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.
Unlock Your Business’s Potential: How Puerto Rico’s Act 60 Boosts Manufacturers (Big and Small!)
Are you an entrepreneur or business owner looking to optimize your finances and scale your operations? Puerto Rico offers one of the most powerful tools for doing just that—Act 60, also known as the Puerto Rico Incentives Code. In a recent conversation, Attorney Ana Izquierdo from Izquierdo Law LLC and Víctor Merced from the Department of Economic Development (DDEC) discussed how Act 60 can put “more money in your pocket”—and not just if you’re a massive corporation like Pfizer or Goya. This law was designed to benefit businesses of all sizes, from startups to established conglomerates. Why Act 60 Is a Game-Changer for Manufacturers 1. Drastically Reduced Tax Rates ⚪ Pioneer businesses: as low as 1% corporate income tax. ⚪ SMEs: 2% for the first five years. ⚪ General manufacturing: 4% rate. That’s a huge drop from the usual 37.5% corporate rate. 2. Additional Tax Breaks Act 60 reduces property taxes (CRIM), and even municipal patents—meaning more savings across the board. Eliminates sales and use tax for raw materials and machinery and equipment used in manufacturing. 3. Long-Term Stability Enjoy 15 years of reduced rates, with the possibility of extending another 15 years—30 years of tax benefits in total. A Broader Definition of “Manufacturing” Manufacturing under Act 60 isn’t just assembly lines—it’s any “eligible activity” capable of generating profit. This opens the door for a variety of industries: ⚪ Software Development – A top category for DDEC applications thanks to its low startup costs. ⚪ Intellectual Property Ownership – Qualify even without physical production if you own the IP. ⚪ Third-Party R&D / Contract Manufacturing – Outsource production but keep ownership of the product and benefit from the reduced tax rate. ⚪ Contract Research – Clinical trials and process development can also qualify. ⚪ Key Suppliers – If your products feed into larger manufacturers, you’re eligible too. ⚪ Conglomerates – Yes, they qualify. ⚪ Property Owners – Lease 25%+ of your space to a manufacturer? You could get a 4% decree yourself. The R&D Credit Advantage Act 60 offers up to 50% credits on R&D expenses—with no cap. These credits can be sold forward, giving you extra liquidity while minimizing your tax burden. The only catch? The financial risk of R&D must be with the contracting entity, not the contractor. Don’t Self-Reject – The most common mistake is assuming you don’t qualify. Just ask. Final Takeaway Whether you’re running a high-tech R&D lab, a niche supplier, or a software company, Act 60 could be your key to major tax savings and growth in Puerto Rico. Don’t dismiss your business’s eligibility—evaluate, validate, and see how much more money you could keep in your pocket. 📞 Ready to explore how Act 60 can transform your business? Reach out to Izquierdo Law LLC today. We’ll guide you through the process and help you tap into Puerto Rico’s powerful manufacturing incentives. Learn more about this topic watch the video here. https://youtu.be/Lu05lHSabuk?si=i6q4eOjudSlUkJ4I
April 15 Tax Deadlines: What You Need to File Today (Puerto Rico & U.S. Overview)
Today is April 15, 2025, and if you haven’t already filed or extended your returns, you’re out of runway. Whether you’re a corporation, pass-through entity, employer, or individual — today is packed with federal and Puerto Rico tax deadlines that carry real consequences if missed. Here’s your rapid-fire breakdown of what’s due, where to file, and how to avoid penalties. Puerto Rico Tax Filings Due Today Income Tax Returns & Reports Withholding & Estimated Tax Payments Informative Returns Employer Responsibilities Additional Items U.S. Federal Tax Filings Due Today Quick Access Portals Final Word: File extension and Call Your CPA Immediately This isn’t a drill. You have multiple critical deadlines converging today. If you’re not 100% sure what applies to you — call your CPA immediately. Filing extensions are available in some cases, but tax payments are not excused by indecision. Don’t assume you’re covered — confirm it. Pay what’s due. File what’s required. Avoid interest, penalties, and surcharges to keep more of your money in your pocket.
