing of annual reports.
The actions came from the agency’s Incentives Office, DDEC Secretary Manuel Cidre said.
“A year and a half ago we established the oversight of tax incentives as a priority and we have managed to significantly increase the efforts to control decrees by adding additional personnel and implementing the use of new technologies, and the results are showing,” said Cidre.
From 2021, through July 31, 311 Act 22 decrees have been revoked, when compared to the 29 cancellations on record from 2012 to 2020.
Meanwhile, 264 notifications of administrative fines of $10,000 have been sent to Act 20 beneficiaries. None of the people who lost their benefits or are facing fines were identified.
“We will continue expanding the oversight, because compliance with these incentives guarantees us the best use of public funds,” Cidre said.
Act 20, to Promote the Export of Services, seeks to encourage local service providers to expand their services to people outside of Puerto Rico, to promote the development of new businesses in Puerto Rico and to stimulate the inbound transfer of non-local service providers to the island.
Meanwhile, Act 22, to Promote the Relocation of Individual Investors, provides a tax exemption on passive income tax for individuals that relocate to Puerto Rico to make the island their legal residence.
“The tax benefit is tied to a responsibility by the beneficiary, and whoever does not comply with their responsibility will not enjoy the benefit either,” said Cidre.
“You can rest assured that we will continue to monitor them and have zero tolerance for any type of non-compliance. What we want is to maximize their performance, looking out for the best interests of Puerto Rico,” Cidre said.
The agency is also working with the Annual Report required by Act 60 — under which the two benefits now fall — to measure the return on investment of all incentives, based on what their recipients pay on taxes and contribute to the government’s coffers.
The last report was published in December and the DDEC is currently working to publish this year’s report in September.
Oversight began last year with Act 22, then was extended to Act 20, and will continue with other incentive laws, said Carlos Fontán, head of the DDEC’s Incentives Office.
