Since 2012, the promotion of the economic development program has occurred in a context of major fiscal, economic and political challenges, as well as natural disasters and the bankruptcy of the government. Attracting new capital, companies and investment in this context has not been an easy task for the government. In 10 years, with only about 2,660 investors moving to Puerto Rico, the economic impact on our economy is impressive:
Economic Impact
10 years after Laws 20 and 22
Like the incentive programs implemented in the last century, the 20/22 program is newly created and any objective analysis must take that reality into account.
Benefits
Demonstrated:
Job Creation
Laws 20 and 22 have created 62,500 new jobs. Averaging the average annual growth in combined employment, the program has had the capacity to generate 6,250 new jobs annually.
More precautions for Puerto Rico
Investors pay over $240 million in taxes to the government annually. Investor activities under both decrees generate new revenues to Puerto Rico, including new revenues under the IVU. Contributions from beneficiaries of both programs also occur through income taxes for activities not eligible for both laws, payment of taxes to the central government, payment of consumption taxes (IVU), and municipal taxes so that the government can provide essential services such as health, education and security.
The latest estimates from the Department of Economic Development, based on statistics from 2022, estimate that the average annual tax payment of Act 20 beneficiaries amounts to $100 million for all tax events ($52 million in 2019); and the average annual tax payment of Act 22 beneficiaries amounts to $140 million ($42 million in 2019).
Social Commitment- Impact on Nonprofit Organizations:
Investors donate over $15 million annually to not-for-profit entities. Recent amendments made to Law 22 in 2017 require a donation of $10,000 annually to non-profit entities in order to maximize the social impact of the program. 50% of these donations are allocated to entities designated by the Legislature to combat child poverty in all senatorial and representative districts of the Island. Some beneficiaries make donations that exceed the minimum required, so the impact of this concept is much greater than that stipulated by law stated in this analysis.
Effective tool against competition from other jurisdictions:
Laws 20 and 22 keep Puerto Rico competitive to win the economic battle against other countries in the world. Puerto Rico currently faces competition from other jurisdictions to attract capital and new investment, including competition from destinations as close as Florida, Texas, the Dominican Republic, the Cayman Islands, Uruguay and El Salvador, which recently announced a program to attract investors.