On April 5, 2025, Governor of Puerto Rico Jenniffer González announced proposed amendments to Act 60–2019 (“Puerto Rico Incentives Code”) as part of a broader tax reform package.  The proposed legislation, which is expected to move swiftly through the legislative process, includes significant updates that could affect future applicants under the Act 60 tax incentives program.

The Key Proposed Changes Include:

• Program Extended Through 2055
  The proposal would extend the validity of Act 60 through December 31, 2055, reaffirming the government’s long-term commitment to attracting capital and investment to Puerto Rico.
• New 4% Tax for Future Applicants
  Individuals who apply for a decree on or after January 1, 2026, would be subject to a 4% tax on capital gains, interest, and dividends.  The current 0% treatment would no longer apply to these new applicants.
• New Residency Requirement
  A residency period prior to application would be required, adding a new eligibility threshold for future applicants.
• No Impact on Current Decree Holders
  Existing Act 60 (formerly Act 22) decree holders are expressly protected. Their decrees are binding contracts with the Government of Puerto Rico and remain fully enforceable under Puerto Rico and U.S. constitutional protections against impairment of contractual obligations.

The time to Act is Now

If you are considering filing for an Act 60 decree, timing is critical.  The proposed changes will not apply retroactively or affect filings prior to January 1, 2026.  If you are considering Act 60, please be aware that to qualify under the current 0% tax regime for dividends and avoid the new residency and tax requirements, we strongly encourage you to file before December 31, 2025.

Conclusion

While the proposed increase to a 4% tax for future applicants represents a policy shift, the extension of the Act 60 program through 2055 is a positive development for investors and reinforces Puerto Rico’s commitment to remain a competitive tax jurisdiction. Importantly, the new 4% rate remains highly attractive compared to most global and U.S. tax regimes.  Existing decree holders are fully protected, and new applicants still have time to benefit from the current 0% structure if they act promptly.

The Puerto Rico Practice Group and Taxes Practice Group at Carrasquillo Law Group are monitoring the situation closely.  We are available to assist clients in evaluating their options, initiating the decree process, and ensuring timely compliance with all requirements.