If you’ve been exploring ways to legally reduce taxes while expanding your business or investment portfolio, Act 60 Puerto Rico is probably one of the most powerful tools you’ll come across. Officially known as the Puerto Rico Incentives Code, Act 60 was introduced in 2019 to consolidate dozens of existing tax incentive programs into a single, streamlined framework. Instead of navigating multiple laws like Act 20 (Export Services) and Act 22 (Individual Investors), everything now falls under one umbrella.

Think of Act 60 as a central hub for tax optimization strategies. It was designed not only to simplify the legal landscape but also to make Puerto Rico more attractive to entrepreneurs, investors, and global businesses. The government wanted to create a competitive edge—something that would draw capital, innovation, and talent to the island.

What makes this especially interesting is Puerto Rico’s unique tax position. While it is a U.S. territory, it operates under its own tax system. This allows eligible individuals and businesses to benefit from significantly reduced tax rates while remaining within a U.S. legal framework. For many, it feels like accessing offshore-level benefits—without actually going offshore.

Background and Purpose

Before Act 60 came into play, Puerto Rico already had several incentive programs. The most notable were Act 20 and Act 22, which targeted businesses and individual investors respectively. While effective, managing multiple laws created complexity and confusion.

So, the government decided to merge these programs into a single, comprehensive code. The goal was clear:

Simplify compliance
Increase transparency
Enhance investor confidence
Promote long-term economic growth

Act 60 didn’t remove benefits—it refined them. It introduced clearer rules, stronger compliance measures, and long-term stability, making it more appealing for serious investors and entrepreneurs.

Key Tax Incentives Under Act 60
Export Services Incentives

One of the most attractive components of Act 60 is the Export Services program, originally known as Act 20. This incentive targets businesses that provide services to clients outside Puerto Rico.

Eligible services include:

Consulting
Marketing
IT and software development
Financial services

Companies operating under this program can enjoy a corporate tax rate as low as 4%. That’s significantly lower than typical U.S. corporate tax rates, which often exceed 21%.

Individual Investor Incentives (Act 22)

Act 60 also incorporates the benefits previously offered under Act 22. This section is specifically designed for individuals earning passive income from investments.

Key highlights include:

0% tax on capital gains (after becoming a resident)
0% tax on dividends and interest

For investors—especially those dealing with stocks or cryptocurrency—this is a game changer.

Manufacturing and Industrial Incentives

Puerto Rico has long been a hub for manufacturing, particularly in pharmaceuticals and electronics. Act 60 continues to support this sector with:

Reduced tax rates
Tax credits for job creation
Incentives for infrastructure investment

These benefits encourage companies to establish and expand operations on the island.

Benefits of Act 60
Low Corporate Tax Rate

The 4% corporate tax rate under the Export Services program is one of the lowest available in any U.S. jurisdiction. This allows businesses to retain more profits and reinvest in growth.

0% Capital Gains

For individual investors, the ability to pay zero tax on capital gains is arguably the biggest draw. This applies to gains realized after becoming a bona fide resident of Puerto Rico.

Dividend and Interest Exemptions

Passive income streams such as dividends and interest are also tax-free under qualifying conditions. This creates a powerful environment for wealth accumulation.

Who Qualifies for Act 60?
Residency Requirements

To access individual tax benefits, you must become a bona fide resident of Puerto Rico. This involves meeting strict criteria, including:

Spending at least 183 days per year on the island
Establishing a primary tax home in Puerto Rico
Demonstrating closer ties to Puerto Rico than any other location

This isn’t a paper move—you need to genuinely relocate.

Business Eligibility Criteria

For businesses, eligibility depends on:

Providing services to clients outside Puerto Rico
Establishing operations on the island
Hiring local employees

Meeting these criteria ensures that the program contributes to the local economy.

Application Process
Steps to Apply

Applying for Act 60 involves several steps:

Submit an application to Puerto Rico’s Department of Economic Development
Provide detailed financial and business information
Pay the required application fee
Await approval and receive a tax exemption decree
Costs and Timeline
Application fees typically start around $750 to $5,000
Annual compliance fees apply
Approval can take several months

Once approved, benefits can last for up to 15–20 years, depending on the program.

Compliance and Ongoing Requirements

Act 60 is not a “set it and forget it” program. To maintain your benefits, you must:

File annual reports
Pay compliance fees
Make charitable contributions (for individual investors)
Maintain residency or operational requirements

Failure to comply can result in penalties—or even loss of benefits.

Act 60 vs Act 20 and Act 22
Feature    Act 20    Act 22    Act 60
Focus    Businesses    Investors    Both
Tax Rate    4%    0%    Combined
Status    Replaced    Replaced    Active

Act 60 simplifies everything by bringing all incentives into one system.

Real-Life Tax Savings Examples

Let’s say a business earns $1 million in profit:

U.S. mainland tax (21%): $210,000
Puerto Rico under Act 60 (4%): $40,000

That’s a savings of $170,000 annually.

Now consider an investor making $1 million in capital gains:

U.S. tax: up to $200,000+
Puerto Rico under Act 60: $0

These numbers explain why so many entrepreneurs and investors are making the move.

Advantages and Disadvantages
Advantages
Extremely low tax rates
U.S. legal protection
Long-term tax stability
Attractive lifestyle and climate
Disadvantages
Must relocate physically
Complex compliance requirements
Initial setup costs
Cultural and logistical adjustments
2026 Updates and Future Outlook

Act 60 continues to evolve. Discussions around introducing a minimum tax for new applicants have surfaced, possibly starting at around 4%. Despite this, Puerto Rico remains one of the most tax-efficient jurisdictions globally.

Governments are also increasing oversight to ensure compliance and prevent misuse, which adds credibility to the program.

Common Mistakes to Avoid

Many applicants lose benefits due to avoidable errors:

Not meeting the 183-day rule
Failing to document residency properly
Ignoring annual compliance requirements
Misunderstanding eligible income types

Avoiding these pitfalls is crucial for long-term success.

Is Act 60 Worth It?

If you’re serious about tax optimization and willing to relocate, Act 60 can be incredibly valuable. It’s not just about saving money—it’s about creating a strategic financial advantage.

However, it requires commitment. You’re not just changing your tax address—you’re changing your lifestyle.

Conclusion

Act 60 Puerto Rico stands out as one of the most powerful tax incentive programs available today. By combining business and individual incentives into a single framework, it offers unmatched opportunities for tax savings and financial growth. Whether you’re an entrepreneur, investor, or high-income professional, understanding how Act 60 works could transform your financial future. The key is proper planning, compliance, and a willingness to fully embrace the move.

FAQs
1. Is Act 60 still available in 2026?

Yes, Act 60 is active and continues to offer tax incentives, though regulations may evolve.

2. Can I avoid all taxes under Act 60?

Not entirely, but you can significantly reduce taxes, especially on eligible income.

3. How long do Act 60 benefits last?

Typically between 15 to 20 years, depending on the decree.

4. Do I need to live in Puerto Rico full-time?

You must meet residency requirements, including spending at least 183 days per year.

5. Is Act 60 legal?

Yes, it is a fully legal, government-approved tax incentive program.

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