PUERTO RICO Trends and Developments Contributed by: Ivan G Marrero and Antonio J Pietrantoni, Pietrantoni Mendez & Alvarez LLC
the new form will be available beginning on 1 August 2025, and the filing deadline will be 15 November with respect to the 2024 tax year. In addition, on 21 July 2025, the US Treasury Depart - ment announced that it intends to postpone, until 1 January 2028, the effectiveness of a US federal rule (the “IA AML Rule”) that would be applicable through - out the United States, including Puerto Rico, and that was set to go into effect on 1 January 2026, which, among other things, provides the following: • includes registered investment advisers and exempt reporting advisers in the definition of “financial institution” under the Bank Secrecy Act (BSA); • prescribes minimum standards for anti-money laundering/countering the financing of terrorism programmes for such advisers; and • requires such advisers to report suspicious activity to the Financial Crimes Enforcement Network of the US Treasury Department pursuant to the BSA. The US Treasury Department also announced that it intends to review the scope of the IA AML Rule, which is generally applicable to private fund advisers in Puerto Rico and is perceived as a welcome devel - opment given that it may ease potential compliance costs and burdens for such advisers. In summary, while the regulatory environment for Puerto Rico’s private equity market is stronger and more reliable, challenges remain – particularly report - ing and other compliance requirements. Nevertheless, the local private equity market benefits from stability, sustained governmental support and a growing pro - fessional services ecosystem that is clearly moving towards bolstering local capabilities to meet evolv - ing OCIF, US Treasury Department and other rules and regulations. Together, all these factors are likely to continue propelling the evolution of Puerto Rico’s private equity market. Puerto Rico’s Economic Outlook Puerto Rico’s fiscal and economic conditions have come a long way since 2016, when the government of Puerto Rico generally defaulted on its public debts and the US Congress passed the Puerto Rico Over -
sight, Management, and Economic Stability Act of 2016 (PROMESA), which, among other things, created the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”) and established a bankruptcy-type process for the Puerto Rico gov - ernment and its instrumentalities to restructure their debts. At that time, Puerto Rico had accumulated over USD120 billion of outstanding public debt and pen - sion liabilities, which far exceeded its gross national product (GNP) of USD68 billion for that year. In the most recent audited financial statements issued by the Puerto Rico government, which cover fiscal year 2022, the government had a total net surplus of USD1.9 billion, which is a turnaround after years of budgetary deficits. According to the Oversight Board, Puerto Rico has made significant progress in achiev - ing fiscal responsibility, stabilising public finances and substantially reducing its debt load. In its revised 2024 fiscal plan, the Oversight Board projects Puerto Rico’s GNP growth to be 1%, followed by declines of 0.8% and 0.1% in fiscal years 2025 and 2026, respectively. It also projects Puerto Rico’s GNP growth for fiscal year 2025 to be 2.8 percentage points below the 2% growth of the US economy, as forecasted by the Congressional Budget Office for calendar year 2025. On average, the Oversight Board projects Puerto Rico’s GNP to grow approximately 0.4% between fiscal years 2023 and 2026, due in part to the unprec - edented influx of US federal funding in the aftermath of hurricanes in 2017, earthquakes in 2020 and the COVID-19 pandemic that followed. Puerto Rico’s economy has had an upward trend over recent years. For example, the Puerto Rico Economic Activity Index (the “Index”), which is published by the Economic Development Bank for Puerto Rico (EDB), a Puerto Rico government instrumentality, stood at 127.6 points in March 2025, reflecting an increase of 0.2% on a month-to-month basis and a 1.0% decrease compared to the same period in the last year. According to the EDB, the Index grew by 2.4% in fiscal year 2023 and by 2.9% in fiscal year 2024. Although Puerto Rico’s economy has been gradually recovering, its economic outlook remains uncertain due to certain risks. These include access to reliable and affordable electric power, increasingly powerful
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