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Film Production Tax Incentives


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Film Production Tax Incentives


Boasting one of the most competitive and longest running tax incentive programs in the world, a privileged location, geography and history, a stable U.S.-based political, financial and legal system and some of the most modern infrastructure in Latin America and the Caribbean, Puerto Rico is ready for your next film project.

Centrally located in the heart of the Caribbean, Puerto Rico enjoys an ideal climate with year-round warm weather and sunshine. With roughly 3,500 square miles of terrain, including various outlying islands, and over five hundred years of history at the crossroads of European and American cultures.

Puerto Rico has a diverse range of geographic resources and locations within a few hours’ drive of each other, including 350 miles of coastline, plains, mountains, jungles, dry forests, rivers, lakes and waterfalls, and colonial, urban and modern architecture.

Film Tax Incentives /State

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40% - PR

35% - DC/OK

30% - KY/IL/WA/NY

25% - RI/PA/AL/MA/NM/NC/SC/TN

20% - CA/CO/AR/UT/OR/MN/HI/GA

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INCENTIVES OVERVIEW


INCENTIVES OVERVIEW


production incentives

  • 40% production tax credit on all payments to Puerto Rico Resident companies and individuals

  • 20% production tax credit on all payments

  • Persons engaged in qualifying film projects are eligible for the following preferential tax rates or exemptions:

    • Fixed income tax rate of between 4% and 10%

    • 100% exemption on dividend taxes -­‐ 90% exemption from municipal and state taxes

    • 100% exemption from municipal license taxes, excise taxes and other municipal taxes

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REQUIREMENTS


REQUIREMENTS


  • Qualifying projects: feature films, documentaries, television programs, episodic series, mini-series, music videos, national and international commercials, videogames, recorded live performances and original sound track recordings and dubbing

  • $100,000 minimum spend requirement per project ($50,000 for short films)

  • No principal photography requirements (full or partial development, preproduction, and post-production may qualify). If 50% or more of principal photography is shot on the island, development payments to Puerto Rico Resident companies and individuals and Qualified Nonresident individuals can qualify.

  • No per-project or individual wage caps

  • No cap on credits for payments to Qualified Nonresident individuals. Payments made to Qualified Nonresident individuals are subject to a 20% withholding over their Puerto Rico sourced income

  • The annual cap on credits for payments to Puerto Rico Resident companies and individuals is $50 million (which may be expanded up to $350 million if incurred partially in a “Zone”.

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INFRASTRUCTURE INCENTIVES


INFRASTRUCTURE INCENTIVES


INFRASTRUCTURE TAX CREDITS

• 25% tax credit on development or expansion costs of studios, laboratories, post-­‐production, animation and  special  effects  facilities,  transmission  facilities  and related infrastructure

• Minimum investment of $1 million per project

• Maximum aggregate annual cap of $10 million and lifetime cap of $150 million for all infrastructure credits. Such credits shall only be available when a project is completed and ready for use and may be carried forward only if the corresponding project is in operation pursuant to the terms of its grant

PREFERENTIAL TAX TREATMENT

Persons engaged in qualifying infrastructure projects as well as operators of studios and other purpose-­‐built media facilities with a budget equal to or greater than $50 million (including their suppliers) are eligible for the following preferential tax rates or exemptions:

  • Fixed income tax rate of between 4% and 10%

  • 100% exemption on dividend taxes

  • 90% exemption from municipal and state taxes on property

  • 100% exemption from municipal license taxes, excise taxes and other municipal taxes

FILM DEVELOPMENT ZONES

To further incentivize the development of high-capacity production studios, the Commonwealth of Puerto Rico may designate certain geographic areas as Film Development Zones.

Qualifying media projects incurring a portion of their expenses with such zones shall also be eligible for expanded annual credit caps on all payments to Puerto Rico Resident companies and individuals beyond the initial $50 million of: (1) $50 million; (2) an additional $150 million, if the investment in the studio located within such zone exceeds $200 million; and (3) a further $100 million if the caps described above are reached for two consecutive years.

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HOW TO APPLY


HOW TO APPLY


1

PREPARE THE DETAILS OF YOUR NEXT QUALIFYING PROJECT

CereProds is available and happy to help at any stage of the application procedure. Please contact us at any point during the application process if you have any questions.


