Agriculture and Agribusiness Incentives Under Puerto Rico’s Act 60-2019

Legal Framework

Puerto Rico’s Incentives Code (Act 60-2019) unifies the Island’s disparate tax-incentive statutes into a single system that covers manufacturing, services, tourism, and agriculture.
Chapter 8 – Agro-Industries preserves the core benefits of prior farming laws while aligning administration with the Department of Economic Development and Commerce (DDEC) and the Department of Agriculture.

The decree process for all incentive programs—including agriculture—is governed by DDEC Regulation MO-DEC-012, which remains the operative regulation for filing and maintaining tax-exemption decrees.

For continuing coverage of Puerto Rico’s incentive programs, visit MZLS Insights.

Eligibility and Certification

To qualify for the agricultural regime, applicants must be certified as Bona Fide Farmers (Agricultores Bona Fide) by the Department of Agriculture.
Certification requires that at least 51 percent of the applicant’s gross income come from agricultural or agro-industrial production and that operations meet the agency’s definitions of eligible activity.
The Department’s application form for new agricultural businesses outlines the information and evidence required.

Following enactment of Law 51-2021, bona fide farmer certification is valid for four years, provided annual reports are filed with Agriculture.

Once certified, the producer applies to DDEC for an Act 60 agricultural decree, accompanied by Agriculture’s recommendation.
This dual-agency process—Agriculture for technical certification, DDEC for decree issuance—replaced the single-agency model under Act 225 and enhances oversight.

Core Fiscal Benefits Under Chapter 8

1. Income Tax Exemption
Certified bona fide farmers enjoy up to a 90 percent exemption on net income derived directly from agricultural or agro-industrial operations.
Interest on qualified agricultural loans is also exempt.

2. Property Tax Exemption
Real and personal property used at least 35 percent in qualifying agricultural activity is exempt from municipal property tax.

3. Municipal License Tax Exemption
Activities covered by the decree are exempt from municipal license (volume-of-business) taxes.

4. Sales and Use / Excise Tax Relief
Machinery, renewable-energy systems, feed-mixing equipment, fencing materials, and other inputs purchased or imported for agricultural use may qualify for 100 percent Sales and Use Tax (SUT) and excise-tax exemptions, as authorized in the decree.

5. Sector-Specific Programs
Chapter 8 authorizes additional incentives for dairy, aquaculture, and research initiatives, coordinated between Agriculture and DDEC.

Duration and Compliance

Agricultural decrees under Act 60 are generally valid for 15 years, renewable once for another 15.
Decree holders must:

• Maintain valid bona fide farmer certification;
• Keep segregated accounting for agricultural vs. non-agricultural income;
• File annual compliance reports with DDEC and Agriculture; and
• Document exempt purchases to substantiate SUT and excise-tax relief.

Failure to maintain certification or submit required reports can result in suspension or revocation of benefits.

Comparison to Prior Law

Under Act 225, Agriculture both certified and administered benefits.
Act 60 transferred decree administration to DDEC, establishing uniform procedures while preserving the substance of the exemptions.
Key elements remain unchanged:

• The 90 percent income-tax exemption on agricultural income;
• Full or substantial exemptions from property, municipal, and SUT/excise taxes;
• A long-term decree providing predictability for investors.

Policy Context and Economic Impact

The agriculture chapter of Act 60 supports Puerto Rico’s broader objectives of food security and agribusiness modernization.
Current administrative guidance—available through Agriculture’s 2025 materials and DDEC’s decree platform—emphasizes technology adoption, sustainability, and integration with renewable-energy initiatives.
Aligning agricultural incentives with the rest of the Incentives Code improves transparency while keeping farming a preferred sector under Puerto Rico law.

For related analyses on fiscal governance and economic-development incentives, see Federal Court Halts Removal of PROMESA Board Members.

Considerations for Producers and Investors

• Certification Management: Renew bona fide status every four years and confirm compliance with the 51 percent income test.
• Operational Segregation: Maintain accounting systems that separate exempt agricultural income from other business lines.
• Procurement Documentation: Keep invoices and usage records for tax-exempt purchases.
• Strategic Planning: Evaluate whether processing or packaging operations qualify as “directly derived” agricultural income before applying the 90 percent exemption.

MZLS advises producers, cooperatives, and agribusiness investors on structuring and compliance for agricultural decrees under Act 60.
Learn more about our Business & Commercial Law and Litigation & Dispute Resolution services, and explore additional insights on MZLS Insights.

Conclusion

Chapter 8 of Act 60-2019, as amended, continues Puerto Rico’s longstanding commitment to supporting agriculture through robust tax incentives while modernizing oversight through DDEC and Agriculture collaboration.
By coupling a 90 percent income-tax exemption with property- and SUT-tax relief, the Incentives Code maintains one of the Caribbean’s most favorable fiscal environments for agribusiness investment.

For assistance with decree applications, certification renewals, or compliance reviews, contact the MZLS Incentives and Economic Development Practice via www.mzls.com.

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