What Is Act 60? Understanding Puerto Rico’s Incentives Code

Puerto Rico adopted Act No. 60 of July 1, 2019 (Incentives Code) to consolidate and modernize its incentive regime in a single statute, replacing a patchwork of sector-specific laws with a consistent legal and administrative structure. Before Act 60, the best-known programs were the Act 20 Export Services Act and the Act 22 Individual Investors Act; their core concepts now live inside Act 60, so many readers still encounter “Act 20/22” when researching the current code.

How Act 60 Works

Eligible Sectors & Activities

Act 60 spans multiple sectors—export services, tourism / visitor economy, manufacturing, creative industries, green energy, agriculture, finance / insurance, and entrepreneurship—as summarized on Tax Benefits & Policy.

Key Benefits & Incentives (High Level)

4% fixed income tax rate for qualifying business activity (e.g., export services, certain manufacturing).

100% exemption on capital gains in specified individual-investor scenarios.

Up to 75% exemption on property tax and 50% exemption on municipal license tax for many exempt businesses.

Standard 15-year decree term, often with potential for 15 additional years.

Decree (Grant) & Application

Benefits are accessed via a tax exemption decree—a binding contract between the beneficiary and the government. Applications are filed through Puerto Rico’s DDEC Incentives Portal using SBP credentials. For an at-a-glance overview of programs and steps, consult the government’s Act 60 brochure.

Who Can Benefit?

Businesses in Puerto Rico (or relocating) that conduct eligible activities may qualify under the Act 60 framework, as outlined in Act No. 60 and public summaries like Tax Benefits & Policy.

Individuals / resident investors who establish bona fide residency (presence, tax-home, and closer-connection tests) can access exemptions on interest, dividends, and certain capital gains under territorial rules explained in IRS Publication 570.

Local entrepreneurs already operating on the Island can leverage sector incentives (export, creative, tourism, manufacturing) if their activities meet statutory criteria.

For legal guidance on selecting and maintaining the right program, see MZLS — Tax Incentives & Decrees and the explainer for Export of Services under Act 60.

Compliance & Guardrails

Source of income: Incentives primarily apply to Puerto Rico–sourced income; U.S. federal rules govern how bona fide residents treat U.S. vs. Puerto Rico source (see Publication 570).

Ongoing obligations: Decree holders must meet annual reporting, fee payments, and substance requirements communicated via the DDEC Incentives Portal and official materials.

Enforcement lens: U.S. tax authorities periodically review Act 60 residency and sourcing positions; accurate documentation of presence, tax home, closer connection, and operations is essential.

Key Takeaways & What to Watch

Act 60 is the central, consolidated incentives code for Puerto Rico, integrating legacy programs like Act 20 and Act 22 into a unified system.

Benefits include a 4% fixed rate on eligible income, targeted property/municipal tax exemptions, and individual-investor provisions—each granted by decree.

Eligibility depends on activity type and, for individuals, bona fide residency under territorial and U.S. rules.

Maintaining benefits requires strict compliance with reporting, substance, and decree terms; watch for legislative amendments, treasury circulars, and procedural updates through official channels.