TAX CREDITS & INCENTIVES IN PUERTO RICO

PUERTO RICO INCENTIVES CODE, ACT 60-2019

The Puerto Rico Incentives Code of 2019 (better known as “Act 60”) is the unified legal framework that consolidates the Island’s economic incentives into a single, streamlined code. It took effect on January 1, 2020, replacing individual incentive laws such as Acts 20, 27, 73, among others. The goal of Act 60 is to simplify administration, increase transparency, and stimulate economic growth by attracting investment, residents, and businesses to Puerto Rico.

Act 60 includes incentives for multiple industries, including, but not limited to: creative industries, export services, manufacturing and research & development, and young entrepreneurs.

The main benefits may vary, but generally include: a reduce corporate income tax rate of 4% on eligible activities; significant exemptions on property taxes and municipal license taxes; exemptions on dividends and distributions; and tax benefits on equipment and operational expenditures.

APPLICATION FOR TAX DECREE

EXPORT SERVICES ACTIVITIES

This incentive category supports businesses that have a “bona fide” office or establishment in Puerto Rico and conduct eligible services as an export service provider to clients located outside the Island.

Companies can benefit from a reduced income tax rate and tax exemptions, making Puerto Rico an attractive hub for service-based operations seeking to scale globally while maintaining competitive cost structures.

ELIGIBLE ACTIVITIES

Advertising and Public Relations
Call centers
Consulting
Corporate headquarters
Creative Industries (design, art, music, publications, development of apps and video games, creative education)
Development of computer programs
Distribution in physical form, through the internet, cloud computing or blockchain
Income from licensing, subscriptions or charges for services

MANUFACTURING ACTIVITIES

Act 60 offers incentives for manufacturing operations and innovation-driven activities such as scientific research, product development, pharmaceuticals, medical devices, aerospace, and industrial processes.

These incentives aim to strengthen Puerto Rico’s manufacturing base, encourage high-value production, and attract investment in advanced technologies. Benefits often include reduced income tax rates, property tax exemptions, and support for capital-intensive projects.

ELIGIBLE ACTIVITIES

Industrial manufacturing units
Property dedicated to industrial development
Development of licensed or patented programs or applications (software) that can be reproduced on a commercial scale
Development of video games that can be reproduced on a commercial scale
Licensing of intangible property, developed or acquired by an exempt business
Recycling activities
Research & Development

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R&D ELIGIBILITY AND TAX CREDITS

R&D Eligibility: Any company that engages in scientific or industrial research and development to develop new products, or to develop new services or industrial processes through basic or applied experimentation.

Exempt Businesses may apply for a transferable tax credit equal to 50% of Special Eligible Investments in R&D.

The transferable tax credit can be used 100% towards the Exempt Business’ own tax liability, against the payment of utilities, or sold to third party buyers of tax credits to use against their Puerto Rico tax liability.

YOUNG ENTREPRENEURS INCENTIVE

This incentive encourages local entrepreneurship by providing tax benefits to young residents who launch new businesses in Puerto Rico. It supports the creation of new enterprises in designated industries. Benefits may include reduced income tax rates on the new business and exemptions for certain earnings.

Young Entrepreneurs are Puerto Rico bona fide residents between 16 and 35 years old.
Must have a high school diploma or its equivalent certification or be studying to obtain one.
Must be interested in establishing a new business long term in Puerto Rico.
The new business must be managed exclusively by Young Entrepreneurs.
Tax benefits will apply only to one new business per Young Entrepreneur. Any business that has been operating through affiliates or that is the result of a reorganization shall not be considered a new business.
Cannot be combined with other tax incentives or grants.

ELIGIBLE REQUIREMENTS

100% exemption on the first $500,000 net income subject to tax
Any net income generated by new businesses in excess of $500,000 will be subject to ordinary rates.
100% exemption from property and municipal license taxes (Patente Municipal)
Term of Exemption: three years as of the date of commencement of operations

TAX BENEFITS

CREATIVE INDUSTRIES ACTIVITIES

This category promotes growth in sectors tied to culture, media, design, digital production, entertainment, and the broader creative economy.

Incentives help reduce operational costs, attract talent, and support Puerto Rico’s positioning as a competitive center for creative and cultural enterprises.

Feature-films
Short films
Documentaries
Commercials

ELIGIBLE ACTIVITIES

Video games
Music Videos
Series, mini-series, pilots
TV programs, including reality

Stand-alone post productions
Film festivals
Live events

FILM INDUSTRY TAX CREDITS

Under Act 60, a film-project or studio operator may be eligible for the following tax benefits and credits, depending on structure, expenditures, and compliance:

Up to 40% credit on Puerto Rico production expenditures incurred in the project — excluding amounts paid to foreign persons.
Up to 20% credit on payments to non-resident/foreign persons (e.g. non-resident talent, crew).
Additional 15% credit option (on top of the prior credits) for full-length films, series or documentaries where a domestic producer leads the project and at least one of the key creative/technical roles (director, cinematographer, editor, production designer, post-production supervisor, or line producer) is held by a Puerto Rico resident.

Credits can be used in two or more installments. Often 50% of the approved credit can be used in the taxable year when production begins (or upon auditor’s certification/bond), and remainder in subsequent years.

Act 60 was created to make Puerto Rico more economically competitive, attract new businesses, investors, and high-skill industries, establishing a uniform oversight and return-on-investment analysis for incentives.

Aligned with such purpose, at ArYse we help our clients to identify whether their business models and industries qualify for Puerto Rico’s incentive programs, aligning opportunities with strategic growth objectives.

We invite you to schedule a consultation with us to explore how these incentives can support your next stage of development.

APPLICATION FOR TAX DECREE