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Act 273

To make Puerto Rico an international banking and financial center, the government enacted Act No. 273, also known as “The International Financial Center Regulatory Act”.
The International Financial Center Regulatory Act (Act 273) seeks to expand the potential market of the International Financial Center of Puerto Rico, by granting tax incentives for new banking and financial activity in Puerto Rico that is provided for clients outside of the island.

Allocating an international financial center here in Puerto Rico allows expanding and developing the service sector due to its privileged geographical position, the extraordinary degree of bilingualism professionalism, and the technical capacity of its human resources, along with its properly developed communications network. This will increase and develop the creation of employment and potential growth in financial activity.

The economic union with the United States, its political stability, the soundness of its banking system, and the unified market and monetary system gives Puerto Rico a significant advantage in multiple conditions to perform international financial transactions. To reach the purposes hereinafter stated, 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 direction 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
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