Puerto Rico R&D Tax Credit: A Powerful Incentive for Innovation
Who Qualifies? | What’s Covered? | Why PR? | Get Started
What Is the Puerto Rico R&D Tax Credit?
The Puerto Rico R&D Tax Credit is a non-refundable tax credit of up to 50% of a company’s qualified R&D investment made within Puerto Rico during the taxable year. This incentive is designed to fuel innovation by making research and development more capital-efficient.
Who Qualifies?
- Must hold a Puerto Rico Tax Decree
- Must invest in local R&D
What Counts as R&D?
- Solves technical uncertainty
- Involves scientific or technological advancement
- Experimental, design, and testing activities
What’s Not Eligible?
- Cosmetic updates
- Market testing
- QC and grant-funded R&D
Top Industries Benefiting from R&D Tax Credits Under Act 60
Pharmaceuticals, Biotechnology & Medical Devices
Puerto Rico has a longstanding reputation in pharmaceutical manufacturing, hosting major companies like Pfizer, Amgen, and Johnson & Johnson.
The island is also a significant player in biotechnology and medical device production.
R&D activities in these sectors, such as developing new drugs or medical technologies, are eligible for substantial tax credits.
Advanced Manufacturing & Aerospace
Industries involved in electronics, aerospace, and advanced manufacturing processes can leverage R&D tax credits for developing prototypes, enhancing production methods, and innovating new products.
These sectors are prioritized under Act 60 for their strategic importance.
Software & Technology Development
Companies engaged in software development, cloud computing, and other tech innovations can benefit from R&D tax credits.
Activities such as creating new applications or improving existing technologies qualify for these incentives.
Renewable Energy & Environmental Sciences
Businesses focusing on renewable energy solutions and environmental technologies are encouraged through R&D tax credits.
This includes developing sustainable energy systems, environmental monitoring tools, and other green technologies.
Agricultural Biotechnology & Sustainable Packaging
Innovations in agricultural biotech, such as developing sustainable packaging materials or enhancing crop yields through biotechnology, are supported under Act 60.
Startups like NuPack, which focuses on mushroom-based sustainable packaging, exemplify the type of ventures that can benefit.
Logistics, Distribution & Export Services
Companies improving logistics and distribution processes, especially those exporting goods and services, can access R&D tax credits.
Innovations in supply chain management and distribution technologies are included
Which Expenses are Eligible?
Operational Expenses:
- Payroll, benefits, taxes
- Rent, utilities, insurance
- Software licenses, professional services
Capital Expenses:
- Construction/upgrades of R&D facilities
- Specialized equipment
- Intellectual property acquisitions
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How Do I Apply for the R&D Tax Credit?
To claim the credit, companies must:
- File an application with Puerto Rico’s Department of Economic Development and Commerce (DEDC).
- Submit an Agreed-Upon Procedures report by a licensed Puerto Rican CPA.
- Receive an Accreditation Certificate confirming eligibility.
- Reinvest the value of awarded credits into further R&D activity on the island, as mandated by Act 60-2019.
Why Puerto Rico?
U.S. jurisdiction for FDA and NIH collaboration
IP protections under U.S. law
Federal research grant access
Lower operating costs than mainland hubs
Proven infrastructure in life sciences, biopharma, and tech
Puerto Rico offers a globally competitive platform for science-driven investment.
The island exports $53+ billion in pharmaceuticals annually, with 6 of the top 10 global biologics manufactured locally. Companies benefit from a fixed low tax rate and R&D credits that can be monetized, sold, or transferred, boosting capital flexibility.
Puerto Rico’s R&D tax credit program is more than a financial incentive—it’s a strategic lever for companies and investors aiming to maximize returns on innovation. By aligning scientific advancement with fiscal efficiency, Puerto Rico offers a rare combination: a U.S. base with global-level incentives.
Ready to capitalize on Puerto Rico’s innovation advantage?
Let us help you claim the credit and grow your R&D footprint in a tax-optimized environment.
Book your intro call online now or give us a call at 678-585-6580
