New Incentives Make Puerto Rico More Appealing to Contact Centers, IT Firms
July 22, 2008
Puerto Rico means ‘rich port’ in Spanish. A new package of investment incentives that came into effect in July has enriched the value proposition of locating contact centers and IT firms there.
- A four percent flat corporate tax rate, down from seven percent.
- A 50 percent tax credit on product research and development activities that can be used to reduce taxes further, or be sold to other companies. This replaces a tax deduction for those costs.
- A 10 percent rebate on energy bills for 10 years. Puerto Rico has high electricity costs because it must import oil power stations; it has no coal and little hydroelectric sources.
Any new firm setting up shop in Puerto Rico would be in good company. The contact centers and IT firms there include Microsoft (News - Alert), Atento, Axon Global, Cascades Technologies, and Corsidian, reports the Puerto Rico Industrial Development Company (PRIDCO), the island’s economic development agency.
Puerto Rico has long been popular with aerospace firms and pharmaceutical firms. Several aerospace companies have expanded their presence to include their contact centers. Honeywell (News - Alert) Aerospace set up a customer and internal IT support center in 2007. Lockheed Martin recently opened an IT help desk.
The breaks provide a great bonus on what is already a considerable wealth of advantages in setting up in Puerto Rico. The island is an autonomous US commonwealth that has long offered tax law flexibility that US states do not have.
At the same time Puerto Rico being part of the US enables firms opening shop there to be eligible for federal government contracts, such as for defense work. Its bilingual workforce gives companies and functions there access to the Latin American market and customers with the stability and security of being under the American umbrella.
Increasingly more importantly Puerto Rico has a growing bank of well-educated labor. There are more than 90 public and private college and university campuses on the island that graduate upwards of 30,000 students every year, 10,000 in the engineering, sciences, and technology alone.
PRIDCO representatives report that engineering enrollment in Puerto Rican colleges is increasing at a higher rate than at leading US institutions. University of Puerto Rico (UPR) Mayaguez Campus and Polytechnic University of PR ranked 10th and 17th in enrollment in 2007, up from 11th and 19th in enrollment in 2006 according to the American Society for Engineering Education.
Also, companies that are thinking of locating in Puerto Rico now have a new site to consider building on. The government is brownfielding a 70-acre former prison site in San Juan, the capital and largest city, into a sci-tech complex known as Science City. It will be served by Tren Urbano, San Juan’s rapid transit system.
Science City will be the anchor for a 2,000-acre public-private "Knowledge Corridor" that will include a new Molecular Sciences Complex and the new Puerto Rico M.D. Anderson Cancer Center.
“This new economic and tax incentives program substantially supports our efforts to become a key driver of the ‘innovation economy,’” says Secretary for Economic Development and Commerce Bartolomé Gamundi. “R&D tax credits will allow companies to receive added benefits by clustering their research facilities in Puerto Rico alongside their manufacturing plants, creating highly skilled employment opportunities for the Island. This also makes it easier for companies to capitalize on our world-renowned science and engineering graduates and research and production facilities.”
Brendan B (News - Alert). Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.
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