• The Act offers the following tax credits: 40% tax credit on all payments to Puerto Rico resident companies and individuals. The Act provides an annual limit of
$50,000,000 of tax credits available for film projects. However, film projects may apply for up to $50,000,000 additional tax credits in excess of the $50,000,000 limit if any portion of its Puerto Rico production expenses are incurred within a Film Development Zone. An additional $150,000,000 will be available if the film project is produced within a Film Development Zone having a film studio with a cost of $200,000,000 or more. The Act provides that, after attaining the previous limits, additional tax credits in an amount of $100,000,000 will be available if the film credits program has conceded at least $250,000,000 for two consecutive years.
• 20% tax credit on all payments to non-resident “Above the- Line” talent, including actors, producers, directors and writers. No annual cap is established with respect to non-resident “Above-the-Line” payments. However, the
grantee of a decree under the Act (or its representative) will be responsible for withholding, remittance and reporting to the Puerto Rico Treasury Department a 20% tax on payments to non-resident “Above-the-Line” talent. Some jurisdictions, as the United States have rules to avoid double taxation that may include foreign tax credit systems. Under a foreign tax credit system, the 20% tax withheld from payments made to non-resident “Above-the- Line” talent should be credited against the income tax liability determined with respect to such income in his/her
primary tax jurisdiction. Each non-resident “Above-the- Line” individual should consult their own tax adviser.
• 25% infrastructure tax credit on costs incurred in the development of a film studio or other eligible infrastructure project. The Act provides an annual limit of $10,000,000 of tax credits available for infrastructure projects. Excess credits not taken in a particular year may be rolled over to a subsequent year. These credits
have a lifetime cap for all projects of $150,000,000. The minimum investment for individual infrastructure projects is $1 million.