If you’ve ever dreamed of paying less in taxes while running your business from a tropical island, Puerto Rico’s Act 60 Export Services might sound like paradise. This government program offers incredible tax benefits to U.S. citizens and companies that provide services to clients outside Puerto Rico. Let’s break down what this means and why it’s become one of the hottest business incentives in the world.
What is Act 60?
Act 60, also known as the Puerto Rico Incentives Code, was established in 2019 to consolidate various tax incentive programs — including Acts 20 and 22 — under one unified law. It’s designed to attract investors, entrepreneurs, and professionals who can contribute to Puerto Rico’s growing economy while benefiting from its advantageous tax structure.
Why Act 60 is Important for Businesses
For service-based companies, high taxes can kill profitability. Act 60 changes that by offering a 4% corporate tax rate — one of the lowest in the world — for qualifying export service businesses. This allows entrepreneurs to reinvest more profits, expand operations, and compete globally.
Purpose of Export Services Under Act 60
The goal is simple: encourage businesses to export services from Puerto Rico to clients abroad. By doing so, Puerto Rico strengthens its economy while giving business owners unmatched tax incentives.
Background of Act 60
The Evolution from Acts 20 and 22
Before Act 60, Puerto Rico introduced Act 20 (Export Services Act) and Act 22 (Individual Investors Act) in 2012. Act 20 focused on corporate tax incentives, while Act 22 attracted individual investors. Act 60 merged both to simplify the system.
The 2019 Act 60 Consolidation
The 2019 reform created a single, more transparent system — ensuring easier access and compliance for both individuals and companies.
Simplifying Tax Incentives Under One Law
By merging multiple acts into one, Puerto Rico made it much simpler for foreign investors and entrepreneurs to qualify without navigating complex legal overlaps.
Understanding Export Services
What Counts as an Export Service
An export service means any service provided from Puerto Rico to a client located outside the island. It’s not about shipping products — it’s about offering knowledge, consulting, technology, and digital expertise across borders.
Examples of Eligible Businesses
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Legal and tax consulting firms
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Software developers
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Financial analysts and investment advisors
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Marketing and design agencies
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Remote service providers and call centers
Global Reach from Puerto Rico
Companies can operate entirely online and serve international clients while enjoying Puerto Rico’s strategic location and time zone — a perfect bridge between the U.S. and Latin America.
Tax Benefits Under Act 60 Export Services
Corporate Tax Rate Reduction
Businesses that qualify pay just 4% corporate tax, compared to the U.S. federal rate of 21%. That’s a massive difference in savings.
100% Tax Exemption on Dividends
Owners can enjoy 100% tax-free distributions from earnings generated under Act 60 — a major draw for entrepreneurs seeking financial freedom.
Exemption on Property and Municipal Taxes
Many businesses also qualify for 75% to 100% exemptions on property and municipal taxes, reducing operational costs even further.
Eligibility Criteria for Export Services
Who Can Apply
Any individual or corporation that provides qualified services from Puerto Rico to clients outside the island can apply.
Requirements for Individual and Corporate Applicants
Applicants must:
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Establish residency or legal presence in Puerto Rico.
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Employ at least one local worker (in most cases).
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Provide export services only to non-Puerto Rico clients.
Location and Residency Rules
To maintain eligibility, individuals must spend at least 183 days per year in Puerto Rico and make it their primary home.
Steps to Apply for Act 60 Export Services
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Register a Business in Puerto Rico.
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Apply for a Tax Incentive Grant through the DDEC portal.
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Comply with ongoing reporting and annual fees.
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Maintain economic substance — meaning genuine business activity on the island.
Act 60 and Remote Work Opportunities
How Digital Nomads and Consultants Benefit
With remote work booming, Act 60 has become a haven for digital entrepreneurs, consultants, and freelancers. You can work from the beach and still enjoy world-class tax benefits.
Growing Popularity Among U.S. Entrepreneurs
From YouTubers to tech startups, many Americans are relocating to Puerto Rico to take advantage of the incentives while staying within U.S. jurisdiction.
Legal and Financial Considerations
Compliance with IRS and Puerto Rico Rules
Even though Puerto Rico has its own tax system, U.S. citizens must still comply with federal reporting requirements. Working with a tax attorney familiar with both systems is essential.
Avoiding Common Mistakes
Common pitfalls include failing to establish genuine residency, incomplete filings, or offering services to Puerto Rican clients (which disqualifies income from benefits).
Real-World Examples of Export Service Businesses
Professional Services
Attorneys, accountants, and consultants offering expertise globally.
E-commerce and Online Companies
Businesses managing websites, SEO, or drop-shipping operations for clients abroad.
IT, Finance, and Digital Marketing Firms
Tech and creative firms thrive due to low taxes and high internet infrastructure.
Economic Impact of Act 60
Boosting Puerto Rico’s Economy
Act 60 has brought thousands of businesses and millions in investments to Puerto Rico, revitalizing local economies.
Creating Employment and Innovation Hubs
Local hiring requirements have generated skilled job opportunities and increased entrepreneurship on the island.
Challenges and Criticism
Misunderstandings About Tax Avoidance
Critics often confuse Act 60 with tax shelters, but it’s a legitimate government-backed economic development tool.
Regulatory Updates and Tightened Rules
The Puerto Rican government has strengthened compliance measures to ensure real contributions to the island’s growth.
How to Maintain Compliance
Record-Keeping and Reporting
Businesses must submit annual reports, maintain accurate books, and demonstrate active business operations.
Renewals and Monitoring
Tax decrees generally last for 15–20 years, but require proper maintenance and renewal under DDEC guidelines.
Comparing Act 60 with Other Global Tax Incentives
How It Stands Against Offshore Jurisdictions
Unlike offshore havens, Puerto Rico is a U.S. territory, offering transparency and legal safety for U.S. citizens.
Why Puerto Rico is Unique for U.S. Citizens
You get the benefits of low taxes without renouncing U.S. citizenship — an advantage few other jurisdictions can match.
Expert Advice for New Applicants
Working with Legal and Tax Professionals
Partner with licensed Puerto Rican professionals who specialize in Act 60 applications to ensure smooth compliance.
Common Mistakes to Avoid
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Ignoring residency rules
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Mixing export and local income
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Failing to meet annual requirements
Conclusion
Act 60 Export Services represent one of the most attractive tax opportunities in the world for U.S. entrepreneurs. It’s not just about saving on taxes — it’s about creating a sustainable business presence that contributes to Puerto Rico’s growing economy. With careful planning and compliance, Act 60 can transform the way you do business — all while enjoying the beauty of the Caribbean.
FAQs
1. What is the main benefit of Act 60 Export Services?
The biggest benefit is the 4% corporate tax rate and 100% tax exemption on dividends.
2. Can U.S. citizens qualify for Act 60?
Yes, U.S. citizens can qualify without giving up their citizenship.
3. What types of businesses qualify?
Any service-based business providing services to clients outside Puerto Rico.
4. How long does an Act 60 decree last?
Most decrees are valid for 15 to 20 years, depending on compliance.
5. Do I need to move to Puerto Rico to qualify?
Yes, individuals must become bona fide residents of Puerto Rico to enjoy full benefits.