Puerto Rico’s government is hopeful for the approval of a bill in the U.S Congress which could spearhead the development of an International Insurance Centre (IIC) on the island.
The bill, introduced by Puerto Rico’s resident commissioner Jenniffer González Colón, proposes an amendment to section 4301 of the Tax Cuts & Jobs Act of 2017.
According to officials, the amendment could lead the island to become a world leader in the re/insurance industry as well as generate approximately $10 billion for the economy in the form of premium deposits in local banks.
In addition, the classification change would allow Puerto Rico to compete with industry markets such as Bermuda and the Cayman Islands.
Manuel Laboy Rivera, Puerto Rico’s Secretary for Commerce, explained that the island’s greatest attraction for the industry is its stable regulatory framework as a U.S jurisdiction, which protects and provides freedom to compete in the market.
“Evidently, because Puerto Rico is part of the United States, it also offers political stability and the matter of the currency, among other things, that make us attractive to that industry,” said Rivera.
“Twenty percent of the economy in Puerto Rico is finance and insurance, so we have a very skilled workforce and knowledge of the regulations and everything that has to do with this sector, and without a doubt the incentives offered by Act 399 [International Insurers & Reinsurers Act] are extremely attractive and combined have turned this industry into one of great importance.”
“In Puerto Rico, we offer a tax exemption on net income in excess of $1.2 million; the preferential tax rate is 4 percent.”
“There is a tax exemption on premiums and an exemption on dividends. This has led to the fact that since 2004 we have created 40 insurers and reinsurers organized under the IIC. Today, between insurers and reinsurers, we have 29 active entities in the center.”
“Some of their countries of origin include the United States, Cayman Islands, Barbados, Bermuda, Germany and Argentina,” he added.
The insurance commissioner acknowledged it will not be known until December whether the bill was passed by Congress but said the legislation addresses the issue more aggressively than in previous instances, thanks to the efforts between Economic Development & Commerce Department, the Treasury and González Colón.
