Puerto Rico has become one of the most attractive destinations in the world for entrepreneurs, investors, and global businesses seeking powerful tax advantages. At the center of this opportunity is Act 60 Puerto Rico, also known as the Puerto Rico Incentives Code. This law consolidates a wide range of tax incentive programs designed to stimulate economic development, attract foreign investment, and encourage innovation on the island.

For many individuals and companies, Act 60 offers a rare combination of low tax rates, government-backed incentives, and access to the U.S. financial system. Businesses can enjoy corporate tax rates as low as 4%, while individual investors may qualify for 0% tax on certain capital gains, dividends, and interest income. These benefits have turned Puerto Rico into a strategic relocation hub for entrepreneurs, cryptocurrency investors, hedge funds, technology startups, and export service companies.

The law was introduced in 2019 to streamline Puerto Rico’s previous incentive programs into one comprehensive code. Before Act 60, multiple laws such as Act 20 (Export Services) and Act 22 (Individual Investors) operated separately. The new legislation merged these programs to simplify administration, improve transparency, and attract even more global investment.

Today, Act 60 plays a major role in Puerto Rico’s economic strategy. Thousands of investors and businesses have already relocated to the island to take advantage of the tax benefits and business opportunities offered by this powerful legislation.

What Is Act 60 Puerto Rico?

Act 60 Puerto Rico, officially known as the Puerto Rico Incentives Code, is a comprehensive tax incentive law enacted in 2019. Its primary goal is to encourage economic growth by attracting entrepreneurs, investors, and companies from around the world to establish operations or residency in Puerto Rico.

Prior to Act 60, Puerto Rico had more than 50 different incentive programs scattered across separate laws and government agencies. This made the system complicated and difficult to navigate for businesses and investors interested in relocating. Act 60 solved this problem by consolidating these incentives into a single legal framework.

The program offers a variety of tax benefits depending on the type of applicant. For example, individual investors who relocate to Puerto Rico may qualify for significant tax exemptions on investment income, while businesses that export services from Puerto Rico can benefit from reduced corporate tax rates and dividend exemptions.

These incentives are granted through a tax exemption decree, which is essentially a binding agreement between the applicant and the Puerto Rican government. Once approved, the decree guarantees the tax benefits for a specific period, often lasting until 2035 or beyond depending on the program.

Because Puerto Rico is a U.S. territory, it offers a unique advantage. Businesses and individuals can access the U.S. legal and financial system while still benefiting from Puerto Rico’s separate tax structure. This combination has made Act 60 one of the most attractive tax incentive programs globally.

The Origin of Puerto Rico’s Incentive Programs

Puerto Rico’s economic incentive programs date back several decades. The island has long relied on tax incentives to attract businesses and stimulate economic development. Earlier initiatives focused on manufacturing and pharmaceutical companies, which helped Puerto Rico become a major industrial hub during the late twentieth century.

However, after the global financial crisis and Puerto Rico’s debt crisis in the 2010s, the government needed a new strategy to revive the economy. Policymakers began focusing on attracting entrepreneurs, investors, and technology companies rather than traditional manufacturing businesses.

This shift led to the introduction of Act 20 and Act 22 in 2012, which offered tax incentives for export services companies and individual investors relocating to Puerto Rico. These programs quickly gained popularity among high-net-worth individuals and global entrepreneurs seeking tax efficiency.

Recognizing the success of these laws, the Puerto Rican government later decided to consolidate and expand them. The result was Act 60, which now serves as the umbrella framework for many of the island’s incentive programs.

Consolidation of Incentives Under Act 60

When Act 60 was enacted in 2019, it unified numerous economic development programs into a single code. This consolidation simplified the regulatory environment and created a more transparent system for investors and businesses.

Some of the major programs integrated into Act 60 include:

Individual Investor Incentives (formerly Act 22)

Export Services Incentives (formerly Act 20)

Manufacturing Incentives

Tourism Development Incentives

Film Production Incentives

Research and Development Incentives

By bringing these programs together, Puerto Rico created a more cohesive economic development strategy. Applicants can now access multiple incentives through a single framework while dealing with fewer government agencies.

This streamlined system has helped Puerto Rico become increasingly competitive as a destination for global entrepreneurs and investors.

Key Tax Benefits of Act 60

The popularity of Act 60 largely comes from its powerful tax advantages. The law offers significant savings for both individuals and businesses that meet the eligibility requirements.

Individual Investor Tax Incentives

One of the most well-known aspects of Act 60 is the Individual Resident Investor Program, which evolved from the former Act 22. This program offers significant tax benefits for individuals who relocate to Puerto Rico and become bona fide residents.

Key benefits may include:

0% tax on Puerto Rico-sourced capital gains

0% tax on dividends

0% tax on interest income

These incentives are especially attractive for investors with large portfolios or those involved in cryptocurrency trading, venture capital, or stock market investments.

To qualify, individuals must meet strict residency requirements and establish Puerto Rico as their primary home. This generally includes spending at least 183 days per year on the island and demonstrating strong personal and economic ties to Puerto Rico.

Export Services Tax Incentives

Another powerful component of Act 60 is the Export Services Program, designed to attract businesses that provide services to clients outside Puerto Rico.

Under this program, qualifying companies may receive several benefits, including:

A 4% corporate income tax rate

100% tax exemption on dividends distributed to shareholders

Partial exemptions on municipal and property taxes

Companies that often qualify include:

Consulting firms

Technology companies

Marketing agencies

Financial service providers

Software development companies

This program has encouraged many entrepreneurs and remote-based businesses to establish headquarters in Puerto Rico.

