Puerto Rico’s recent tourism boom is often presented as a story of recovery from a two-decade-long economic and fiscal crisis. Accordingly, after years marked by austerity, hurricanes, and the COVID-19 pandemic, the archipelago has reemerged as a desirable destination.

Luxury hotels, gated communities, and large-scale tourism developments are expanding, reshaping coastal towns such as Cabo Rojo, Dorado, and Fajardo through projects like Esencia and Moncayo. Public agencies and industry actors, including Discover Puerto Rico, consistently frame tourism as a cornerstone of economic renewal. The image is familiar across the Caribbean: paradisiacal beaches paired with the promise of being open for business.

This narrative obscures a deeper reconfiguration of tourism policy in Puerto Rico in ways that extend beyond attracting visitors into a financial and speculative investment sector. At stake is a shift in how development itself is structured, one in which tax incentives and credits tied to tourism increasingly function as financial assets. The economic, legal, and sociopolitical implications of that development are experienced by local communities that have been displaced by luxury megaprojects, as well as by austerity measures and an unequal tax burden.

At the center of this transformation is Puerto Rico’s tax incentives regime, particularly Act 60 of 2019. The law authorizes a broad range of incentives designed to attract investment across sectors, including tourism, real estate, international financial services, international banking and insurance, and alternative investments.

It also provides substantial benefits that encourage wealthy individuals and investors to relocate to the unincorporated US territory. These incentives are framed as tools to stimulate economic activity, operating as subsidies granted in exchange for investment, employment, and economic development.

Under a particularly obscure section of Act 60, tax credits for tourism and manufacturing industries are defined as instruments of value that can be transferred or sold. The law explicitly permits them to be traded “as if they were a bond or a stock.”

Once issued to holders of tax exemption decrees, credits circulate in secondary markets, typically at prices between ¢80 and ¢95 on the dollar. Buyers, often Limited Liability Companies (LLCs), acquire them at a discount and use them to offset their tax liabilities, retaining the difference as a financial gain.

Because these credits reduce tax obligations dollar for dollar, rather than simply lowering taxable income, they provide a particularly advantageous mechanism for minimizing taxes. The gains generated through these transactions are not subject to taxation.

Recent legal reforms, such as Act 52 of 2022, refined the administrative and legal infrastructure governing tax credit circulation, strengthening their role within investment strategies. One of its key innovations is the creation of a centralized Tax Credits Manager system within the Puerto Rico Treasury Department. This digital platform registers, tracks, transfers, and manages the life cycle of tax credits, standardizing their circulation within an electronic system.

According to the Puerto Rico Treasury Department, a total of $417,244,271 in tax credits has been granted to tourist investment projects since January 1, 2023. As of January 20, 2026, the date the data was shared, a significant portion of these credits had already circulated through the secondary market, with $368,349,250 being sold or transferred.

Of the total tax credits granted, only $115,777,928 had been claimed on tax returns. After accounting for these sales and claims, the remaining available balance stood at $297,541,446. Almost $300 million in tax credits are still circulating in the secondary market.

Importantly, between 2023 and January 2026 alone, the Treasury Department reported 599 sales transactions. Of these, 280 occurred between legal entities (no disaggregated data are available on the specific type of entity, such as LLCs or other corporate forms). Another 314 transactions involved transactions between legal entities and individuals, while only five transactions were conducted exclusively between individuals, where both buyer and seller were natural persons.

These transactions, and the scale of the secondary market, reveal the financialized dynamics at play within the tourism tax credit system. Rather than relying on hotel occupancy rates, employment generation, or sustained tourism demand to drive profitability, this tax credit’s structure enables returns through the exchange and strategic deployment of the credits themselves. Revenue streams tied to occupancy rates or visitor flows are complemented, and in some cases displaced, by gains realized through financial transactions.

This shift helps explain the growing convergence between tourism, real estate, and offshore finance in Puerto Rico. Large-scale developments such as Esencia and Moncayo blur the boundaries between visitor economy and speculative investment. They combine tourism infrastructure with luxury residential properties marketed to global elites, creating spaces that function simultaneously as destinations, investment vehicles, and stores of wealth.

The language used to promote these projects is crucial in this process. Tropes of paradise, tropicality, and exclusivity are mobilized to attract capital and rebrand the archipelago as a premium destination. This imagery diverts attention from the displacement of local communities and the privatization of Puerto Rican beaches, among other natural resources.

These incentives and credits reposition Puerto Rico as an offshore financial center and facilitate the transfer of public resources to private actors, attracting mobile capital while enabling investors to capture value through transactions that are often only loosely connected to local economic conditions.

The link between tax incentives and public benefit becomes increasingly difficult to sustain under these conditions. As Espacios Abiertos noted in a recent report, in 2025, Puerto Rico spent $3.1 billion or 23.91 percent of its gross domestic product in tax incentives and other fiscal expenditure for tax incentives for decreed holders.

This process unfolds within a broader context of fiscal constraint. Puerto Rico continues to operate under strict oversight and austerity measures that shape public services and everyday life. School closures, cuts to public institutions, and persistent economic inequality remain defining features of the archipelago’s recent political and economic trajectory. Against this backdrop, the expansion of a sophisticated market for tax credits highlights the extent to which public policy is oriented toward facilitating capital accumulation.

Puerto Rico’s status as a US territory places it in a distinctive position within global financial and regulatory systems. Without full sovereignty, the archipelago faces significant constraints on its ability to design independent fiscal or monetary policies. At the same time, Puerto Rico positions itself as a competitive jurisdiction for global investment. Tax credits become key instruments in this strategy, which provides the political narrative, the spatial framework, and the legal basis for deploying financialized incentives.

The result is a development model in which tourism, real estate, and offshore finance are deeply intertwined, linked through shared legal frameworks, financial flows, and networks of investors and intermediaries.

Puerto Rico continues to be marketed as a destination defined by its natural beauty and cultural appeal. Yet understanding its current trajectory requires looking beyond visitor numbers and promotional narratives. It requires attention to the legal and financial structures that shape how value is produced and distributed, and to the dynamics of exclusion and displacement experienced by Puerto Ricans. Puerto Rico has become a site where the boundaries between tourism, offshore finance, and real estate speculation are being actively redrawn.