January 26, 2016 / 3:53 PM / 3 years ago

Puerto Rico study optimistic on job creation under tax breaks

SAN JUAN (Reuters) - Tax incentives aimed at spurring Puerto Rico’s economy have created 5,800 jobs in the first four years since their enactment, but could create another 50,000 jobs in their next eight, according to a study commissioned by the island’s government.

The study, released on Tuesday by the economic consulting firm Estudios Tecnicos and commissioned by Puerto Rico’s Department of Economic Development and Commerce, said Acts 20 and 22 have generated about 3,349 and 2,483 jobs, respectively.

The study sees a steep increase in the next eight years, estimating a combined total of 56,000 jobs created by 2024.

The acts, highly touted when they were passed in early 2012, are aimed at spurring a Puerto Rican economy that is facing a 45 percent poverty rate and rapidly shrinking tax base as residents jump ship for the continental United States.

The island is $70 billion in debt and trying to sway creditors on taking pay cuts, while lobbying Washington lawmakers to let it file for bankruptcy.

Act 20 offers low corporate taxes to export businesses that set up shop on the island, while Act 22 aims to attract such entrepreneurs by exempting newcomers from taxes on passive income.

There have been 763 decrees under Act 22 and 528 under Act 20, but those numbers should climb to 4,000 and 3,500 respectively by 2024, the study estimates.

People who have moved to the island under Act 22 have planned $228 million in capital investments in the U.S. commonwealth, and spent about $266 million in real estate, generating some $50 million in mortgages for local banks, according to the study.

Buyers spent an average of $1.8 million on homes, while renters pay about $2,800 in monthly rent, the study showed. Overall real estate investment by Act 22 grantees could reach $1.7 billion by 2024, according to the study.

Reporting by Nick Brown; Editing by Frances Kerry

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