Act 60: Promoting international financial institutions in Puerto Rico

29 April, 2024

Under the ACT 60 framework, Puerto Rico has endeavored to attract and encourage the establishment of International Financial Institutions (IFIs) in its territory. Chapter 4 of this legislation provides a favorable tax environment specifically designed for those companies engaged in eligible financial activities. This article addresses the tax incentives and selection requirements that distinguish Puerto Rico as an attractive destination for the investment and operation of IFIs.  

Tax Benefits for International Financial Entities

IFIs in Puerto Rico enjoy a number of significant tax advantages, including: 

  • Reduced Tax Rate: Income earned by IFIs is subject to a flat income tax rate of 4%, which is a great competitive advantage globally.  
  • Gross Income Exemptions: Interest, financing charges, dividends, or profits distributed by the IFIs are not considered Puerto Rican gross income and, therefore, are exempt from taxes or withholdings applicable to non-residents.  
  • Special Tax Rate for Dividends: A tax rate of fixed income of 6% is applied on dividends and other profit-sharing received by shareholders or IFIs’ partners who are residents of Puerto Rico.  
  • Property Tax Exemption: IFIs enjoy a 75% exemption on property tax for real estate and personal property.  
  • Municipal Tax Reduction: A 50% municipal tax exemption is offered to the IFIs. 

Selection Requirements for IFIs

An international financial entity must meet a set of requirements to benefit from these incentives in Puerto Rico: 

  • Incorporation and Organization: The entity may be incorporated under the laws of Puerto Rico, the United States, or any foreign country.  
  • Local Employment: The entity must employ a minimum of four full-time employees in its trade office in Puerto Rico.  
  • License and Leave: It is necessary to apply for leave and license at the Office of the Commissioner of Financial Institutions and obtain a tax exemption decree from the Business Incentives Office, with an initial term of 15 years, potentially renewable for another equal period.  
  • License Fee: An initial license fee of $5,000 must be paid, renewable annually at the same amount.  
  • Legal Compliance: The entity must comply with federal anti-money laundering laws and regulations and OFAC (Office of Foreign Assets Control) sanctions programs.  
  • Capital Requirements: The authorized capital stock must be at least $5 million ($500,000 for certain financial activities), with at least $250,000 paid in before license issuance, in addition to having at least $300,000 in restricted assets. 


Chapter 4 of ACT 60 offers an attractive set of tax incentives and operating conditions for International Financial Institutions, placing Puerto Rico as a competitive destination for investment and expansion of financial activities worldwide. Along with these incentives, the island intends to attract capital and talent and foster a dynamic and diversified economic environment. IFIs interested in establishing operations in Puerto Rico will find a welcoming environment conducive to their growth and success.