R&D and Manufacturing
Act 60 Tax Incentives / R&D and Manufacturing
What is the Act 60 R&D and Manufacturing tax incentive?
With this program, Puerto Rico has created a very attractive incentive for research and development as well as manufacturing enterprises. 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.
Note that this was formerly referred to as Act 73.
Benefits of acquiring an Act 60 R&D and Manufacturing tax decree include:
- Passive Income Tax Exemptions
- 0% US federal tax on dividend and interest income that qualifies as Puerto Rico sourced income
- 100% tax exemption from Puerto Rico taxes on all dividend and interest income
- Option to reduce any tax that may be owed on non-Puerto Rico sourced income to 0% or 10% through certain Puerto Rico investment vehicles
- Capital Gains Tax Exemptions
- 0% US federal tax on capital gains earned after becoming a Puerto Rico resident
- 100% tax exemption on these same capital gains
- 5%-10% tax on capital gains accrued prior to becoming a Puerto Rico resident
- Corporate tax credits for:
- Job creation ($1K, $2.5K, or $5K, depending on the location of the operations)
- 50% income tax credit on qualifying expenses
- 50% income tax credit for investments in equipment used for the production of renewable energy
- 25% income tax credit for the purchase of locally manufactured products
- Up to 10% credit if the business can show evidence of reducing their electrical energy cost
- Passive Income Tax Exemptions
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:
- 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
We streamline the process of obtaining your Act 60 decree by assisting you with developing all of the necessary documents to apply.
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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