PUERTO RICO Trends and Developments Contributed by: Amanda Billoch-Vázquez, Antonio Pietrantoni, Manuel del Valle and Iván Marrero, Pietrantoni Mendez & Alvarez LLC
integration of diversified generation technologies to address shortfalls and stabilise service, creating new opportunities for investors in the construction, energy and technology sectors positioned to support Puerto Rico’s energy transformation. For example, in October 2025, the Puerto Rico Public Private Partnerships Authority launched a major pro - curement process to secure up to 3,000 MW of new flexible, firm generation capacity through long-term public-private partnership contracts. This process is technology-agnostic (excluding coal and nuclear) and is open to generation technologies such as thermal, standalone storage, renewables paired with batter - ies and waste-to-energy, provided they contribute dependable capacity and support further renewable integration. Each new facility will be limited to 400 MW and must be located near major load centres, with the aim of maximising reliability and supporting the Island’s goal of meeting 100% renewable energy by 2050. Puerto Rico has also set ambitious renewable energy targets, aiming to derive a significant portion of its power from renewable energy sources, such as solar and wind. To advance these goals, PREPA and the Puerto Rico Energy Bureau (the independent regula - tor) have launched procurement processes to expand PREPA’s energy portfolio and reduce reliance on fos - sil fuels. Although the renewable energy targets have been delayed, they remain in place, and ongoing efforts to diversify the Island’s energy mix and inte - grate cleaner sources could present strategic oppor - tunities for investors focused on sustainability and long-term infrastructure development. Act 60 incentives and the private equity market Private equity has emerged as an important driver of economic growth and development globally, foster - ing innovation, creating jobs and stimulating entre - preneurship; Puerto Rico’s private equity market is no exception to this trend. Act 60-2019, also known as the Puerto Rico Incentives Code, as amended (“Act 60”), represents a comprehensive legislative initia - tive aimed at attracting private investment to stimu - late economic development. As a result of Act 60’s tax benefits, private equity is increasingly playing an important role in Puerto Rico’s economic landscape,
including mergers and acquisitions, as the Island has seen an influx of financial industry professionals and firms investing in various sectors, including real estate, energy and infrastructure. A central component of Act 60 is its robust tax incen - tives, which play a pivotal role in attracting private equity investment. Under Act 60, eligible partnerships or limited liability companies may become either a Puerto Rico private equity fund or a private equity fund, provided they comply with certain requirements set out under Act 60 and under a tax decree issued by the Puerto Rico Department of Economic Devel - opment and Commerce ( Departamento de Desarrollo Económico y Comercio , or DDEC). Private equity funds are taxed on a flow-through basis under Act 60, which means that each fund is not subject to Puerto Rico income taxes but, instead, its members are the ones responsible for the applicable Puerto Rico income taxes on their distributive share of the fund’s net income. Act 60 extends specific tax benefits to private equity funds. For example, a mem - ber’s distributable share of the income of the fund attributable to interest and dividends generated by the fund will be taxed at a fixed Puerto Rico income tax rate of 10%. Furthermore, in the case of any flow- through capital gains of the fund, the capital gains are totally exempt from Puerto Rico income taxes. In addition, certain tax deductions allowed under Act 60 may be used against Puerto Rico-sourced income, thereby providing an important tax benefit to Puerto Rico residents (or offshore investors that have Puer - to Rico-sourced income). With respect to a Puerto Rico private equity fund, each Puerto Rico resident member may deduct up to a maximum of 60% of their equity investment in the fund within a maximum period of 15 years, provided that the maximum deduc - tion for a particular taxable year does not exceed 30% of the member’s net income for the year prior to this deduction. With respect to a private equity fund, each Puerto Rico resident member may deduct up to a maximum of 30% of its equity investment in the fund within a maximum period of ten years, provided that the maxi - mum deduction for a particular taxable year does not
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