If you’ve been exploring ways to grow your business while minimizing tax burdens, Act 60’s Export Services provisions might just be the opportunity you’ve been looking for. Puerto Rico offers one of the most competitive corporate tax rates in the world, giving service-based companies the chance to thrive in a U.S. jurisdiction while legally lowering their tax obligations.
History of Export Services Incentives
The roots of Act 60 trace back to Act 20 (Export Services Act), which aimed to turn Puerto Rico into a hub for global service companies. In 2019, Act 20 merged with other laws under the umbrella of Act 60, creating a single, streamlined framework for tax incentives.
Purpose of Act 60 Export Services
Puerto Rico established this program to:
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Attract foreign and U.S. businesses to operate from the island
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Create new jobs for Puerto Ricans in high-demand industries
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Diversify the economy beyond traditional manufacturing and tourism
How Export Services Work Under Act 60
In simple terms, an “export service” is when a business in Puerto Rico provides services to clients outside the island. As long as the service is performed in Puerto Rico but consumed elsewhere, it qualifies as an export service.
Corporate Tax Benefits
Here’s where Act 60 really shines:
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Fixed 4% corporate tax rate on eligible income
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100% tax exemption on dividends paid from export service earnings
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75–90% exemption from municipal and property taxes depending on the location
Eligible Export Services
Businesses in various sectors can benefit, including:
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Consulting & Advisory – management, law, accounting, finance
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IT & Software Development – coding, SaaS, cybersecurity
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Creative Industries – marketing, design, media, advertising
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Financial Services – hedge funds, asset management, investment firms
Industries That Benefit Most
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Technology firms building global software platforms
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Financial firms running investment funds and advisory services
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Outsourcing companies offering customer service and back-office support
Application Process for Export Services
Getting approved isn’t complicated but requires precision:
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Apply with the Department of Economic Development and Commerce (DDEC)
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Submit business plans, financial forecasts, and organizational documents
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Pay the application fees
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Wait for approval, typically 3–6 months
Residency vs. Non-Residency for Business Owners
One of the best parts? You don’t necessarily have to move to Puerto Rico to establish an export services company. The business must be physically based on the island, but owners can live elsewhere (though personal tax benefits only apply if you become a resident).
Compliance Obligations
To keep enjoying benefits, companies must:
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File annual reports
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Stay in good standing with DDEC
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Maintain genuine business operations in Puerto Rico
Advantages of Act 60 Export Services
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Ultra-competitive 4% tax rate
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Operate within U.S. jurisdiction (federal legal protections, banking, contracts)
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Strategic location with access to U.S. and Latin American markets
Challenges and Criticisms
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Administrative compliance can be complex
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Critics argue it mostly benefits wealthy outsiders
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Some locals worry about rising costs and inequality
Act 60 vs. Other Offshore Jurisdictions
Compared to other tax-friendly destinations, Puerto Rico has unique advantages:
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Unlike the Cayman Islands, Puerto Rico offers direct U.S. legal and financial protections
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Unlike Panama, there’s no need for foreign residency or banking hurdles
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You remain under the U.S. tax system while enjoying territorial tax breaks
Case Studies of Export Services Success
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Small consulting firm moved operations to Puerto Rico, reducing its tax rate from 35% to 4% and expanding staff locally.
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Large tech company established a Puerto Rico subsidiary, leveraging cost savings to reinvest in R&D.
Future of Act 60 Export Services
The future looks bright but uncertain. Political debates may lead to reforms, but as of now, Act 60 remains a critical driver of Puerto Rico’s economy.
Conclusion
Act 60 Export Services is a golden opportunity for businesses that serve global clients. With an unbeatable 4% corporate tax rate, generous exemptions, and the backing of the U.S. legal framework, Puerto Rico stands as one of the most compelling places in the world to relocate or launch a service-based business.
FAQs
1. What is considered an export service under Act 60?
Any service provided in Puerto Rico and consumed outside the island qualifies.
2. Do I need to live in Puerto Rico to benefit?
No. Your business can qualify without you moving, but personal tax breaks require residency.
3. How long does it take to get approved?
Most applications take 3–6 months, depending on complexity.
4. Can startups apply for Act 60 Export Services?
Yes. Even small and newly established companies can qualify.
5. Is Act 60 permanent?
It may evolve, but currently it remains central to Puerto Rico’s economic development strategy.