If you’ve been exploring ways to reduce your corporate tax burden while expanding internationally, you’ve likely heard of Puerto Rico’s Act 60 Export Services. This powerful tax incentive program was designed to transform Puerto Rico into a global hub for export-oriented businesses, especially those offering services to clients outside the island.
Act 60 merges several previous tax acts—most notably Acts 20 and 22—into one cohesive framework, offering unparalleled advantages for entrepreneurs and corporations alike.
What Are Export Services?
Under Act 60, “export services” refer to eligible services provided by a Puerto Rico-based business to clients located outside of Puerto Rico. These services must not benefit the island’s local market and must be rendered primarily from Puerto Rico.
In simpler terms, if you’re running a consulting, tech, or creative firm serving clients in the U.S. mainland or abroad—your company may qualify.
The Evolution of Act 20 and Act 60
Before Act 60, Puerto Rico offered separate incentives under Act 20 (Export Services Act) and Act 22 (Individual Investors Act). These programs were so successful in attracting businesses and high-net-worth individuals that the government decided to consolidate them into Act 60 of 2019.
This unification streamlined the application process, reduced redundancies, and provided clearer guidance for compliance—making Puerto Rico even more attractive for international entrepreneurs.
Who Can Qualify for Act 60 Export Services?
To qualify, a business must:
Be registered in Puerto Rico
Operate an eligible service business
Provide services to clients outside Puerto Rico
Generate income exclusively from export activities
Both U.S. citizens and foreign nationals can qualify, as long as they establish a bona fide Puerto Rican entity and meet residency and compliance requirements.
The 4% Corporate Tax Rate Explained
One of the most appealing aspects of Act 60 is the fixed 4% corporate income tax rate on eligible export service income. This rate is dramatically lower than the 21% U.S. federal corporate tax rate, making Puerto Rico a legitimate tax haven for service-based companies.
To put it in perspective:
If your company earns $1,000,000 in net profit, under Act 60, you’d pay just $40,000 in Puerto Rico corporate tax—leaving $960,000 to reinvest or distribute.
100% Exemption on Dividends
Another major benefit is the 100% tax exemption on dividends distributed from the Puerto Rico entity to its owners.
This means once you’ve paid the 4% corporate tax, you can distribute profits to shareholders without additional U.S. federal taxation—provided certain conditions are met. It’s one of the few legal ways to significantly minimize double taxation.
Types of Export Services Eligible Under Act 60
Eligible export services include, but are not limited to:
Business consulting and advisory services
Advertising, public relations, and marketing
Research and development
Software design and IT services
Legal, accounting, and tax consulting
Investment and financial advisory
Creative industries like film production and design
Essentially, if your service can be performed remotely for clients outside Puerto Rico, it may qualify.
Key Benefits of the Act 60 Export Services Incentive
Here’s why so many entrepreneurs are relocating to Puerto Rico:
4% corporate tax rate on export service income
100% exemption on dividends and distributions
Reduced operational costs and access to U.S. financial systems
No federal income tax on Puerto Rico-sourced income
Access to a bilingual, skilled workforce
These benefits combine to create one of the most favorable tax environments in the world.
Requirements for Compliance
While the benefits are immense, compliance is critical. You must:
Maintain proper accounting records
Submit annual reports and tax filings
Renew your tax decree every year
Ensure services are strictly rendered to non-resident clients
Failure to comply can result in penalties or revocation of your tax decree.
How to Apply for Act 60 Export Services
Step 1: Form a Puerto Rico Entity
Incorporate your business under Puerto Rico law as a corporation or LLC.
Step 2: Apply for the Tax Decree
Submit your Act 60 Tax Incentive Application through the Puerto Rico Department of Economic Development and Commerce (DDEC) portal.
Step 3: Pay Required Fees
An application fee of $750 (subject to change) is required, along with a one-time acceptance fee.
Step 4: Wait for Approval
Once reviewed, your business receives a Tax Exemption Decree, which typically lasts 15 years and can be renewed for another 15.
Maintaining Eligibility
To keep your benefits:
Keep at least one full-time Puerto Rico employee (depending on the industry)
Operate from a physical office on the island
Submit annual compliance certifications
Maintain valid business licenses
Following these steps ensures you continue to enjoy all Act 60 advantages.
Potential Challenges and Misconceptions
Many people mistakenly believe they can “set up and forget” their Puerto Rico entity. However, the DDEC actively monitors compliance.
Other misconceptions include:
You must move to Puerto Rico (not always true for Act 60 businesses)
It’s only for the wealthy (many small businesses qualify)
It’s a loophole (it’s 100% legal and government-backed)
Act 60 vs. Other Global Tax Incentives
Compared to other tax-friendly jurisdictions like Panama, Ireland, or Singapore, Puerto Rico offers unique advantages:
U.S. legal and banking systems
U.S. dollar currency
No need for foreign visas for U.S. citizens
Strong intellectual property protection
These features make it far easier for American entrepreneurs to transition without complex offshore structures.
Future Outlook for Act 60 Export Services
As Puerto Rico continues to attract businesses, policymakers are fine-tuning Act 60 to ensure sustainability and fairness.
Future trends suggest greater emphasis on:
Local hiring
Innovation and technology exports
Environmental sustainability
The incentive’s longevity depends on maintaining transparency and compliance—but for now, it remains one of the world’s top tax incentives.
Conclusion
Puerto Rico’s Act 60 Export Services program is more than a tax break—it’s a gateway to global growth. With a 4% corporate tax rate, 100% dividend exemption, and access to U.S. markets, it’s an unmatched opportunity for service-based entrepreneurs.
If you’re seeking to optimize your tax structure while scaling globally, Act 60 might be your best move.
FAQs
1. How long does an Act 60 decree last?
Typically, the decree lasts for 15 years and can be renewed for another 15 years.
2. Do I need to move to Puerto Rico to qualify?
Not necessarily for export services, but physical presence and operations in Puerto Rico are required.
3. Can digital businesses qualify?
Yes! Many online businesses offering remote services to clients outside Puerto Rico are eligible.
4. What happens if I serve a Puerto Rican client?
Income from Puerto Rico clients is excluded from the 4% tax benefit and taxed at standard rates.
5. Is Act 60 still valid in 2025?
Yes, as of 2025, Act 60 remains in effect, though periodic updates and compliance adjustments are common.