For additional information, do not hesitate to contact our offices. Our address is:
Fiddler González & Rodríguez, P.S.C., P.O. Box 363507, San Juan, PR 00936-3507.
We welcome your questions and comments.
Myrna Y. Medina-Massanet
*Special Tax Counsel
February 28, 2017
Incentives Act for Retention and Return of Medical Professionals Enacted
On February 21, 2017, the Governor of Puerto Rico, Honorable Ricardo Rosselló Nevarez, signed into law the “Incentives Act for the Retention and Return of Medical Professionals”, Act No. 14 of 2017 (the “Act”). The purpose of the Act, which will be generally effective sixty (60) days from enactment, is to establish a reduced income tax rate to qualified physicians and to exempt eligible dividends issued by professional service corporations or limited liability companies which provide medical diagnostic and treatment services in Puerto Rico.
A qualified physician who obtains a Tax Exemption Grant (the “Grant”) under the Act will enjoy the following tax incentives for the period of the Grant:
• 4% fixed income tax rate on eligible income generated from professional medical services rendered throughout the period of the Grant;
• Eligibility to make voluntary contributions up to 25% of the net income in the case of individual retirement plans (Keogh) or up to 25% of their salary in the case of corporate retirement plans;
• Income tax exemption up to $250,000 on eligible dividends;
• The qualified physician will enjoy the benefits of the Act for a period of 15 years, effective January 1st of the taxable year the Grant is awarded;
• The period of the Grant can be extended for an additional 15 years, for a total of 30 years.
For purposes of the Act, a qualified physician is an individual who has been admitted to practice medicine, podiatry, any specialized area of dentistry, or doctors who are studying their residency in a duly accredited program. The qualified physician must dedicate at least 100 hours per month to offer professional medical services in a public or private hospital, a federal or state agency, a private office dedicated to providing professional medical services or a duly accredited medical school.
Nonresident qualified physicians may qualify for the benefits of the Act. If the Secretary of the Department of Economic Development and Commerce (the “Secretary”) issues a favorable determination, the qualified physician will have a term of 120 days to transfer his/her practice to Puerto Rico and become a resident individual.
To enjoy the benefits of the Act, the Puerto Rico Secretary of Treasury and the Secretary of Health must endorse positively the application based on various criteria. In addition, the qualified physician must continuously comply with the following requirements:
• Be a bona fide resident of Puerto Rico;
• Maintain his/her status as a qualified physician;
• Provide 180 hours of community service annually, as specified in the Act;
• Submit the required annual report, as specified in the Act;
• Be in compliance with all tax responsibilities, and;
• Any other requirements imposed by the Grant.
How to Apply
A qualified physician interested in benefiting from the incentives provided by the Act, must submit a formal request to the Secretary, through the Office of Industrial Tax Exemption, accompanied by the corresponding filing fee to be determined by Regulation, and a special assessment fee of $1,000. All requests must be submitted within 2 years from the effective date of the Act.
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**©2014 Fiddler, González & Rodríguez, P.S.C. This Watch has been prepared by Fiddler, González & Rodríguez, P.S.C. for informational purposes only and does not constitute legal advice. This information does not create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. Fiddler, González & Rodríguez, P.S.C. and its members assume no responsibility to inform you of additional changes in law or any other legal issues related to the matters advised in this e-mail.