Have you ever dreamed of running a business with almost no tax burden? With Puerto Rico’s Act 60 Export Services Incentive, that dream can become a reality. This unique program allows eligible businesses to pay a flat 4% corporate tax rate, making Puerto Rico one of the most attractive destinations for entrepreneurs, consultants, and service providers.
In this article, we’ll break down exactly what Act 60 Export Services is, who qualifies, how to apply, and the opportunities it opens for global businesses.
What is Act 60 Export Services?
Act 60 Export Services is a tax incentive program that applies to businesses that provide services from Puerto Rico to clients outside the island. Originally introduced under Act 20, this program was consolidated into the Act 60 Incentives Code in 2019.
The idea is simple: if you operate from Puerto Rico and serve clients abroad, you can pay just 4% corporate tax on your profits.
Why Puerto Rico Created the Export Services Incentive
Puerto Rico’s government designed this program to:
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Encourage foreign investment
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Make Puerto Rico a hub for international services
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Create jobs for locals
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Revitalize the economy by attracting high-value industries
Key Benefits of Act 60 Export Services
Here’s why so many companies are moving operations to Puerto Rico:
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4% corporate tax rate on net income
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100% tax exemption on dividends paid to Puerto Rico residents
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No U.S. federal income tax on Puerto Rico-sourced earnings
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Renewable 15-year tax decree guaranteeing these benefits
Who Qualifies for Act 60 Export Services?
To qualify, your business must meet specific requirements:
Eligible Businesses
The incentive targets service-based companies, including:
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Consulting and advisory firms
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Marketing and advertising agencies
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Software development and IT services
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Investment and financial advisory services
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Accounting, legal, and tax services
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Professional back-office operations
Residency Requirement for Owners
Business owners must become bona fide residents of Puerto Rico to fully enjoy dividend exemptions.
How Act 60 Export Services Works
Here’s a quick example:
If your company earns $1,000,000 in profit from U.S. or international clients:
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In the U.S. mainland, you’d pay 21% corporate tax + state taxes
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In Puerto Rico under Act 60, you’d pay just 4% = $40,000
That’s a potential savings of hundreds of thousands of dollars each year.
Application Process for Act 60 Export Services
Getting approved requires going through Puerto Rico’s Department of Economic Development and Commerce (DDEC):
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Hire a local attorney or tax advisor
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Prepare a business plan showing your export service operations
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Submit the Act 60 application to the DDEC
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Pay the application fee (around $750–$1,500)
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Await approval and obtain your tax decree
Compliance Requirements
To maintain your Export Services tax decree, you must:
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File annual reports with the government
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Pay an annual fee to keep your decree active
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Employ at least one full-time employee (in most cases)
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Stay in compliance with Puerto Rico’s tax laws
Industries Thriving Under Act 60 Export Services
Several industries have especially benefited from the program:
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Tech Startups & SaaS Companies: Using Puerto Rico as a base for global clients
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Financial Advisors & Hedge Funds: Serving investors outside Puerto Rico
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Marketing & Creative Agencies: Exporting digital marketing services
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Professional Services: Lawyers, accountants, and consultants working remotely with international clients
Lifestyle and Business Advantages
Moving your business to Puerto Rico doesn’t just reduce taxes—it offers lifestyle perks too:
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U.S. legal system and dollar economy
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Direct access to U.S. markets without international restrictions
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Lower cost of living compared to major U.S. cities
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A vibrant expat and entrepreneurial community
Challenges and Considerations
While the benefits are significant, there are also challenges:
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Strict compliance rules must be followed
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Political risks—future governments could adjust incentives
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Local hiring expectations to support Puerto Rico’s economy
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Residency relocation may be required for owners to enjoy full tax savings
Act 60 Export Services vs. U.S. Mainland Taxes
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U.S. mainland: Up to 37% federal income tax + state taxes + 21% corporate tax
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Puerto Rico (Act 60): 4% corporate tax + 0% dividend tax (for residents)
The difference is massive, especially for businesses with high profits.
Conclusion
The Act 60 Export Services Incentive is one of the most powerful tax opportunities in the world. By relocating your business to Puerto Rico, you could legally reduce your corporate tax rate to just 4%, protect dividends, and enjoy life in a Caribbean paradise—all while still being under U.S. jurisdiction.
For entrepreneurs, consultants, and service providers with global clients, this could be a game-changing move.
FAQs
1. What is the main tax benefit of Act 60 Export Services?
Businesses pay only 4% corporate tax on qualifying income.
2. Do I need to live in Puerto Rico to benefit?
Business owners must move to Puerto Rico to qualify for dividend exemptions, though the company itself can still get the 4% rate.
3. How long does the tax decree last?
Typically 15 years, with the option to renew.
4. Do I need to hire local employees?
Yes, most businesses must employ at least one local worker.
5. Can copyright companies qualify under Export Services?
Yes, if they provide blockchain or copyright-related services to clients outside Puerto Rico.