Creative Industry and Act 60: Incentive Considerations for Entertainment and Media

Creative Industries Under Act 60

Puerto Rico has been developing its creative and entertainment sector, and Act 60 provides incentive structures that may be relevant to businesses in film, television, gaming, digital content, and related industries.

Applicable Act 60 Chapters

Chapter 3 (Export Services): Creative services provided to clients outside Puerto Rico (international film production, software development, digital marketing for foreign clients) may qualify for the 4% corporate rate under Section 2032.01(a).

Chapter 2 (Individual): Creative professionals establishing bona fide residency (under IRS IRC Section 937) may qualify for individual investor benefits on qualifying income. For grandfathered applicants (before December 31, 2026), certain gains may receive preferential treatment under Section 2022.01(a).

Film Incentives: Puerto Rico has historically offered film production tax credits separate from Act 60. The interaction between film credits and Act 60 structures involves specific considerations that require professional analysis.

Puerto Rico's Creative Ecosystem

• Bilingual workforce (English and Spanish)
• Diverse filming locations (beaches, mountains, urban, historic)
• Growing technology and digital media sector
• US legal framework with IP protections
• Geographic bridge between US and Latin American markets

Qualifying Creative Activities

Activities that may qualify under Chapter 3 include:

• Film and television production for international distribution
• Gaming and software development
• Digital content creation for international clients
• Music production and distribution
• Advertising and marketing services for foreign clients

Compliance Requirements

Creative businesses under Act 60 follow the same general compliance framework:

• DDEC annual report by November 15 (Section 6020.10(a)(3))
• Employment requirements per decree terms
• Export ratio documentation
• Annual filing fee of $5,000 (Section 6020.10(d))

Frequently Asked Questions

Can film production combine Act 60 with PR film credits? The interaction between different incentive programs involves specific rules and limitations. Professional guidance is recommended for structuring combined incentive approaches.

Do gaming companies qualify for Act 60? Gaming companies providing services to international markets may qualify under Chapter 3. The specific eligibility depends on the nature of activities and client locations.

Virtus Advisory provides this content solely for informational purposes. Nothing in this article should be construed as a guarantee of any particular tax outcome, an endorsement of any specific tax strategy, or an offer to provide professional services. For personalized guidance, contact a licensed CPA or tax professional.