Tourism Incentives Under Puerto Rico’s Act 60-2019

Written by: Anthony O. Maceira, esq. and Marie C. Maceira

Legal Framework and Scope

Puerto Rico’s Incentives Code (Act 60-2019) consolidated more than seventy prior incentive statutes into a single, modernized framework.  Chapter 5, titled Visitor’s Economy, reorganized benefits that were previously available under the Tourism Development Act (Act 74-2010) and aligned them with Puerto Rico’s broader economic-development strategy.

Administered by the Puerto Rico Tourism Company and the Department of Economic Development and Commerce (DDEC), the tourism program grants long-term tax exemptions and investment credits for qualifying hospitality and visitor-economy projects.  Each beneficiary receives a binding tax-exemption decree valid for 15 years, renewable once for another 15.

For continuing coverage of incentive programs and regulatory updates, visit MZLS Insights.

Eligible Projects

The Visitor’s Economy provisions define tourism activity broadly.  Eligible projects include:

• Hotels, condohotels, paradores, and guesthouses
• Vacation clubs, marinas, golf courses, and theme parks
• Cultural, eco-tourism, and medical-tourism facilities
• Attractions, guided tours, and water or land excursions
• Casinos, eSports, and fantasy-league venues, subject to regulation

This comprehensive list is intended to capture both traditional hospitality assets and modern experiential tourism initiatives.

Core Fiscal Incentives

1. Income Tax on Tourism Development Income (TDI).
Qualifying tourism businesses pay a flat 4 percent tax rate, replacing the former 90 percent exemption under Act 74-2010.

2. Dividend and Distribution Exemption.
Dividends paid from tourism income are generally 100 percent exempt from Puerto Rico income tax.

3. Property Tax Exemption (75 percent).
Real and personal property used in the exempt business receives a 75 percent reduction in municipal property taxes.

4. Municipal License Tax Exemption (50 percent).
Act 60 provides a 50 percent exemption from municipal gross-receipts and license taxes for new and existing tourism businesses.

5. Sales and Use / Excise Tax Relief.
Materials and equipment used directly in tourism construction or operations may qualify for 100 percent SUT and excise-tax exemptions, subject to approval by the Tourism Company.

6. Tourism Investment Tax Credit (30–40 percent).
Investors may claim a credit of 30–40 percent of eligible capital investment, applied against Puerto Rico income-tax liability or transferred under secondary-market rules.  See the Tourism Company’s Incentives Program for current guidance.

Comparison to Prior Law

Act 60 streamlined administration but reduced some rates that had been more generous under prior law:

• Replaced a 90 percent exemption with a flat 4 percent income-tax rate;
• Reduced property-tax exemptions from 90 to 75 percent;
• Lowered municipal-license exemptions from 90 to 50 percent; and
• Capped construction excise-tax exemptions at 75 percent.

These adjustments reflect a shift toward uniformity and predictability, while extending eligibility to modern sectors such as digital entertainment, eSports, and sustainable tourism.

Decree Term and Compliance Obligations

Tourism decrees are effective for 15 years and may be renewed once for another 15.  Beneficiaries must:

• Maintain accounting segregation for Tourism Development Income;
• File annual compliance reports and informative returns under Section 1061.15 of the Puerto Rico Internal Revenue Code;
• Certify employment and investment levels specified in the decree; and
• Keep documentation supporting property-tax, SUT, and municipal-tax exemptions.

The DDEC Regulations for the Incentives Code authorize audits and clawbacks where projects cease operations or fail to meet conditions.

Policy Context and Strategic Impact

Tourism remains a designated growth pillar in the Fiscal Plan certified by the Financial Oversight and Management Board.  By consolidating legacy statutes into a single code, Act 60 reduces administrative burden while preserving competitive benefits.

The Invest Puerto Rico agency reports steady increases in resort and hospitality investment.  Combined with the 4 percent tax rate and 30–40 percent investment credit, the framework continues to attract local and international capital.

For a related analysis on governance and oversight under PROMESA, see Federal Court Halts Removal of PROMESA Board Members.

Considerations for Investors and Developers

• Predictable Tax Treatment: Fixed 4 percent rate simplifies modeling for long-term financing.
• Capital Efficiency: Transferable credits enhance equity returns and financing flexibility.
• Local Engagement: Projects emphasizing local supply chains and employment receive stronger institutional support.
• Regulatory Alignment: Early coordination with the Tourism Company and DDEC ensures compliance from inception.

MZLS advises hospitality developers, lenders, and operators on structuring and compliance for Act 60 tourism projects.  Learn more about our Business & Commercial Law and Litigation & Dispute Resolution services.

For additional updates on incentives and regulatory matters, explore more MZLS Insights.

Conclusion

The Act 60-2019 Tourism Incentives Program underpins Puerto Rico’s strategy to expand its visitor economy through predictable tax treatment and modern oversight.  For investors, it offers a clear legal framework to support sustainable development across hospitality and experiential industries.

For tailored guidance on tourism incentives, compliance, or decree applications, contact the MZLS Incentives and Economic Development Practice via www.mzls.com.

‍