R&D and Manufacturing
Act 60 Tax Incentives / R&D and Manufacturing
What is the Act 60 R&D and Manufacturing tax incentive?
The Act 60 R&D and Manufacturing tax incentive—formerly referred to as Act 73—creates a very attractive opportunity for research and development as well as manufacturing enterprises in Puerto Rico. Imagine being able to have your R&D efforts almost totally exempt from tax, while getting tax breaks for creating jobs and purchasing materials, and then being able to also sell the product you develop at an extremely low tax rate.
Benefits
Benefits of acquiring an Act 60 R&D and Manufacturing tax decree include:
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- 4% income tax on eligible business income
- 0% tax on owner profit distributions
- Corporate tax credits for investments made in machinery and/or equipment and supplies, and for employee payroll
- 12% tax on royalty payments, creditable against the 4%
- 0% excise and sales/use tax on certain raw materials, machinery and equipment
- 75% exemption on property tax
- 75% exemption from municipal tax, excise tax, and other taxes paid to contractors and subcontractors, not including manufacturing lead time
- 50% exemption from municipal tax
How long is an Act 60 R&D and Manufacturing decree valid?
These decrees are effective for 15 years, regardless of the economic development of the zone where the business operates.
How to Qualify
The following business activities are eligible under the Act 60 R&D and Manufacturing decree, when performed in Puerto Rico:
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- Industrial businesses that manufacture on a commercial scale
- Subcontracted services essential to manufacturing defined as being in a “high economic impact cluster”
- Services rendered by key suppliers of Act 60 businesses
- Owners of property used by an Act 60 business for its Act 60 operations
- The breeding of animals for use in scientific and medical research
- Recycling activities
- Hydroponics operations
- Software product development intended to be sold on a commercial scale
- Operation of certain specified strategic projects
- Licensing of intangible property developed or acquired by an Act 60 business
- Production of purified bottled water
- Construction of social interest housing, and the planning and development of self-sustainable communities
- Certain laboratory research and development activities
Application Process
We streamline the process of obtaining your Act 60 decree by assisting you with developing all of the necessary documents to apply.
Contact us for a free consultation!
We Can Help
Our company helps people like you take advantage of Puerto Rico’s excellent tax incentives! We can help you determine which tax incentives are right for you, help you plan your residency and relocation strategy, and simplify the entire process for you.
Contact us for a free initial consultation.
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