Act 74: Puerto Rico Tourism Development Act

On July 10, 2010, Puerto Rico enacted Act No. 74 of 2010, as amended, known as the “Tourism Development Act” (the “Act”), to provide incentives that will allow for substantial growth of Puerto Rico’s tourism industry and all infrastructure related thereto. The Act provides tax exemptions and tax credits to businesses engaged in eligible activities in Puerto Rico. To avail from such benefits, a business needs to become an exempt business by applying for a tax concession and obtaining a tax exemption decree.


Eligible activities that may qualify for the benefits under the Act include the following:

  • Ownership, operation and/or hotel administration, timeshares or vacation club programs, condo hotels, guesthouses, theme parks, golf courses, marinas for tourism purposes, port facilities, agro hospices, agro tourism, medical tourism, nautical tourism and other facilities that are a source of active, passive or recreational entertainment and that are a stimulus to internal or external tourism;
  • Ownership of a lease made to a business with a decree under the Act or predecessor tourism incentive laws.
  • Development and administration of natural resources such as caverns, forests, canyons, natural reserves and lakes; and
  • The purchase of existing hotels or other eligible activities, if a substantial renovation or expansion to the existing business is made.

Tax Exemptions

  • Up to 90% tax exemption on income tax (100% tax exemption if business is located in Vieques or Culebra).
  • 100% tax exemption on alternative minimum taxes and additional income taxes on undistributed income;
  • 90% tax exemption from personal property taxes.
  • 90% tax exemption from real property taxes.
  • Up to 100% tax exemption on excise tax on imported goods;
  • Up to 100% tax exemption on sales and use tax; and
  • Up to 100% tax exemption on municipal construction excise tax.

The initial step is to provide a Sworn Statement with the Incentives and Investments Division of the Puerto Rico Tourism Company. The Sworn Statement should include the following:

  • Name, Address (physical & postal) and Social Security;
  • Telephone and fax numbers;
  • Name of the Investors and their respective Social Security numbers;
  • Applicant’s legal representative name, physical and postal address, phone and fax number
  • Legal provision under which the Grant is requested and an explanation as to why should it qualify;
  • Nature of the Eligible Business;
  • Location of the Tourism Activity.
  • Stating the reasons why any of the information required by the Section 9(c)-1 of the Regulation of the Act 74-2010 not included with the Application

For more information on Act 74’s Eligibility and Tax Exceptions, along with additional information, please review this flyer

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