In Puerto Rico, Act 60, also known as the Puerto Rico Incentives Code, is a comprehensive law aimed at consolidating and simplifying various tax incentives to attract businesses and individuals to the island. Enacted in 2019, Act 60 brings together incentives previously outlined in Acts 20, 22, and other tax benefit programs, streamlining the process and offering a range of tax incentives that aim to promote economic growth in Puerto Rico. Here are the main components:

1. Tax Incentives for Individuals (Formerly Act 22)

• Resident Individual Investors: U.S. citizens who move to Puerto Rico and establish bona fide residency under Act 60 can enjoy substantial tax breaks on certain types of income.
• Tax-Exempt Capital Gains: Capital gains on assets acquired after becoming a Puerto Rico resident are exempt from Puerto Rican taxes. Gains from assets owned before moving to Puerto Rico are eligible for a reduced tax rate after 10 years of residency.

1. Incentives for Export Services and Businesses (Formerly Act 20)

• Export Services Companies: Businesses that export services outside of Puerto Rico can receive a 4% corporate tax rate.
• Dividends: Qualified business owners may also benefit from tax exemptions on dividends generated by these services.

1. Bona Fide Residency Requirements

• To benefit from Act 60, individuals must meet the “bona fide resident” criteria, which typically involves:
  • Spending at least 183 days in Puerto Rico per year.
  • Demonstrating stronger personal and economic ties to Puerto Rico than to the U.S.

1. Compliance Requirements

• Charitable Contributions: Act 60 requires qualifying individuals to make annual charitable contributions to Puerto Rican nonprofits, generally $10,000.
• Property Purchase Requirement: New residents have to purchase a residence in Puerto Rico within two years to maintain their status.
  
  

Act 60’s goal is to boost Puerto Rico’s economy by attracting investment, creating jobs, and encouraging local spending, which in turn supports the island’s economic development.

This legislation has made Puerto Rico an attractive destination for high-net-worth individuals, remote workers, and entrepreneurs from the U.S. seeking favorable tax treatment while retaining U.S. citizenship.