Act 60 (now Act 60-2019) provides attractive tax incentives for businesses and individuals relocating to Puerto Rico, but maintaining compliance is crucial. Revocation of these benefits can have significant financial implications. Below, we outline the primary reasons for revocation, based on official guidelines from the Department of Economic Development and Commerce (DDEC) and related regulations.
1. Non-Compliance with Decree Terms, Laws, or Regulations
Any violation of the specific conditions outlined in your incentive decree, or failure to adhere to Puerto Rican tax laws, environmental regulations, or other applicable statutes, can result in immediate revocation. This includes operational changes that deviate from approved activities without prior authorization.
2. Failure to Maintain Compliance
Non Compliance, jeopardize ongoing eligibility. Allowing it to lapse due to unmet requirements, such as annual filings or audits, directly triggers revocation proceedings.
3. Unauthorized Transfer of Business, Stock, or Assets
Selling, transferring, or restructuring ownership, shares, or key assets without explicit approval from the DDEC or relevant authorities can void the decree. This safeguard ensures continuity and prevents abuse of incentives through unauthorized changes in control.
4. Failure to Commence Operations Within Specified Period
Your decree typically requires starting eligible export services, manufacturing, or other qualified activities within a set timeframe, often 6-12 months. Delays beyond this period, without an approved extension, lead to automatic revocation.
5. Tax Liability Non-Compliance
Failing to fulfill tax obligations, including timely payment of any non-exempt taxes, accurate reporting, or resolving audits satisfactorily, can prompt revocation. This encompasses both Puerto Rican and potential U.S. federal tax compliance issues.
6. Failure to Submit Annual Reports
Annual reports to the DDEC, detailing operations, employment, and financials, must be filed by specified deadlines (usually July 15). Missing these submissions, or providing incomplete/inaccurate information, is a common cause for decree termination.
7. Sector-Specific Failures
Certain decrees have tailored requirements: for example, export services must maintain job creation quotas; physicians under resident incentives must practice full-time in Puerto Rico; farmers need to sustain eligible agricultural activities. Falling short, such as reducing workforce below thresholds or ceasing qualified operations, results in revocation.
To mitigate these risks, businesses should implement robust compliance monitoring, consult experts regularly, and stay updated on regulatory changes. Proactive adherence preserves the valuable tax benefits of Act 60.
Contact Us
For assistance with your compliance or to schedule a consultation, feel free to reach out to us:
- Email: [email protected]
- Phone: 787-473-8985
- Website: www.bonnllc.com
We’re here to help you navigate this procedure of moving down here and ensure you remain compliant while maximizing your benefits!
Disclaimer:
The information provided is for informational purposes only and should not be considered legal or tax advice.