Learn what qualifies (and what doesn’t) under Act 60 for tech entrepreneurs in Puerto Rico. Get clear guidance on export services, R&D, and eligibility rules.

Puerto Rico recently extended its Individual Resident Investor incentive through 2055, a signal of long-term commitment to the program. Business decrees work on their own timeline: an export services or manufacturing grant runs 15 years and can be renewed for 15 more.

That extension, along with decree terms that can run 30 years with renewal, gives founders a long planning horizon. With a 4% corporate tax rate and potential credits on R&D expenses, Puerto Rico offers strong incentives for tech founders.

In this article, you’ll learn exactly what qualifies and what doesn’t under Act 60 if you’re planning to move your business to the island.

What Qualifies Under Act 60

To benefit from Act 60, tech entrepreneurs must meet these criteria:

1. Engage in Qualified Manufacturing Activities

The following are examples of tech-related activities that qualify under Act 60.

Software and App Development

Software applications can serve a wide range of industries, including biotech, health, finance, and logistics.

Examples include:

• Custom software for B2B clients
• Cloud-based solutions or subscription platforms

The key factor is that the software must be created in Puerto Rico and monetized externally.

Video Game Production

Video game development qualifies when core production happens on the island. Act 60 treats it as an eligible export activity under its creative industries category. This process includes:

• Programming and AI development
• Graphic design and animation
• Sound engineering and system integration

Eligible teams often include developers, technical artists, and backend engineers.

Scientific and Industrial R&D

This category applies to experimental work aimed at creating or improving products, services, or processes. Common qualifying sectors include:

• Biotech
• Wearable tech
• Artificial intelligence and machine learning

Eligible businesses may also benefit from a 50% tax credit on qualified R&D spending. These investments include:

• Salaries and technical staff
• Infrastructure and research equipment
• Clinical trials conducted as part of product development

2. Export Services or Intellectual Property

All services and products must be sold to markets outside of Puerto Rico. This rule means your business should create valuable intellectual property, such as software, platforms, or digital tools, and either sell it directly to clients in the U.S. or internationally.

The core goal is to bring in revenue from external sources and attract foreign investment to the island.

3. Maintain a Business Presence in Puerto Rico

Under Act 60, qualifying businesses must demonstrate that they genuinely operate from Puerto Rico. The main requirements include:

• Maintaining a physical office or workspace (a lease or utility bill can serve as proof)
• Hiring at least one full-time Puerto Rico resident employee once annual net income passes $3 million
• Filing Puerto Rico income tax returns annually

Owners who want the full personal benefit, including the 0% rate on dividends from the exempt business, must also qualify as bona fide residents of Puerto Rico under federal rules. That generally means spending at least 183 days per year on the island.

What Doesn’t Qualify

Even if you’re in the tech space, these common setups will not make the cut:

1. Selling Tech Locally in Puerto Rico

If you’re offering an app, service, or product solely to customers within Puerto Rico, it does not qualify as an export service under Act 60. Selling on the island is considered local economic activity, which goes against the purpose of the program.

Act 60 is intended to attract outside capital, increase export revenue, and strengthen Puerto Rico’s economy. Allowing businesses to compete locally while receiving tax breaks would create an uneven playing field for other companies operating under standard tax rules.

2. Freelancers Without a Puerto Rico Business Entity

If you’re a digital nomad offering development services to foreign clients as an individual, you may not qualify for Act 60. To be eligible, you must register as a business entity in Puerto Rico and meet the program’s physical presence and residency requirements. Simply staying on the island temporarily while working remotely doesn’t meet the standard—your business must be formally established and actively operating from Puerto Rico.

3. No Actual Technical Work Involved

Simply listing a product, like an app or digital template, online does not qualify as a manufacturing activity under Act 60. To be eligible, you must be actively developing your product in Puerto Rico. This process includes core technical work such as building, testing, and updating the software or service from the island. For R&D purposes, you also need to show you’re investing effort and resources into innovation, such as:

• Creating new iterations of a product using local infrastructure
• Testing and refining algorithms for improved functionality
• Experimenting with AI tools to expand the capabilities of your software

Development and experimentation must take place in Puerto Rico, not outsourced or passively managed.

Is Your Tech Business a Fit for Act 60?

Puerto Rico’s tax incentives are built for tech founders who are building products, running operations locally, and reaching global markets. If you’re set on growth, innovation, and reducing your tax burden, relocating might be the best move you make this year.

Need help with your application or figuring out if you qualify? Contact one of our experts to simplify your Act 60 documentation and get started the right way.