New Hacienda Guidance Changes How R&D Tax Credits Are Applied in Puerto Rico

Puerto Rico’s Department of the Treasury (Hacienda) has issued Administrative Determination No. 25-02 (DA 25-02), clarifying how Research & Development Tax Credits (RDTCs) can be claimed and used by businesses operating under Act 60-2019, as amended (“Act 60”) or prior incentives laws. Although DA 25-02 expressly references Acts 73-2008 and 83-2010, note that Act 60 recognizes prior incentive decrees and coordinates RDTC use across regimes.

The ability to generate and use RDTCs is not new (see our prior posts and videos). Act 52-2022 (“Act 52”) previously changed how RDTCs may be used. DA 25-02 now changes how the credit is split and recorded in the Manejador de Créditos Contributivos (MCC). This update impacts only businesses with an incentives decree that are engaged in qualifying R&D activities in Puerto Rico.

Background: R&D Tax Credits Under Incentives Laws

If you hold an Act 60 or prior-law incentives decree and invest in eligible R&D activities in Puerto Rico, you can generate an RDTC of up to 50% of your special eligible investment. To claim the credit, you must obtain a Certification from the Department of Economic Development and Commerce (DDEC), supported by an Agreed-Upon Procedures (AUP) report from a licensed Puerto Rico CPA. Historically, the Certification, the AUP, and any amended returns were submitted to the MCC, and the credit appeared as a single transaction per tax year.

Act 52 established that credits from tax years beginning after December 31, 2021 may be taken in two (or more) installments: up to 50% in the tax year the DDEC certification is issued (and it may be applied to a not-yet-due income tax return, including extensions), with the balance in subsequent tax years until exhausted. This change created ripples in the tax credit market because the RDTC usage year may no longer match the investment year, and taxpayers can be negatively affected by DDEC issuance timing and market dynamics (including caps under Act 73 of $300mm). It also directly affects cash flow: the purchase price an RDTC seller can obtain often depends on when the RDTC is issued and which returns are due at that time. While unfavorable for some taxpayers, this has been the rule since Act 52.

Before DA 25-02 (but after Act 52), the law already required splitting the credit into installments, yet the MCC typically displayed one transaction. In practice, when an RDTC was sold to more than one taxpayer, sale agreements would specify which tax year the credit related to. DA 25-02 addresses monitoring challenges by splitting the MCC record into two transactions aligned with the tax years of use.

Why This Matters for Incentives Businesses Doing R&D

Under DA 25-02, the RDTC for a single tax year is divided into two separate installments, and each installment has its own identifier in the MCC. The two installments cannot first become available in the same tax year; the first is available in the certification year (or a prior year if the return is still open), and the second is available in subsequent years until exhausted. Each installment is independently transferable, and buyers step into the seller’s timing rules.

For lawyers, RDTC sellers and buyers, and CPAs, this means you must review documentation carefully to ensure the RDTC sold and applied matches the correct installment and tax year. If you are executing a block sale, expect additional compliance steps and two separate MCC transfers—one for each installment ID. This structure may also affect pricing, since the market can now value each installment separately—something Hacienda can also track more explicitly via the MCC.

Example

Company ABC has an Act 60 decree and invests $2 million in R&D in 2024. On September 1, 2025, DDEC issues a $1 million RDTC certification. In the MCC, the RDTC appears in two tranches (installments): Tranche 1 (up to 50%) and Tranche 2 (the remainder). ABC sells the RDTC to Company XYZ, which filed for an extension; its 2024 return is not yet due, so XYZ can use Tranche 1 for its 2024 income tax liability and Tranche 2 for 2025. The transaction documents must reference the specific tranche identifiers, and the MCC transfer must be executed twice—once for each tranche. When the buyer’s CPA applies the credit, they must reference the correct tranche.

Our Take

DA 25-02 does not change the substantive eligibility of RDTCs; it clarifies how and when they can be used and operationalizes the split inside the MCC as two separate transactions, with timing and transfer rules that can materially affect pricing and cash-flow planning.

Questions about R&D tax credits or other Act 60 matters?

Contact Izquierdo Law LLC. We’ll help you navigate the new rules, optimize credit use, and stay fully compliant with DDEC and Hacienda requirements.