Stop wasting time and money due to supply chain issues
Puerto Rico is the Smart Choice for Optimizing Your Supply Chain Manufacturers today face mounting external and internal challenges that threaten supply chain stability. Over-reliance on distant suppliers has proven risky, as COVID-19 exposed the dangers of single-source dependency, causing massive disruptions across industries. Now, looming tariffs and trade restrictions add further uncertainty, driving up costs and forcing companies to rethink their global sourcing strategies. Internally, manufacturers struggle with rising labor costs, supply chain visibility issues, and logistical inefficiencies, making it harder to remain competitive. Puerto Rico provides a strategic alternative—offering the benefits of “Made in USA” manufacturing with shorter lead times, lower costs, and a skilled bilingual workforce, all while sidestepping many of the regulatory and financial risks associated with offshore production. it offers the perfect combination of proximity, financial incentives, and regulatory benefits—making it a strategic alternative to overseas locations. As a U.S. territory,Puerto Rico presents a unique solution: “Made in USA” advantages with offshore-like cost savings, seamless regulatory compliance, and a fast-tracked investment climate under Executive Order OE-2025-012. Key Benefits of Leveraging Puerto Rico 1. Tax Incentives for Business Growth 💰 Lower Tax Burden: Puerto Rico-sourced income is excluded from U.S. federal taxation. Under Act 60, many businesses qualify for tax rates between 0% and 10.5% (generally 4%). OE-2025-012 Fast-Tracks Investment: The newly enacted executive order establishes “Fast Track” approval processes and unique funding mechanisms, further reducing operational hurdles. Reinvestment Opportunities: Lower taxes mean higher profits that can be reinvested into innovation, workforce expansion, and infrastructure. 2. Regulatory & Legal Advantages ⚖️ U.S. Federal Laws Apply: Puerto Rico follows many of the same regulatory standards as the mainland, simplifying compliance. “Made in USA” Labeling: Products manufactured in Puerto Rico qualify as “Made in USA,” meeting domestic and federal procurement requirements. Robust IP Protection: U.S. intellectual property laws apply, ensuring strong patent, trademark, and trade secret protections. 3. Highly Skilled, Bilingual Workforce 👩💻👨💻 STEM Talent Pipeline: Over 20,000 STEM graduates annually from 80+ universities. Lower Labor Costs with Subsidies: Programs like WIOA and Registered Apprenticeships cover 50-90% of wages. Bilingual Workforce: Fluent in both English and Spanish, Puerto Rico offers a gateway to Latin America and U.S. markets. 4. Strategic Location & Logistical Efficiency ✈️ Proximity to Mainland U.S.: Puerto Rico is closer than most offshore locations, reducing shipping costs and delivery times. Time Zone Alignment: Operates in Atlantic Standard Time (AST), which is on a similar if not equal time-zone as your mainland teams facilitating real-time communications. Tariffs & Trade Restrictions: Geopolitical tensions are driving up costs and creating uncertainty for manufacturers. While Mexico and Canada are often considered nearshoring alternatives, potential tariffs could make them expensive options for U.S. companies. Meanwhile, China remains the largest supplier to U.S. manufacturers, but its distance, ongoing trade disputes, and looming tariffs pose significant risks to supply chain stability. 5. Fast-Tracked Reshoring & Expansion 🚀 OE-2025-012 Creates a “One-Stop Shop” for Investment: The new executive order mandates a single-window system for site selection, permitting, and tax incentives . Specialized Manufacturing Hub: Puerto Rico ranks #1 in U.S. pharmaceutical and medical device exports, making it an ideal location for biotech, aerospace, defense, and high-tech industries . Dedicated Workforce Development Funds: OE-2025-012 establishes a Workforce Training Fund to help businesses up-skill employees in advanced manufacturing . Why Now? The combination of reshoring incentives, streamlined regulatory processes, and Puerto Rico’s strong industrial ecosystem makes this the perfect time to relocate or expand your operations. Puerto Rico is competing directly with locations like Ireland, Singapore, and Costa Rica—but with the added advantage of U.S. jurisdiction and protections. By leveraging Puerto Rico’s unique advantages, businesses can enhance supply chain resilience, reduce operational costs, and stay competitive in a shifting global market. Ready to Optimize Your Business? If your company struggles with supply chain issues, it may be time to rethink where and how you manufacture and distribute. Puerto Rico could be the answer. 🚀 Puerto Rico offers a seamless, cost-effective, and strategic solution for companies looking to strengthen their supply chains. Take advantage of OE-2025-012’s fast-tracked investment opportunities and position your business for long-term success. Want to evaluate whether moving your operations to Puerto Rico is right for your business? Contact us today for a free consultation at ana@izquierdolawllc.com. #BusinessStrategy #PuertoRicoAdvantage #SupplyChainOptimization #TaxSavings #Reshoring #Growth
No le pague taxes a Hacienda – legalmente.
