The Act 60 Export Services Incentive is one of the most powerful tax strategies available in Puerto Rico today. It allows eligible businesses to reduce their corporate tax rate to just 4%, making it a highly attractive option for entrepreneurs, consultants, and remote service providers. If you’ve ever dreamed of keeping more of your profits while operating within a U.S. jurisdiction, this program might be exactly what you’re looking for.

At its core, the Export Services Incentive is designed to attract global businesses that provide services to clients outside Puerto Rico. The government wants to bring in foreign revenue while creating jobs and economic activity on the island. So, in exchange for relocating or setting up operations there, businesses get access to significant tax reductions.

Overview of Export Services Incentive

The Export Services program focuses on companies that generate income from outside Puerto Rico. This includes a wide range of industries such as consulting, marketing, IT services, financial advisory, and software development. The key requirement is that your clients must primarily be located outside Puerto Rico.

Think of it like this: if your business operates globally but you’re physically based in Puerto Rico, you can take advantage of the island’s tax benefits. It’s a simple concept with powerful financial implications.

History and Evolution from Act 20

Before Act 60, the Export Services incentive existed under Act 20, which was introduced in 2012. Act 60 consolidated Act 20 and other tax laws into a single, streamlined code in 2019.

This consolidation made the system easier to navigate and more accessible to new applicants. While the core benefits remained largely the same, Act 60 introduced additional compliance requirements and long-term stability, making it a more robust framework overall.

Key Benefits of Act 60 Export Services
4% Corporate Tax Rate

The headline benefit of Act 60 Export Services is the 4% corporate tax rate. Compared to the U.S. federal corporate tax rate of 21%—plus additional state taxes—this is a massive reduction.

Imagine running a business that earns $1 million annually. In the mainland U.S., your tax bill could easily exceed $250,000. Under Act 60, that same business might pay just $40,000. That’s a difference that can completely transform your financial trajectory.

100% Dividend Tax Exemption

Another major advantage is the 100% tax exemption on dividends distributed from your Puerto Rico company to you as an individual resident.

This means you’re not taxed again when you take profits out of your business. In many jurisdictions, dividends are taxed twice—once at the corporate level and again at the personal level. Act 60 eliminates this double taxation for qualifying individuals.

Tax Credits and Additional Incentives

In addition to low tax rates, businesses may also qualify for various tax credits, including credits for job creation and investment in local infrastructure. These incentives further reduce your effective tax burden and encourage long-term growth.

Eligible Businesses Under Act 60
Service-Based Businesses

The program is specifically designed for service-based businesses. This includes industries like:

Consulting and advisory services
Marketing and advertising agencies
Legal and financial services
IT and software development

If your business provides intangible services rather than physical products, you’re likely a good fit.

Digital and Remote Businesses

Digital entrepreneurs are among the biggest beneficiaries of Act 60. Whether you run an online business, SaaS platform, or remote consulting firm, you can operate from Puerto Rico while serving clients worldwide.

This flexibility makes the program especially appealing in today’s remote-first economy.

Requirements to Qualify
Puerto Rico Entity Setup

To qualify, you must establish a legal entity in Puerto Rico, typically a corporation or LLC. This entity will be the one receiving the tax benefits.

Local Employment Requirement

Most businesses are required to hire at least one local employee. This ensures that the program contributes to the local economy.

Export Services Criteria

Your services must be exported—meaning your clients are located outside Puerto Rico. If you primarily serve local customers, you won’t qualify for this incentive.

Residency Rules for Business Owners
Bona Fide Residency Explained

To fully benefit from Act 60, business owners often need to become bona fide residents of Puerto Rico. This involves meeting IRS requirements that prove Puerto Rico is your primary place of residence.

183-Day Rule

The most well-known requirement is spending at least 183 days per year in Puerto Rico. But it’s not just about time—you also need to establish genuine ties to the island, such as housing, banking, and social connections.

Application Process Step-by-Step
Filing for a Tax Decree

The first step is applying for a tax exemption decree through Puerto Rico’s Department of Economic Development and Commerce. This decree is essentially a contract that guarantees your tax benefits.

Government Approval Timeline

Approval typically takes a few months, depending on the complexity of your application. Once approved, your benefits are locked in for a set period, often up to 15–20 years or more.

Compliance and Ongoing Obligations

Act 60 isn’t a “set it and forget it” program. Businesses must meet ongoing compliance requirements, including:

Filing annual reports
Paying a fixed annual fee
Maintaining local employment
Adhering to residency rules

Failing to comply can result in losing your tax benefits, so it’s important to stay organized and proactive.

Real-Life Tax Savings Example

Let’s say you run a digital marketing agency generating $800,000 in annual profit. In the U.S., your combined federal and state taxes could reach $250,000 or more.

Under Act 60, your tax bill drops to approximately $32,000. That’s over $200,000 in annual savings—money you can reinvest into your business or keep as profit.

Comparison Table: Act 60 vs US Tax System
Feature    Act 60 Export Services    United States
Corporate Tax Rate    4%    21%+
Dividend Tax    0%    Up to 20%
Global Income    Favorable    Fully Taxed
Double Taxation    Avoided    Common
Pros and Cons of Export Services Incentive
Advantages

The benefits are undeniable—low taxes, high profitability, and access to a U.S. jurisdiction. It’s a powerful combination that’s hard to find elsewhere.

Disadvantages

However, relocation is a major commitment. You must genuinely live in Puerto Rico and comply with strict rules. There are also setup costs and administrative requirements to consider.

Conclusion

The Act 60 Export Services Incentive is one of the most effective legal tax strategies available today. With a 4% corporate tax rate and tax-free dividends, it offers unmatched opportunities for entrepreneurs and service-based businesses.

But success requires careful planning, compliance, and a willingness to relocate. If you’re ready to make that move, Puerto Rico could become your gateway to significant tax savings and long-term financial growth.

FAQs
1. What businesses qualify for Act 60 Export Services?

Service-based businesses that provide services to clients outside Puerto Rico.

2. Do I need to live in Puerto Rico?

Yes, to maximize benefits, you typically need to become a bona fide resident.

3. How long do the tax benefits last?

Usually 15–20 years, depending on the decree.

4. Can I run an online business under Act 60?

Yes, digital and remote businesses are ideal candidates.

5. Is the 4% tax rate guaranteed?

Yes, once approved, your tax rate is locked in through your decree.