Act 135-2014, known as the “Act for Incentives and Financing for Young Entrepreneurs” amended section 1031-02 of the Puerto Rico Internal Revenue Code, as amended, to establish an income tax exemption for young residents of Puerto Rico between the ages of 16 and 26

A young entrepreneur is an individual who is:

• a resident of Puerto Rico
• between the ages of 16 and 35
• a high school graduate, and
• creates and operates a new business in Puerto Rico.

A new business is not a business that has been operating through affiliates or that is created after  a business reorganization, as defined in the Puerto Rico Internal Revenue Code of 2011, as amended (“the Code”). The tax incentives available in Act 60 can only be applied towards one (1) new business per young individual, and the new business must be operated solely by the young entrepreneurs.   

The tax benefits available for young entrepreneurs and their new businesses under Act 60 include:

• A 100% income tax exemption for the first $40,000 earned by the young entrepreneur between the ages of sixteen (16) and twenty-six (26) years old, from wages and other compensation for personal services rendered.
• A 100% income tax exemption on the first $500,000 of net income generated by the young entrepreneur’s new business during the first three (3) years of operations.
• A 100% exemption on the young entrepreneur’s new business’s personal property taxes during the first three (3) years of operations.
• A 100% exemption on municipal taxes during the first three (3) years of operations of the young entrepreneur’s new business.

Net income over $500,000 and any dividend distributions from the new business to its owners will be subject to the regular tax rates applicable under the Code.

Criterion Advisors Group can help young entrepreneurs who wish to benefit from the incentives provided by Act 60

For additional information or questions, please contact us at 939-391-1680, email at peter@criterionadvisorsgroup.com, or complete our Contact Form.