Act 27 was passed to bolster Puerto Rico as a viable destination for the production of film projects. This law is directed at companies or individuals engaged in qualifying film and infrastructure projects or in managing studios. Such activities include purpose-built media facilities, production of feature films, short films, documentaries, and television programs including pilots, series episodes, mini-series, music videos, commercials, video games, recorded live performances, and original soundtrack recordings and dubbing, among others.

The tax incentives that are offered include:

• 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

The tax benefits available through Act 27 have made Puerto Rico a prime location for film production. Even more impressive than the exotic scenery and award-winning talent available on the island is the list of tax credits and incentives that dramatically reduce production costs.

These tax incentives extend to projects like feature films, short films, documentaries, television programs, and commercials. It also includes recordings of live performances, original soundtracks, and certain types of other productions.

To be eligible for the tax incentives the Act provides, you must conduct business in one or more of the following manners:

• Carry out their production and post-production in whole or in part within Puerto Rico
• Airing, commercial distribution or exhibition outside of Puerto Rico
• Production expenses of at least $100,000
• Full-length films; short films; documentaries; television programs; series in episodes; mini-series; music videos; national and international commercials; video games; recorded live performances; and original soundtrack recordings and dubbing

The tax exemption is for a 15-year term and cannot be revised by future legislation.

Please contact us by email at peter@criterionadvisorsgroup.com, by telephone by calling 939-391-1680 or complete our Contact Form for additional information.