Over ten legislative bills were introduced and approved by the Puerto Rico Legislative Assembly recently and were expected to be signed into law by Governor Luis G. Fortuño. These bills form part of the Puerto Rico Tourist Reform, a government initiative to attract more demand to Puerto Rico as a tourist destination. One of these legislative measures is the Nautical Tourism Act 2009. This bill sets the standards to define Nautical Tourism and create a more “boater-friendly” island that welcomes both private cruisers and commercial tourism-related marine businesses.
One of the key provisions of the Nautical Tourist Act 2009 is to grant the Tourism Company the power to regulate all maritime tourism activities. This includes issuing certificates to companies carrying out nautical tourism activities—for example, chartering and sports fishing—so that these companies can receive incentives provided for under the act such as tax exemptions. This streamlines the process from the past when a visit to several government agencies was required.
Another provision of the act is to make it easier for boaters who want to set up a nautical tourism business. This bill covers vessels such as sail, power and even jet skis or water sports equipment. For yachts 32 feet and greater, the vessel must be rented, chartered or actively used in a tourist-related business for at least six months of the year in order to obtain the tax incentives and exemptions being offered. Vessels under 32 feet must be engaged in a tourism-related business for the 12 months of the year in order to get tax incentives. One of the tax incentives provided under the law is no sales tax charged on vessels bought in Puerto Rico to be used in a tourism-related business.
Cruising yachtsmen will now find it easier to visit Puerto Rico under this act. Currently, in-transit vessels are charged a sales tax (or entry fee equal to seven percent of the total value of the vessel), when they enter Puerto Rico’s waters. The current bill eliminates the entry fee for in-transit vessels and also allows them to stay in Puerto Rico for periods of up to one year without the need to obtain a license and registration. The current law allows 60 days only.
Another of the 10 legislative measures that are part of the Puerto Rico Tourist Reform is a Tax Incentives bill. Provisions of this bill include a 90 percent Income Tax exemption on Nautical Tourism related businesses. For example, if a Florida-headquartered charter yacht company operated a base in Puerto Rico and grossed $1 million in revenue from that business in a calendar year, that business would be taxed on only $100,000 at a rate of 29 percent for foreign-based business.
This legislation is all geared to develop and strengthen a new market niche for Puerto Rico which the Puerto Rico Tourism Company believes, based on studies, has the potential to become a revenue-generating sector as lucrative as its cruise ship industry.
Dan Shelley, president of Puerto del Rey, Inc., said, “Puerto Rico is one of the best locations in the world for nautical tourism. Especially here on the eastern end of the island, we’re a jumping off point to cruise the Spanish Virgin Islands of Culebra and Vieques.
“The airport infrastructure is here. Nearby Roosevelt Roads (now the José Aponte de la Torre Airport) will be expanding to handle international air traffic and will have Customs and Immigration,” said Shelley. “We, at Puerto del Rey, will be upgrading to a 330-ton travellift in order to haul megayachts. The vocational high school in Fajardo will be training students in the nautical trades. This legislation also opens up a lot of opportunities in the industry, for example, for charter companies and charter yachts.”