Incentivo para Jóvenes Empresarios en Puerto Rico: Una Oportunidad para el Éxito Empresarial Puerto Rico tiene incentivos increíbles. El mejor es para que los empresarios jóvenes creen su negocio sin preocuparse del Hacienda, el CRIM o patentes municipales. La Ley Núm. 60-2019, según enmendada, conocida como el Código de Incentivos, (“Ley 60”) provee el Incentivo para Jóvenes Empresarios en Puerto Rico ofreciendo un apoyo financiero significativo para que estos jóvenes entre 16 y 35 años conviertan sus sueños en realidades. Este incentivo proporciona exenciones completas contributivas y beneficios económicos diseñados para fomentar la innovación, retención del talento joven y el crecimiento económico entre los jóvenes empresarios. Los jóvenes empresarios que califiquen pueden disfrutar de los siguientes beneficios: Para calificar al Incentivo para Jóvenes Empresarios, los solicitantes deben cumplir con los siguientes requisitos: 3. Restricciones 4. ¿Cómo Solicitar el Incentivo? El proceso de solicitud es más sencillo que otros decretos y está diseñado para agilizar el inicio de negocios: Puerto Rico también ofrece otros programas para fortalecer el éxito de los jóvenes empresarios, tales como: Incubadoras y Aceleradoras de Negocios – Programas como Grupo Guayacán, Parallel18, y Colmena66 ofrecen mentoría, redes de contactos, herramientas y acceso a capital. Subvenciones y Préstamos a Bajo Interés – El Banco de Desarrollo Económico (BDE) proporciona financiamiento y el decreto de joven empresario que puede hacer elegible para otros fondos del DDEC son los fondos de incentivos económicos y los créditos de investigación y desarrollo. Este apoyo financiero para ayudar a los emprendedores con su capital inicial. Estos recursos ayudan a los jóvenes empresarios a desarrollar modelos de negocio sostenibles y a recibir orientación de expertos. Puerto Rico cuenta con una combinación ideal de ubicación estratégica, jurisdicción estadounidense y beneficios contributivos para negocios, lo que lo convierte en un destino atractivo para los jóvenes empresarios. Además, el costo de vida es más bajo que en muchas ciudades principales de EE. UU., permitiendo a los emprendedores maximizar sus recursos financieros. La Ley 60 reemplazó la Ley Núm. 135-2014 con el objetivo de simplificar y mejorar el acceso a incentivos para jóvenes empresarios. Aunque los beneficios se mantienen en gran medida, la nueva ley ofrece un proceso más centralizado, exenciones más claras y mayor estabilidad en su implementación. El Incentivo para Jóvenes Empresarios bajo la Ley 60 es una oportunidad única para jóvenes que desean establecer un negocio en Puerto Rico. Con hasta tres años de exenciones contributivas al 100% o hasta $500,000 en ingresos brutos, los jóvenes empresarios pueden construir el negocio de sus sueños y quedarse con más dinero en su bolsillo. Si estás listo para convertir tu visión en realidad, puedes ir directo a solicitar a través del Portal de Incentivos de Puerto Rico. Si tienes preguntas o necesitas asistencia solicita un reunión inicial gratis. ¡Inicia tu camino emprendedor con una poderosa ventaja contributiva! 🚀 #Ley60 #LibreDeImpuestos #PuertoRico #Incentivos #JovenEmpresario #MasDineroEnTuBolsillo Aviso legal: Esta publicación proporciona información general y no constituye asesoría legal. Los decretos están sujetos a negociación y los resultados no están garantizados. Consulta con un abogado antes de tomar decisiones basadas en esta información. Acceder o utilizar esta publicación no establece una relación abogado-cliente entre nosotros.
Puerto Rico’s Investor Tax Incentives: Are You Leaving Money on the Table?