Major Programs Included in Act 60

Act 60 includes several economic development programs targeting different industries and economic sectors.

Act 60 Individual Resident Investor Program

The Individual Resident Investor program is designed to attract wealthy individuals and investors to Puerto Rico. By offering substantial tax benefits on investment income, the government hopes to encourage new residents to bring capital, investment activity, and economic growth to the island.

Participants must obtain a tax incentive decree from the government and comply with residency requirements. They are also typically required to contribute to local charities and invest in Puerto Rican property or businesses.

Act 60 Export Services Program

The Export Services program focuses on businesses that generate revenue from outside Puerto Rico. Because these companies bring external income into the local economy, the government offers them reduced tax rates and additional incentives.

This program has helped transform Puerto Rico into a growing hub for digital services, consulting firms, financial services companies, and technology startups.

Other Business Incentives

Beyond investor and export service incentives, Act 60 also supports several other industries.

These include:

Manufacturing and industrial development

Tourism and hospitality

Renewable energy

Film and media production

Research and development projects

Each program provides specialized tax benefits designed to encourage growth in specific sectors.

Eligibility Requirements for Act 60

Although Act 60 offers generous tax benefits, applicants must meet strict eligibility requirements.

Bona Fide Residency Rules

For individuals seeking investor tax benefits, becoming a bona fide resident of Puerto Rico is essential. This generally involves:

Spending at least 183 days per year in Puerto Rico

Establishing Puerto Rico as the primary tax home

Demonstrating stronger connections to Puerto Rico than any other location

These rules ensure that participants genuinely relocate to the island rather than simply claiming residency for tax purposes.

Business Eligibility Requirements

Businesses applying for Act 60 incentives must meet certain operational requirements. For example, export services companies must provide services to clients located outside Puerto Rico.

They must also establish a legitimate business presence on the island, which often includes:

Hiring Puerto Rican employees

Leasing office space

Registering with local authorities

These requirements help ensure that the incentives contribute to Puerto Rico’s economic development.

Tax Benefits Under Act 60

The tax benefits offered under Act 60 can significantly reduce the tax burden for qualifying individuals and businesses.

Capital Gains Tax Exemptions

For qualifying investors, capital gains realized after becoming a Puerto Rico resident may be completely exempt from Puerto Rico taxes. This benefit is particularly appealing to investors with high-growth portfolios or cryptocurrency holdings.

Corporate Tax Advantages

Export service companies benefit from a reduced corporate tax rate of approximately 4%, which is significantly lower than typical U.S. corporate tax rates. In addition, dividends paid to shareholders may be fully exempt from Puerto Rico taxes.

These incentives make Puerto Rico one of the most competitive tax jurisdictions for service-based businesses.

Application Process for Act 60 Incentives

Applying for Act 60 incentives involves several steps.

Filing With Puerto Rico DDEC

Applicants must submit their request to the Puerto Rico Department of Economic Development and Commerce (DDEC). This process includes providing financial information, business plans, and documentation supporting eligibility.

Receiving a Tax Incentive Decree

Once approved, the applicant receives a tax exemption decree, which outlines the benefits and duration of the incentives. This decree acts as a legal contract guaranteeing the tax benefits for the agreed period.

Economic Impact of Act 60

Since its introduction, Act 60 has attracted thousands of investors and businesses to Puerto Rico. The influx of capital has helped stimulate the real estate market, support local businesses, and create new employment opportunities.

Many technology entrepreneurs, digital nomads, and financial professionals now view Puerto Rico as a strategic location for both lifestyle and business growth.

Challenges and Criticism of Act 60

Despite its economic benefits, Act 60 has also generated controversy. Critics argue that the incentives disproportionately benefit wealthy individuals and may contribute to rising housing costs in certain areas.

Others believe the program is necessary to attract investment and support Puerto Rico’s economic recovery.

Why Businesses and Investors Move to Puerto Rico

Puerto Rico offers a unique combination of advantages that make it attractive to global entrepreneurs and investors. These include access to the U.S. financial system, a favorable tax environment, a tropical climate, and a growing entrepreneurial ecosystem.

For many individuals and companies, relocating under Act 60 represents a strategic opportunity to reduce taxes while participating in a rapidly developing economic landscape.

Conclusion

Act 60 Puerto Rico represents one of the most comprehensive and powerful tax incentive programs available today. By consolidating numerous economic development initiatives into a single framework, Puerto Rico has created an attractive environment for investors, entrepreneurs, and global businesses.

The law offers significant tax savings, including 0% taxes on certain investment income and corporate tax rates as low as 4% for qualifying businesses. While participation requires genuine relocation and compliance with strict rules, the potential financial benefits are substantial.

For those seeking a strategic location that combines tax efficiency with access to the U.S. economy, Puerto Rico continues to stand out as a compelling option.

FAQs
1. What is Act 60 Puerto Rico?

Act 60 is Puerto Rico’s Incentives Code, a law that consolidates several tax incentive programs designed to attract investors, entrepreneurs, and businesses to the island.

2. What tax benefits does Act 60 offer?

Benefits may include 0% tax on certain investment income and a 4% corporate tax rate for export services companies.

3. Is Act 22 still available in Puerto Rico?

Act 22 benefits still exist but are now included under Act 60’s Individual Resident Investor program.

4. How many days must you live in Puerto Rico to qualify?

Typically, individuals must spend at least 183 days per year in Puerto Rico to qualify as bona fide residents.

5. Who benefits the most from Act 60?

Entrepreneurs, export service companies, cryptocurrency investors, and high-net-worth individuals often benefit the most from the program.