Act 60, officially known as the Puerto Rico Incentives Code, is a comprehensive tax incentive framework enacted in 2019 to consolidate dozens of economic development laws into a single statute. The legislation replaced several well-known programs, including Act 20 (Export Services) and Act 22 (Individual Investors), while preserving many of their core benefits. The goal of Act 60 is to attract entrepreneurs, investors, businesses, and professionals to Puerto Rico while stimulating local economic growth, job creation, and investment.

Today, Act 60 is considered one of the most attractive tax incentive programs available within a U.S. jurisdiction. It offers substantial benefits to qualifying export service businesses, investors, manufacturers, tourism projects, agricultural enterprises, and other eligible industries. Unlike traditional tax incentives that may change frequently, many Act 60 benefits are granted through legally binding tax exemption decrees that provide long-term certainty.

The History Behind Act 60

Before 2019, Puerto Rico operated multiple independent incentive programs. The most famous were:

Act 20 – Export Services Incentive
Act 22 – Individual Investors Incentive
Manufacturing and Tourism Incentive Programs
Agricultural Incentive Programs

Managing separate laws created administrative complexity and confusion for applicants. To streamline the process, Puerto Rico enacted Act 60 and consolidated more than 70 incentive laws under a single framework. This modernization created a more predictable system for businesses and investors while improving government administration.

Main Categories of Act 60 Incentives

Act 60 includes incentives across numerous sectors of Puerto Rico's economy, including:

Incentive Category    Purpose
Export Services    Attract service-based businesses
Individual Investors    Encourage residency and investment
Manufacturing    Expand industrial activity
Tourism    Support hotels and visitor attractions
Agriculture    Promote food production
Creative Industries    Encourage media and arts businesses
Renewable Energy    Support sustainable development
Financial Services    Attract capital and investment firms

The law was designed to encourage economic diversification and position Puerto Rico as a competitive destination for both businesses and individuals.

Act 60 Export Services Program

The Export Services Incentive, formerly known as Act 20, is one of the most popular sections of Act 60.

It applies to businesses that provide services from Puerto Rico to clients located outside Puerto Rico. Eligible companies can include:

Software developers
IT consultants
Marketing agencies
Financial consultants
Engineers
Business consultants
SaaS companies
Research firms
Call centers
Educational service providers

To qualify, businesses must generally maintain a bona fide office in Puerto Rico and export services to customers outside the island.

Export Services Tax Benefits

Qualified export service businesses may receive:

4% corporate income tax rate
100% exemption on qualifying dividend distributions
75% property tax exemption
50% municipal tax exemption
Long-term tax decree protection

These incentives have helped attract technology companies, remote businesses, and entrepreneurs from across the United States and around the world.

Act 60 Individual Investor Program

The Individual Investor Program is the successor to the former Act 22.

This program encourages individuals to relocate to Puerto Rico and establish bona fide residency. Historically, qualifying residents benefited from highly favorable treatment on capital gains, dividends, and interest income generated after becoming Puerto Rico residents.

Residency Requirements

Applicants generally must:

Become bona fide Puerto Rico residents
Establish Puerto Rico as their tax home
Demonstrate stronger connections to Puerto Rico than any other jurisdiction
Satisfy applicable physical presence requirements

Residency compliance is critical because tax benefits depend on maintaining legitimate Puerto Rico residency.

Important Changes Coming in 2027

One of the biggest developments affecting Act 60 involves the Individual Investor Program.

Recent legislative updates indicate that individuals obtaining new investor decrees after December 31, 2026, may become subject to a 4% tax rate on certain qualifying investment income, replacing the historical 0% treatment that attracted many investors. Existing decree holders generally retain their previously granted benefits. The investor incentive program has also been extended through 2055, providing long-term certainty for future applicants.

Comparison of Investor Benefits
Category    Before 2027 (Many Existing Decrees)    New Applicants After 2026
Capital Gains    Potentially 0%    Potentially 4%
Dividends    Potentially 0%    Potentially 4%
Interest Income    Potentially 0%    Potentially 4%
Program Expiration    Previously 2035    Extended to 2055

Actual tax treatment depends on specific circumstances, decree terms, and applicable regulations.

How to Apply for Act 60

The application process typically involves obtaining a Tax Exemption Decree from the Puerto Rico government.

Applicants usually submit:

Business information
Ownership details
Financial projections
Economic impact information
Operational plans
Compliance documentation

The decree serves as a contractual agreement between the applicant and Puerto Rico, providing certainty regarding tax benefits and compliance obligations. Many decrees are issued for extended periods and may be renewable depending on the program.

Compliance Requirements

Act 60 benefits require ongoing compliance.

Businesses and individuals must generally:

File annual reports
Maintain proper records
Meet operational requirements
Satisfy residency obligations when applicable
Demonstrate continued eligibility

Failure to comply can jeopardize tax benefits. As a result, many participants work closely with attorneys, accountants, and tax advisors experienced in Puerto Rico incentive programs.

Advantages of Act 60

Act 60 offers several compelling benefits:

Significant Tax Savings

Export service businesses may benefit from a 4% corporate tax rate, while qualifying investors may receive favorable treatment on investment income.

U.S. Jurisdiction

Puerto Rico remains a U.S. territory, providing legal familiarity and access to U.S. financial systems.

Long-Term Stability

Tax decrees provide contractual certainty that many investors find attractive.

Diverse Opportunities

The law supports businesses across multiple industries rather than focusing on a single sector.

Potential Challenges

While Act 60 offers substantial benefits, it is not suitable for everyone.

Potential challenges include:

Relocation requirements
Ongoing compliance obligations
Professional advisory costs
Regulatory scrutiny
Complex residency rules

Prospective applicants should conduct thorough due diligence before making decisions based solely on tax considerations.

Is Act 60 Worth It?

For many entrepreneurs, investors, consultants, software developers, and business owners, Act 60 can provide extraordinary opportunities. The combination of low corporate tax rates, investor incentives, and Puerto Rico's status as a U.S. territory continues to attract businesses and individuals from around the world. However, the best outcomes typically occur when participants view Puerto Rico as a genuine place to live and operate rather than simply a tax strategy.

The decision ultimately depends on income sources, business structure, residency goals, and long-term plans. With proper planning and professional guidance, Act 60 remains one of the most powerful economic incentive programs available in 2026.

Conclusion

Act 60 has transformed Puerto Rico into a leading destination for entrepreneurs, investors, and service-based businesses seeking tax efficiency and economic opportunity. By consolidating former incentive laws such as Act 20 and Act 22, Puerto Rico created a modern framework that supports investment, innovation, and growth. Whether through export services incentives or investor benefits, Act 60 continues to play a major role in Puerto Rico's economic development strategy. For qualifying individuals and businesses willing to meet the program's requirements, the opportunities remain substantial in 2026 and beyond.

Frequently Asked Questions
1. What is Act 60 Puerto Rico?

Act 60 is Puerto Rico's Incentives Code, enacted in 2019 to consolidate multiple tax incentive programs into a single legal framework.

2. Did Act 60 replace Act 20 and Act 22?

Yes. Act 60 consolidated the former Act 20 Export Services Program and Act 22 Individual Investor Program into one incentives code.

3. What is the Act 60 corporate tax rate?

Qualified export service businesses may receive a 4% corporate income tax rate on eligible income.

4. Is Act 60 still available in 2026?

Yes. Act 60 remains active and continues to accept eligible applicants.

5. Are there changes coming in 2027?

Yes. New investor applicants after December 31, 2026, may be subject to a 4% tax rate on certain qualifying investment income instead of the historical 0% structure.