On January 2, 2017 the House of Representatives presented Bill No. 5 titled “Incentives Act for the Retention and Return of Medical Professionals” (the “Bill”). The Bill was approved by the House of Representative on February 8, 2017 and on February 11, 2017 by the Senate. On February 21, 2017, the Governor of Puerto Rico signed the Bill into law as Act No. 14 of 2017 (the “Act”). The purpose of the Act is to guarantee accessible and quality health services for all the residents of Puerto Rico; and offer an attractive tax incentives proposal for the medical professionals to stay in Puerto Rico, and at the same time, attract the setup of other professionals’ medical practice in Puerto Rico.

Eligibility for the incentives is based on four (4) main characteristics: (a) professional eligibility; (b) residency; (c) community service; and (d) timing of the request.

A Qualified Physician that requests and obtains a Tax Exemption Grant under the Act (the “Grant”), will enjoy the following tax incentives for an initial term of 15 years:

• A 4% fixed income tax rate on Eligible Income (defined below) generated as a result of offering his/her Professional Medical Services (defined below);
• 100% exemption (including Alternative Minimum Tax (“AMT”)) on up to $250,000 received from Eligible Dividends (defined below), per year; and
• Eligibility to contribute up to 25% of the net income to individual retirement plans (Keogh) or up to 25% of their salary in case of corporate retirement plans, as after tax contributions.
  
  

The Qualified Physician can request an extension of the Grant for an additional 15 years, if he/she can demonstrate that said extension is in the economic benefit of Puerto Rico.

We can assist a qualified physician in requesting and obtaining the tax exemption decree under Act 14. Please contact us at 787-458-2398.