• 4% Fixed Income Tax Rate on development, preproduction, production and post-production income
• 1% Fixed Income Tax Rate for pioneer or novel product manufacture
• 12% Fixed Income Tax Rate on Intangible Property
• 0% Federal Income Tax
• 100% Tax Exemption on dividend distributions
• 100% Tax Exemption on Excise Tax
• 100% Sales and Use Tax
• 100% Tax Exemption on municipal construction taxes
• 90% Tax Exemption from personal property and real estate tax
• 100% Tax Exemption from Municipal license taxes
• 40% Transferable tax credit on payments made to residents of Puerto Rico for services physically performed in Puerto Rico
• 20% Transferable tax credit on payments to “Above-the-Line” Non-Resident Talent for services physically rendered in Puerto Rico.
• 25% Infrastructure transferable tax credit on the amounts disbursed in connection with the development or substantial expansion of studios, laboratories, facilities for the international transmission of television images or other media and other permanent facilities to carry out film projects within Puerto Rico, whose budget of hard costs exceed $1,000,000.
• 50% Transferable tax credit of cost documentary up to
• 9% when at least 1 of the screenplay writers, the director or cinematographer is a resident of Puerto Rico, 8% when the film composer or the editor is a resident of Puerto Rico, 7% when at least 2 of the sound engineers, gaffers or key grips are residents of Puerto Rico
• 10% of the amounts certified by the auditor are being disbursed on the cost of production in Puerto Rico

Impact of Tax Benefits

The tax benefits provided through Act 27 have positioned Puerto Rico as a leading destination for film production. Beyond the island’s breathtaking landscapes and its roster of award-winning talent, the extensive list of tax credits and incentives serves to significantly lower production costs for filmmakers. This combination of natural beauty and financial advantages draws a diverse array of projects to the region, allowing filmmakers to maximize their budgets while achieving high-quality productions. As a result, more projects are being filmed in Puerto Rico, contributing to local economies and creating job opportunities within the film industry. The strategic implementation of these tax incentives reflects a commitment to cultivating a robust and vibrant film sector in Puerto Rico.

Eligibility for Tax Incentives

To qualify for the tax incentives outlined in Act 27, filmmakers and production companies must meet certain criteria. First and foremost, productions must be carried out, either wholly or partially, within Puerto Rico to be eligible for these benefits. Furthermore, the airing, commercial distribution, or exhibition of the projects must occur outside of Puerto Rico. A minimum production expense threshold of $100,000 is also required, ensuring that only substantial projects benefit from these incentives. Eligible projects include a variety of formats, such as full-length films, short films, documentaries, television programs, series episodes, mini-series, music videos, national and international commercials, video games, recorded live performances, and original soundtrack recordings and dubbing. This broad definition of eligible projects allows for a diverse range of creative works to take advantage of the incentives provided by Act 27.

Duration of Tax Exemptions

The tax exemptions granted under Act 27 are valid for a term of 15 years, providing a long-term incentive for filmmakers and production companies to invest in Puerto Rico. This extended duration of benefits is particularly appealing, as it encourages sustained economic activity in the film sector. Importantly, once granted, these exemptions cannot be altered or revoked by future legislation, ensuring stability and predictability for investors and filmmakers. This aspect of the law fosters an environment of trust and confidence, allowing production companies to plan their projects without the fear of sudden tax policy changes. Consequently, the 15-year term solidifies Puerto Rico’s commitment to becoming a premier location for film production.

Contact Information

For those seeking additional information regarding Act 27 and its associated tax incentives, we encourage you to reach out to us directly. You can contact us via email at peter@criterionadvisorsgroup.com. Alternatively, you can reach us by phone at 939-391-1680. We also offer a convenient Contact Form for inquiries. Our team is ready to assist you with any questions or clarifications you may need regarding the opportunities provided by Act 27. We look forward to helping you explore the benefits of filming in Puerto Rico.