The McConnell Valdés Tax Exemption Practice Team is the most comprehensive and experienced tax incentives practice in Puerto Rico.
Our work with clients from around the world seeking to establish and expand operations on the Island reflects our longstanding commitment to Puerto Rico’s economic development. Our client base includes Fortune 100 corporations, multinational manufacturers, renewable energy companies, tourism and agricultural enterprises, export services firms, and high‑net‑worth individuals.
We have been at the forefront of Puerto Rico’s tax incentives framework from the beginning. When the Island enacted its first Industrial Incentives Act in 1948, we were already helping clients obtain tax exemption grants.
Since then, our attorneys have played an integral role in drafting and amending numerous incentives statutes and regulations, including the Industrial Tax Incentives Acts of 1998 and 2008, the Tourism Development Acts of 1993 and 2010, the Green Energy Incentives Act of 2010, the Film Industry Act of 2011, the Export Services Act of 2012, and the Individual Investors Act of 2012 and more recently, the codification of these Acts into Act 60 of 2019 and subsequent amendments.
Our well‑connected and informed lobbying group effectively advocates for clients in all areas of tax incentives legislation. This unparalleled experience strengthens our proactive approach: we anticipate issues before they arise and develop tax‑efficient strategies to help clients secure every benefit available under applicable laws.
If disputes occur, our team includes seasoned tax litigators who vigorously protect our clients’ interests in both Puerto Rico and U.S. forums. Our dedicated Tax Litigation Practice combines exceptional advocacy skills with deep substantive knowledge, representing clients at every stage and in every type of tax controversy.
We also work closely with the Economic Development Administration (PRIDCO), which administers Puerto Rico’s tax exemption programs. PRIDCO not only oversees the granting of tax exemptions but also assists clients with site selection and provides financial incentives to new and expanding businesses.
What We Do
We help clients by:
- Advising on tax exemption issues relating to complex corporate acquisitions, reorganizations, and liquidations
- Counseling clients across a broad range of industries – from energy to tourism, from pharmaceuticals to exports – on Puerto Rico’s tax incentives programs, including industrial tax exemption, municipal incentives, and infrastructure and location incentives
- Counseling clients on individual investor and export services exemptions
- Preparing and filing tax exemption applications
- Negotiating tax incentives grants
- Representing clients in incentives-related litigation before the Puerto Rico Court of First Instance, the Puerto Rico Court of Appeals and the Puerto Rico Supreme Court
Representative Clients & Matters
Representative Clients & Matters
Representative Matters
Notable representations include:
- Assisting a client in the negotiation of amendments to its industrial tax incentives grant to classify products as novel to attain million dollar tax savings. We filed a Competent Authority Request and negotiated a closing agreement on the Puerto Rico income tax consequences of IRS income reallocations to prevent double taxation with the Puerto Rico Treasury Department. We successfully assisted client in obtaining a closing agreement with the Puerto Rico Treasury Department granting unique tax credits under the Puerto Rico Internal Revenue Code related to the excise tax of Act 154 to multinational manufacturing companies in Puerto Rico. We also successfully assisted client in obtaining a closing agreement with the Puerto Rico Treasury Department attributing proceeds from a multi-million dollar IP litigation settlement in the U.S. to Puerto Rico and taxing at preferential rates.
- Currently representing clients in complex litigation against two municipalities challenging final notices of deficiency on the payment of municipal license taxes. The assessments relate to various novel issues regarding the municipal license tax exemption applicable to businesses located within a duly authorized Foreign Trade Zone, and to challenges of the long-standing Puerto Rico tax incentives programs by the municipal government.
- Representing a company in negotiation of a tax incentives grant with the Puerto Rico Industrial Development Company, Puerto Rico Treasury Department, and Department of Economic Development and Commerce to maintain operations in Puerto Rico in light of the negative impact of excise tax of Act 154. We assisted in the negotiation of incentives, as well as the negotiation, drafting and execution of grant documents, closing agreements, regulatory amendments and others. We filed a Competent Authority Request regarding the Puerto Rico income tax consequences of IRS and UK income reallocations, and started negotiations thereunder. We also successfully drafted and lobbied for legislation providing for pioneer product treatment carryover in the renegotiation process of an Act 135 tax incentives grant to an Act 73 grant. Since its enactment, this legislation has promoted significant economic activity in Puerto Rico.
