Bill of Rights for Decree Holders in Puerto Rico: Key Protections and Benefits
Learn about Puerto Rico’s Bill of Rights for Tax Decree Holders. Discover protections for businesses and shareholders, including fair treatment, negotiation rights, and tax exemption benefits. Maximize your tax incentives with expert guidance from MZLS.
Puerto Rico’s Incentives Code was created to promote economic development by encouraging capital investment, job creation, and business expansion through tax exemption decrees. It aims to make Puerto Rico a competitive destination for businesses by offering strategic tax benefits and reducing operational costs. These decrees are essential tools for encouraging capital investment, job creation, and business expansion on the island. The Bill of Rights for Decree Holders and Shareholders under Section 1000.04 of Puerto Rico law outlines the fundamental rights and protections available to businesses and shareholders holding tax exemption decrees. This article explains the key provisions and how they protect the interests of exempt businesses and their shareholders.
The Bill of Rights for Decree Holders and Shareholders under Section 1000.04 of Puerto Rico law outlines the fundamental rights and protections available to businesses and shareholders holding tax exemption decrees. This article explains the key provisions and how they protect the interests of exempt businesses and their shareholders.
Fair and Unbiased Treatment
Every exempt business and its shareholders have the right to receive fair, proper, and unbiased treatment from all officials and employees of the Department of Economic Development and Commerce (DEDC) during any process carried out at the Department. The government is required to uphold impartiality and fairness in all dealings with decree holders. Learn more about Puerto Rico’s Individual Resident Investor Incentives here.
Every exempt business and its shareholders have the right to receive fair, proper, and unbiased treatment from all officials and employees of the Department of Economic Development and Commerce (DEDC) during any process carried out at the Department. The government is required to uphold impartiality and fairness in all dealings with decree holders.
Contractual Nature of Tax Exemption Decrees
Tax exemption decrees constitute a binding contract between the Government of Puerto Rico, the exempt business, and its shareholders. The terms and conditions of the decree must be honored throughout the term of the tax exemption, provided the decree holder obtains a Certificate of Compliance demonstrating compliance with the decree's terms.
Geographical Validity of Tax Decrees
Tax exemption decrees are valid throughout Puerto Rico, including its municipalities. If an exempt business starts operations in a new municipality, it does not need to amend its tax exemption decree to cover activities already included under the decree.
Right to Negotiate with the Government
Exempt businesses and shareholders are entitled to negotiate tax decrees and economic development matters with the Secretary of the DEDC as the representative of the Government of Puerto Rico. For matters related to taxes and accounting, the endorsement of the Secretary of the Treasury is required. Learn more about the benefits of the Individual Resident Investor under Puerto Rico’s Incentives Code here.
Exempt businesses and shareholders are entitled to negotiate tax decrees and economic development matters with the Secretary of the DEDC as the representative of the Government of Puerto Rico. For matters related to taxes and accounting, the endorsement of the Secretary of the Treasury is required.
Right to Benefit from More Favorable Laws and Regulations
When new laws or regulations are enacted that provide more favorable terms and conditions, an exempt business may request that its decree be modified to reflect those benefits. The modification is at the discretion of the Secretary of the DEDC and subject to the endorsement of the Secretary of the Treasury. Learn more about Puerto Rico tax incentives here.
When new laws or regulations are enacted that provide more favorable terms and conditions, an exempt business may request that its decree be modified to reflect those benefits. The modification is at the discretion of the Secretary of the DEDC and subject to the endorsement of the Secretary of the Treasury.
Expedited and Transparent Process
Exempt businesses and shareholders are entitled to a transparent and expedited process for granting tax exemption decrees. The government is required to act efficiently and without unnecessary delays. Discover the benefits of exporting services from Puerto Rico here.
Exempt businesses and shareholders are entitled to a transparent and expedited process for granting tax exemption decrees. The government is required to act efficiently and without unnecessary delays.
Confidentiality and Protection of Information
All information provided by exempt businesses and their shareholders to the DEDC is protected under confidentiality provisions. No one outside of the DEDC may access such information without authorization from the exempt business and its shareholders unless explicitly allowed by law. Businesses have the right to know the purpose for which the information is requested, how it will be used, and the consequences of withholding it.
Right to Legal Representation
Exempt businesses and shareholders are entitled to be represented by an authorized professional. Certified professionals must be either attorneys admitted to the Bar or certified public accountants (CPAs).
Our tax practice at MZLS is led by Simón Carlo Valentín, Esq., CPA, a highly experienced attorney and certified public accountant. Simón focuses in tax law, corporate structuring, and regulatory compliance, offering strategic guidance to businesses and individuals navigating Puerto Rico’s tax exemption framework.
Notification of Modifications to the Decree
If the DEDC modifies a decree due to the decree holder’s failure to obtain a Certificate of Compliance or due to partial noncompliance, the DEDC must notify the exempt business and its shareholders in writing. The notification must include the nature of the modification, the grounds for the change, and the opportunity to be heard as required by due process.
Protection Against Discrimination
Exempt businesses and shareholders are entitled to protection from discrimination based on race, color, sex, birth, social origin, political affiliation, or religious beliefs. The DEDC cannot impose arbitrary requirements that increase operating costs or create unfair burdens on decree holders.
Promotion of Decree Renewal and Economic Growth
The Government of Puerto Rico prioritizes the renewal of existing decrees and the approval of new decrees to maintain and expand manufacturing activities and other economic sectors. Tax exemptions are recognized as a valuable tool for promoting capital investment, job creation, and economic activity in Puerto Rico. Discover why Puerto Rico is the best destination for private equity investment here.
The Government of Puerto Rico prioritizes the renewal of existing decrees and the approval of new decrees to maintain and expand manufacturing activities and other economic sectors. Tax exemptions are recognized as a valuable tool for promoting capital investment, job creation, and economic activity in Puerto Rico.
Conclusion
The Bill of Rights for Decree Holders and Shareholders under Section 1000.04 of Puerto Rico law provides critical protections for exempt businesses and their shareholders. Understanding these rights is essential for maximizing the benefits of tax exemptions and ensuring compliance with Puerto Rico's legal framework. Maximize your tax benefits—schedule a consultation today for expert guidance on tax exemption decrees.