If taxes feel like a constant uphill battle, Act 60 might look like a downhill road with a tailwind. Puerto Rico’s Act 60 isn’t just another tax law—it’s a strategic invitation. An invitation to entrepreneurs, investors, and professionals who want to legally reduce taxes while living and doing business in a U.S. jurisdiction.

Let’s break it down, human to human, without the legal fog.

What Is Act 60?
Overview of Puerto Rico Act 60

Act 60, officially known as the Puerto Rico Incentives Code, is a comprehensive tax incentive framework designed to attract businesses and individuals to Puerto Rico. It consolidates multiple legacy incentive laws into one streamlined system.

Think of it as Puerto Rico saying: “Bring your business, bring your talent, and we’ll meet you halfway—tax-wise.”

The Merger of Act 20 and Act 22

Before Act 60, there were two big names:

Act 20 for export services businesses

Act 22 for individual investors

Act 60 merged them into one unified code, keeping the benefits but simplifying administration.

Why Puerto Rico Created Act 60
Economic Transformation Strategy

Puerto Rico needed a reboot. Act 60 was designed to stimulate job creation, attract capital, and modernize the economy.

Lower taxes aren’t the goal—they’re the tool.

Attracting Investors and Talent

In a global economy, talent is mobile. Act 60 helps Puerto Rico compete by offering tax incentives without sacrificing U.S. legal protections.

Understanding the Structure of Act 60
Export Services Incentives

This section targets businesses providing services from Puerto Rico to clients outside the island.

Individual Investors Incentives

Designed for high-net-worth individuals, traders, crypto investors, and asset managers.

Other Eligible Activities

Manufacturing, hospitality, agriculture, and more also fall under Act 60’s umbrella.

Act 60 Export Services Incentives
What Qualifies as Export Services

Services performed in Puerto Rico for clients outside Puerto Rico qualify. Common examples include:

Consulting

Software development

Marketing services

Financial and investment services

Tax Benefits for Eligible Businesses
Corporate Income Tax Rate

Eligible businesses pay a fixed 4% corporate income tax rate. Compare that to typical U.S. federal and state combined rates, and the difference is dramatic.

Dividend Distributions

Dividends distributed to Puerto Rico residents are 100% tax-exempt.

Act 60 for Individual Investors
Capital Gains Tax Benefits

Qualifying individuals can enjoy:

0% tax on Puerto Rico–sourced capital gains

Significant reductions on certain U.S.-sourced gains

For traders and crypto investors, this can be game-changing.

Dividend and Interest Income Exemptions

Dividend and interest income earned after becoming a Puerto Rico resident may be tax-free under Act 60.

Who Is Eligible for Act 60
Residency Requirements

You must become a bona fide resident of Puerto Rico. This is not optional.

Bona Fide Resident Test

The IRS uses three tests:

Presence test

Tax home test

Closer connection test

Miss one, and the benefits disappear.

Eligible Individuals vs. Businesses

Individuals and businesses apply separately and must meet different requirements.

Act 60 Tax Rates Explained
Corporate Tax Rates

Export services businesses enjoy a 4% corporate tax rate, locked in by decree.

Individual Tax Rates

Qualified individual income may be taxed at 0%, depending on the category.

Comparison With U.S. Federal Taxes

Act 60 often results in a fraction of what taxpayers would owe on the mainland.

Compliance Requirements Under Act 60
Annual Reports and Filings

Beneficiaries must file annual compliance reports with Puerto Rico authorities.

Employment and Substance Rules

Some incentives require local employees or office space.

Charitable Contributions Requirement

Individual investors must make annual charitable donations to Puerto Rico nonprofits.

Benefits Beyond Tax Savings
Lifestyle Advantages of Puerto Rico

Beaches, warm weather, and a lower cost of living sweeten the deal.

Strategic Business Location

Puerto Rico offers U.S. legal certainty with international tax advantages.

Common Mistakes to Avoid
Misunderstanding Residency Rules

This is the number one mistake—and the most expensive.

Poor Business Structuring

Structure determines eligibility. Get it wrong, and benefits vanish.

Non-Compliance Risks

Act 60 is generous, but strict. Compliance is non-negotiable.

Act 60 vs. Other Global Tax Incentives
Comparison With Offshore Jurisdictions

Unlike offshore havens, Puerto Rico operates under U.S. law.

Why Puerto Rico Stands Out

Low taxes, U.S. citizenship, and legal stability are a rare combo.

The Application Process for Act 60
Step-by-Step Application Overview

Entity or individual assessment

Application submission

Government review

Decree issuance

Timeline and Approval Process

Approval can take several months, depending on complexity.

Is Act 60 Right for You?
Who Benefits the Most

Service-based entrepreneurs

Traders and investors

Crypto professionals

Remote business owners

Situations Where Act 60 May Not Fit

If relocation isn’t realistic, Act 60 may not be suitable.

Future of Act 60
Regulatory Updates and Trends

Rules evolve, but Act 60 remains a cornerstone of Puerto Rico’s strategy.

Long-Term Outlook

Expect continued oversight, not elimination. The program is here to stay.

Conclusion

Act 60 isn’t a loophole. It’s a deliberate economic policy. For the right individual or business, it can unlock massive tax savings while offering a high-quality lifestyle in a U.S. jurisdiction. But success depends on proper planning, real relocation, and strict compliance. Done right, Act 60 can be one of the most powerful tax incentives available today.

FAQs

1. Is Act 60 legal under U.S. tax law?
Yes. Puerto Rico operates under a unique U.S. tax framework.

2. Do I have to move to Puerto Rico to qualify?
Yes. Bona fide residency is mandatory.

3. What is the corporate tax rate under Act 60?
A fixed 4% for qualifying export services businesses.

4. Can crypto investors benefit from Act 60?
Yes, if structured correctly and residency rules are met.

5. Is Act 60 permanent?
Benefits are granted through binding tax decrees, typically long-term.