Puerto Rico’s Act 20 and Act 22 have generated 36,222 jobs and $1.2 billion in investments on the island from 2012 to 2019, a study revealed by the Department of Economic Development and Commerce confirmed.
According to the study on the performance of the government’s incentives programs, commissioned to the Estudios Técnicos research firm, the economic impact of Act 20 has consistently grown. Total jobs have increased from 7,400, according to the 2015–2016 Economic Impact Report to 36,222 jobs at present.
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 Puerto Rico.
Total investments under the act have grown from almost $500 million in 2015-2016, to more than $1.2 billion, according to the study.
“These results are very positive, because they show that this law is fulfilling its task of boosting Puerto Rico’s economic development by exporting services and/or products that we generate on the Island,” said Economic Development and Commerce Secretary Manuel Laboy.
The number of Act 20 decrees granted between 2015 and as of mid 2019, were 1,680, of which some 35% were granted to local firms, the study showed. Act 20 grantees added fiscal revenues which totaled $210 million.
“The economic activity associated with Act 20 is new money that comes from external markets,” Estudios Técnicos CEO José Joaquín Villamil said, adding that as exporting companies increase the market, opportunities are expanded for local companies that are part of their supply chains.
From January to Oct. 30, 418 decrees have been approved. It is estimated that by 2029, 5,026 decrees must have been approved under the incentive law, Laboy said.
As for results associated with Act 22, the Estudios Técnicos analysis showed that 2,202 decrees were granted between 2015 to mid 2019. 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 study showed that some 4,000 jobs have been created under Act 22, while 35% of decree holders have started businesses in Puerto Rico, including many that operate under Act 20.
Planned capital investments under Act 22 are estimated at $678 million, and the sector represents $141 million in direct consumption of goods and services in Puerto Rico.
Meanwhile, more than 81% of the capital of these individuals have a net value of less than $10 million and only 2.8% have a net value of more than $50 million, according to the data.
“About 68% of investors under Act 22 of 2012, have bought real estate and 32% currently rent a property on the island,” Villamil said. “The value of purchased real estate was more than $1.3 billion. The total estimated value of leases equals $560 million.”
Projections for decrees suggest that by 2029, there should be 6,392 decrees under Act 22 and 5,026 decrees under Act 20. For that same year, more than 14,600 jobs should be created as a result.
The aggregate impact for the projected real estate sector from 2015 to 2029, would reach $7.4 billion in purchased properties and almost $450 million for rented properties.