2

CONTACT US TO DISCUSS YOUR FILM PROJECT: 

We can answer any questions on the production tax credit program and application process  as  well  as  provide  you  with  valuable  assistance in scouting, budgeting, production resources, location permits and logistics.


3

OBTAIN A PRE-APPLICATION CONFERENCE LETTER: 

The  Pre-application Conference Letter sets forth the date when  you  have  expressed  your  intent  to  apply  for production tax credits. Preproduction, production and/or postproduction expenses will become eligible for production tax credits from this date. If you do not obtain a Pre-application Conference Letter, expenses will become eligible for production tax credits from the date you file the application.

In order to obtain a Pre-application Conference Letter, you must provide the following information:

  • name of the film project

  • type of project

  • estimated total budget

  • estimated Puerto Rico budget

  • production schedule


4

FILE THE APPLICATION: 

Complete  and  submit  the application, along with all required supporting documentation. When preparing the application, please follow all instructions set forth therein as well as the program rules. You must file the application before  the  end  of  principal  photography (or postproduction, in the case of standalone post-production).


5

REVIEW AND APPROVAL OF THE APPLICATION:

After application authorities have five working days to review the application to ensure compliance with  all  eligibility  requirements  as  set  forth in the applicable statute and program rules. If the applicable film project is deemed eligible and passes initial approval by the film commission,  the application is then forwarded to the Puerto Rico Treasury Department for final review. The Puerto Rico Treasury Department will have 15 working days to review the application to ensure the  good  standing  of  persons  applying  for  the  credit and certify the availability of tax credits.


6

OBTAIN YOUR TAX GRANT

Once the Puerto Rico Treasury Department approves the application, production must pay the mandatory filing fee of 1% of your Puerto Rico estimated budget. You will be provided the tax grant, contract between you and the Commonwealth of Puerto Rico confirming the production tax credits reserved and tax benefits granted to the applicable film project.


7

LET’S ROLL

While you may begin your film project at any time during the application process, you have a maximum of 30 days after the grant has become effective to begin principal photography (or postproduction, in the case of standalone post).


8

PREPARE AUDIT REPORT

All productions are expected to present an audit report in conformity with the parameters set forth in Circular No. 12-08 Film Project Application Protocols & Validation of Puerto Rico Production Expenses to obtain production tax credits. Once film accounts have been handed over to the auditor, there will be a term of 30 days to complete the audit report and submit to the Puerto Rico Film Commission and Treasury Department, which may be extended for 30 additional days for reasonable cause.


9

REVIEW & APPROVAL

The adjudicating bodies (Puerto Rico Film Commission and Puerto Rico Treasury Department) will have a period of 30 days to review and approve the Audit Report. Once approved, the Treasury Department will certify that the tax credits and benefits set forth in your grant are available for use and/or transfer.


10

CLAIMING YOUR CREDITS

Within 1 day of receiving certification from the Treasury Department, the Puerto Rico Film Commission will notify that the tax credits and benefits set forth in your grant are available for use and/or transfer. In order for the applicable tax credits and benefits to become available, you will have 15 working days to pay the balance of the filing fee. All tax credits are transferable and can be used to offset income tax liability in Puerto Rico or brokered in the open market.

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WORKING TOGETHER


WORKING TOGETHER


Our Office

Guaynabo, PR 00969
Puerto Rico

 
 

Contact Us

Tell us about your project and we’ll tell you how we can help. We work with a huge range of projects from music videos and branded content through to scripted narrative fiction and IATSE, ISTAE/SAG, IATSE/SAG/DGA affiliated projects.

Our expertise is thanks to the collective decades of experience our crew, technicians and producers bring to the table.

Whatever your project needs, contact CereProds for full and thorough analysis and consultation.

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Film Name, Type of Project, Estimated Total Budget, Estimated PR Budget, Production Schedule.
  • Elements of data contained herein were taken from the Puerto Rico Film Commission official guidelines. This should not constitute legal advice.

  • Although we make every effort to keep our information up to date there may be features and facilities different to as described. In any case contact CereProds for more details.