Act 273

With the objective of making Puerto Rico an international banking and financial center the government enacted the Act No. 273, also known as “The International Financial Center Regulatory Act” which provides tax incentives for new banking and financial activity in Puerto Rico that is done for clients outside of Puerto Rico.

The International Financial Center Regulatory Act (Act 273) seeks to expand the potential market of the International Financial Center of Puerto Rico.

The benefits of an international financial center in Puerto Rico are the expansion of the service sector, as well as the direct and indirect creation of employment and growth in the economic activity. Puerto Rico offers many favorable conditions to perform international financial transactions, such as political stability, the soundness of its banking system, the close economic relationship with the United States, the high degree of professionalism, bilingualism and technical capacity of its human resources, a unified market and monetary system, its privileged geographical position and a properly developed communications network.

To meet the purposes hereinafter mentioned, the law provides for the organization of International Financial Entities (IFE). An IFE is a Puerto Rico entity engaged in traditional banking or financial services for non-Puerto Rican clients. IFEs are under the supervision of the Office of the Commissioner of Financial Institutions.


  • Accepting deposits
  • Borrowing money
  • Lending
  • Letters of credit
  • Refinancing
  • Foreign currency exchange
  • Underwriting
  • Trade financing
  • Trust services
  • Securities brokerage
  • Clearinghouse services
  • Asset management
  • Other financial services

IFEs are generally not permitted to do transactions with local Puerto Rico counterparties, except in certain cases such as these:

  • Certain transactions involving the Government Development Bank and the Economic Development Bank of Puerto Rico Certain transactions and activities involving securities issued by the Government of Puerto Rico
  • Participation in local loan syndications originated by a local
  • Purchasing of substandard or non-performing loans from Puerto Rico entities


  • IFEs will enjoy a 4% flat income tax rate on their income
  • Distributions from earnings and profits derived from IFEs:
    • Taxed at 6% for shareholders that are Puerto Rico residents
    • 100% exemption from Puerto Rico taxes on such dividends
  • Municipalities in Puerto Rico may levy a gross receipts tax of up to 1.5% for financial services
  • IFEs will be 100% exempt from all property taxes
  • A 15-year tax decree, renewable for two (2) additional 15-year periods