Act 60 FAQ:

1. What is the purpose of Act 60?

Act 60 consolidates and simplifies Puerto Rico’s various economic and tax incentives to attract investment and promote economic development across multiple sectors, including manufacturing, agriculture, creative industries, and renewable energy.

2. What constitutional protections apply to Act 60?

Act 60 decree is a contract between the company, the owners and the government. The benefits provided under Act 60 decree are constitutionally protected. This means that even if the government changes or repeals Act 60, businesses that have signed decrees will retain their benefits as long as they comply with the terms. While this constitutional protection ensures that rights cannot be diminished for decree holders, beneficiaries may seek better terms. Act 60 allows decree holders to request amendments when new laws or regulations offer more favorable terms, but approval from both the Secretary of the Department of Economic Development and Commerce (DDEC) and the Secretary of Treasury is required. 

3. Who is eligible to benefit from Act 60?

Eligible entities include local and international businesses, startups, and individuals involved in sectors such as manufacturing, R&D, export services, creative industries, agriculture, tourism, and renewable energy. Act 60 also extends benefits to professionals, investors, and industries new to Puerto Rico.

4. What are the key incentives under Act 60?

Act 60 offers several incentives depending on the applicable chapter, including:

• • • Income tax rates as low as 1-10%
    • 100% exemption on dividends
    • Exemptions on personal and property taxes from 75-100%
    • Exemptions on business-to-business (VOB) taxes from 50-100%.
    • Exemption on municipal construction taxes
    • Exemptions on interest earned by financing lenders
    • Exemption on excise taxes
    • Tax credits
    • Cash grants

5. What sectors benefit the most from Act 60?

Act 60 supports a variety of sectors, including manufacturing, tourism, software development, R&D, renewable energy, agriculture, and export services. It also has provisions for industries like blockchain and creative sectors (film, music, and art).

6. How does Act 60 benefit individual entrepreneurs?

Act 60 provides specific benefits to individual entrepreneurs, including young entrepreneurs (ages 16-35), professionals of difficult recruitment (such as scientists and doctors), and residents moving to Puerto Rico to invest in local businesses.

7. How long can businesses benefit from Act 60?

In general, businesses can benefit from Act 60 for up to 15 years. Startups and small businesses (PYMES) may receive more tailored benefits for 5 years. Young entrepreneurs decree receive incentives such as a 0% tax rate for up to three years or until they reach $500,000 in revenue.

8. What is the process for applying for Act 60 incentives?

Applicants need to register their business, provide details regarding the business including forecast for revenue, financing, facilities, and employees, compliance certifications, and why it qualifies for an Act 60 decree, and submit required documents through the Department of Economic Development and Commerce (DDEC) online platform. Depending on the type of project application, especially those involving tourism, infrastructure, or a historic zone, may require additional plans, documents, and permits. Once approved, businesses must comply with reporting and operational requirements, such as submitting annual reports and meeting employee or investment benchmarks.

9. What flexibility does Act 60 offer in terms of terms and conditions?

The terms and conditions of each decree vary depending on the industry and business profile. Companies can negotiate specific terms, such as employee requirements or investment levels. 

10. How are the benefits under Act 60 maintained or transferred?

Decrees are binding contracts between the business, its owners, and the government. The owners are responsible for compliance. In certain situations, such as a change in control, businesses must notify the DDEC. However, some transfers, like inheritances, are exempt from notification.