Did you know that Puerto Rico offers some of the most attractive tax incentives in the world? If you’re a business owner or investor, you could be saving thousands—maybe even millions—in taxes! How Act 60 Benefits Investors Puerto Rico’s Incentives Code (Act 60-2019, as amended) grants a tax decree to individual resident investors who meet specific criteria. This decree allows eligible individuals to PAY ZERO TAXES on interest, dividends, and capital gains. To qualify, you must become a bona fide resident. This incentive became especially popular in the crypto and investment communities since it covers gains from stocks, commodities, digital assets, and blockchain-based holdings. But you have to hurry, as these incentives all end in 2036. Additionally, individuals can pair this with an operating business in Puerto Rico, which may qualify for a 15-year tax decree at just 4% corporate income tax. Some industries even benefit from tax rates between 0% and 10%, depending on their economic activity. While business incentives come with technical requirements (which we’ll cover in a future post), today’s focus is on individual resident investors and their residency qualifications. Key Requirements for the Individual Resident Investor Decree If you want to retain your tax benefits, you must meet strict requirements: Residency – You (and your family) must establish Puerto Rico as your primary residence. You must have not lived in Puerto Rico between January 17, 2006 and January 17, 2012. Real Estate – Within two years of obtaining your decree, you must purchase a home in Puerto Rico that is exclusively owned by you and/or your spouse. Charitable Contribution – A $10,000 annual donation to a Puerto Rico-based nonprofit is mandatory. Annual Report – You must file an annual report with the Department of Economic Development and Commerce (DEDC), which costs $5,005. Please note that Act 22 and Act 60 have grandfathered clauses, meaning some people with Act 22 decrees do not have to buy a house and only pay $5,000 to charity. Since it is a contract between you and the government, you have constitutional protection that no future law can amend to impair your contract. However, if Act 60 is amended with better benefits, you can request your decree be amended to benefit from the better terms. ⚠️ Failure to comply with these requirements can lead to disqualification, revocation, and back taxes.While the housing requirement is non-negotiable (if not met, your decree is automatically revoked), other failures—like missing your donation or annual report—can sometimes be corrected by paying late fees, amending your decree and requesting clemency from the DEDC. Residency: What You Think You Know is Wrong Most people assume they need to spend at least 183 days per year in Puerto Rico to qualify as a resident. But that’s only partially true. 🛑 The 183-day rule is just a presumption—not a requirement. 📌 The Puerto Rico Internal Revenue Code (PRIRC) states that spending 183 days physically in Puerto Rico automatically establishes residency. However, not meeting this threshold does NOT mean you are automatically a non-resident. Instead, if you spend less than 183 days in Puerto Rico, you must prove your residency using facts and circumstances under Puerto Rico’s domicile test. How to Prove Puerto Rico Domicile Under the PRIRC, a resident individual is someone domiciled in Puerto Rico. But what does that mean? Your domicile is the place where you habitually reside when not away for work or other temporary reasons. You can only have ONE domicile at a time—if you want it to be in Puerto Rico, you must take intentional actions to establish it. You must demonstrate Puerto Rico is your “home base,” meaning it’s the place you return to during “seasons of repose.” On top of this, the IRS applies its own three-part test to determine if someone is a bona fide Puerto Rico resident: Presence Test – Being physically present in Puerto Rico for 183 days OR showing a “significant connection” to the island. The Internal Revenue Service (“IRS”) in Publication 570 establishes other ways to meet the Presence Test, which are outside the scope of this article, but you can check it out. Tax Home Test – Proving your primary place of business or employment is in Puerto Rico. Closer Connection Test – Demonstrating that your strongest ties (family, home, voting registration, community, mail, assets, etc.) are in Puerto Rico rather than the U.S. 🚨 Example: The IRS once ruled that a taxpayer who moved to Puerto Rico to start a business but whose spouse and children stayed in California was not a bona fide Puerto Rico resident. Despite owning a home in Puerto Rico, the taxpayer frequently traveled to the U.S. for business, family visits, and vacations. Because of his closer connections to the U.S., he failed the residency test. The Bottom Line: Residency is Fact-Specific Puerto Rico has incredible incentives but you have to comply with the rule to avail yourself of them. The key takeaway? Puerto Rico residency isn’t as simple as counting days. It depends on your lifestyle, economic ties, and personal connections. If you’re considering relocating or need help optimizing your tax structure, consult a professional. Every case is different, and the consequences of getting it wrong can be costly. 💬 Thinking about moving your business to Puerto Rico? Not sure if you would qualify as a resident?📩 Let’s talk! Schedule a consultation today and ensure you don’t leave money on the table. Legal Disclaimer This post is for informational purposes only and does not constitute legal advice. You should consult with legal counsel before making any decisions regarding residency, taxation, or business incentives. Accessing this post does not create an attorney-client relationship.
