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Renewable Natural Resources
Tax incentive for businesses utilizing renewable natural resources in Puerto Rico, supporting sustainable resource-based industries.
11 min
•
Section Code:
2061.01(d)
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Purpose:
Infrastructure — 2071.01(7)
Overview
The Renewable Natural Resources designation under Section 2061.01(d) of Act 60-2019, as amended, provides preferential tax treatment for businesses that utilize renewable natural resources in their operations. This designation supports sustainable resource-based industries that harvest or process renewable materials.
Qualifying businesses may receive reduced corporate income tax rates, property tax exemptions on facilities and equipment, and municipal tax relief. The program attracts forestry operations, sustainable harvesting businesses, biomass processors, and other industries based on renewable natural resources.
The key distinction of this designation is its focus on renewable resource utilization rather than conventional extractive industries. Renewable natural resources are those that regenerate naturally and can be sustainably harvested without depletion when properly managed.
Puerto Rico has natural resources including forests, agricultural lands, and marine resources that support renewable resource industries. The incentive encourages sustainable resource management and value-added processing of renewable materials.
Key Benefits
Corporate Income Tax Rate
Renewable resource businesses may receive a reduced corporate income tax rate on income from resource utilization and processing. The specific rate depends on resource type and decree terms.
Property Tax Exemptions
Businesses receive exemptions from property taxes on processing facilities, equipment, resource lands, and related assets. For resource-intensive operations, these exemptions provide meaningful value.
Municipal Tax Exemptions
Renewable resource businesses may receive exemptions from municipal license taxes on revenues from resource activities.
Sustainable Resource Management
The designation supports businesses that utilize resources sustainably, contributing to environmental objectives while creating economic activity.
Rural Development Contribution
Renewable resource businesses often operate in rural areas, contributing to rural employment and economic diversification.
Requirements & Obligations
Business Structure and Registration
Businesses must establish Puerto Rico legal entities, register with natural resource authorities, and obtain necessary permits for resource harvesting or processing.
Renewable Resource Requirements
Activities must involve renewable natural resources that regenerate naturally and can be sustainably managed. This includes forestry products, biomass, sustainably harvested marine resources, or other renewable materials.
Sustainable Management Practices
Businesses must demonstrate sustainable resource management practices ensuring resource regeneration. Harvest rates, management plans, and environmental practices support sustainability claims.
Facility and Operations
Resource harvesting or processing must occur in Puerto Rico. Appropriate facilities, equipment, and operational practices for resource utilization are required.
Environmental Compliance
Businesses must comply with environmental regulations, resource management requirements, and conservation practices applicable to renewable resource industries.
Employment Requirements
Renewable resource businesses must employ Puerto Rico residents in harvesting, processing, and management roles.
Compliance and Reporting
Annual compliance reports must document resource utilization, harvest volumes, processing activities, sustainability practices, revenues, and employment. Environmental compliance must be maintained.
How to Apply
The application process for Renewable Natural Resources incentives typically requires six (6) to twelve (12) months depending on resource type and operational complexity.
The process begins with resource assessment and business planning. Operators should identify renewable resources, assess availability and sustainability, plan harvesting or processing operations, and evaluate market opportunities. Consultation with natural resource management and tax advisors helps structure operations.
During planning, operators establish Puerto Rico legal entities, secure resource access rights, obtain permits for resource utilization, and develop facilities or equipment for processing.
The formal application is submitted to relevant agencies and includes renewable resource descriptions, sustainability management plans, harvesting or processing methods, facility plans, financial projections, and employment plans.
The review process evaluates resource sustainability, operational viability, and environmental compliance. Review typically takes sixty (60) to ninety (90) days.
Upon approval, the decree is issued specifying terms and obligations. After issuance, the business must commence operations and implement compliance reporting.
This information is educational and should not be considered legal or tax advice. Applicants should consult with qualified legal and tax professionals familiar with Puerto Rico incentive programs before making any business decisions or submitting applications.
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