18 OPPORTUNITY ZONE MAGAZINE | VOLUME 2 • ISSUE 1
Why does that matter ? It ’ s proof of the upward trajectory and major private sector investments to complement those by the federal government . It also reflects the strength of the market that will indirectly benefit other real estate projects and property values on the island , including those created by Qualified Opportunity Funds .
LEARN THE LOCAL INCENTIVES , TRACK NEW GUBERNATORIAL ADMINISTRATION
Following the natural disasters of the past few years , there ’ s also a social mission aspect to transforming the island . While there is much work to do , officials recognize this as a unique reset period , and over the past few years have passed tax incentives specifically to complement the Opportunity Zone incentives that are fostering a more dynamic business climate .
With the goal of transforming the island into a destination for Opportunity Zone investment , the Puerto Rican government passed complementary legislation in 2019 ( now encapsulated under the island ’ s general incentive law , Act 60 ). 11 These incentives sweeten the deal for Qualified Opportunity Funds and include a flat income tax rate of 18.5 %, 100 % tax exemption for dividends , a minimum 25 % exemption for municipal and real and personal property taxes as well as a 5 % to 25 % investment credit . 12 These incentives are on top of the federal OZ incentives . The Department of Economic Development and Commerce also launched the Single Business Portal in November , where interested parties can apply to be priority projects in Opportunity Zones . 13
There are also growing expectations that the local government has worked through early problems that slowed its initial
These incentives sweeten the deal for Qualified Opportunity Funds and include a flat income tax rate of 18.5 %, 100 % tax exemption for dividends , a minimum 25 % exemption for municipal and real and personal property taxes as well as a 5 % to 25 % investment credit
recovery response and is poised to expedite its spending of federal relief funds . The newly elected Governor , Pedro Pierluisi , is a corporate attorney known to the business community who served as the island ’ s non-voting resident commissioner in Congress from 2009 to 2017 . He is well versed in Puerto Rico ’ s relations with the federal government having secured stimulus funds for the island and ensuring it was covered by the Affordable Care Act . 14 During his campaign , Pierluisi also expressed support for the Puerto Rican Chamber of Commerce ’ s 12-point plan , which included making the entire island an Opportunity Zone and a manufacturing hub . 15
RECOGNIZE THE OZ ADVANTAGE AND BENEFIT FROM OTHER SUCCESSFUL PROJECTS
One of Puerto Rico ’ s other advantages is that other states and territories in the U . S . are only allowed to designate up to 25 % of their low-income census tracts as Opportunity Zones . Puerto Rico has secured the OZ designation for 100 % of its tracts , providing 98 % of the island land mass with the program ’ s tax incentives . 16
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