Export Goods and Services
Act 60 Tax Incentives / Export Goods and Services
What is the Export Goods and Services Incentive?
The purpose of the Export Goods and Services Incentive, is to promote the development of new service businesses in Puerto Rico by attracting outside revenue into Puerto Rico, and thereby creating new jobs. Puerto Rico’s goal is to grow Puerto Rico into a hub for international business services
This is one of Puerto Rico’s most popular tax incentive programs.
We have the ability to streamline the process of obtaining your Export Goods and Services tax incentive, as we have for many other business owners.
This incentive is specifically designed for service and trade businesses that can perform their work from within Puerto Rico for clients outside of Puerto Rico. Such businesses can apply for a tax exemption decree (grant) under Act 60. Once accepted, the grant is for a term of 15 years, and is renewable for an additional 15 years, as long as it maintains compliant with the law and the rules of the program.
Benefits
Under this incentive, all eligible export goods and services business income:
- Is exempt from US taxation under IRC §933 and IRC §937
- Has a Puerto Rico corporate income tax rate of 4% (businesses located in Vieques or Culebra, and businesses with income under $3MM, are eligible for only 2% tax!)
- Distributions are taxed at 0% to PR ‘bona fide’ resident owners
Eligible Business Types
- Research and development
- Advertising and public relations
- Economic, environmental, technological, scientific, management, marketing, human resources, information and audit consulting
- Advisory services on matters relating to any trade or business
- Commercial arts and graphic services
- Production of construction drawings, architectural and engineering services and project management
- Professional services such as legal, tax and accounting
- Corporate headquarters
- Electronic data processing centers
- Development of computer programs
- Voice and data telecommunications between persons located outside of Puerto Rico
- Call centers
- Shared services centers (“shared services”) including but not limited to accounting, finance, taxes, auditing, marketing, engineering, quality control, human resources, communications, electronic data processing and other centralized management services
- Storage and distributions centers (“hubs”)
- Educational and training services
- Hospital and laboratory services
- Investment banking and other financial services
- Any other service that the Government of Puerto Rico later determines that must be treated as an eligible service
Application Process
We have the ability to streamline the process of obtaining your tax incentive by assisting you with developing all of the necessary documents to apply.
How long is this incentive valid?
The initial grant is for a period of 15 years, with one possible 15 year extension.
How to Qualify
To take advantage of this incentives, you must meet the following conditions:
- You must be an owner or member of a Puerto Rico business entity that has been granted a tax exemption decree and is in compliance with all of its legal obligations, including employment of employees that are Puerto Rico residents (the number of employees is determined by revenue volume, starting with 1 employee required at $3MM).
- The income for which you desire to receive the tax exemptions must be Puerto Rico sourced and effectively connected to Puerto Rico as “Non-U.S. Source Income”.
- You must be a “bona fide resident” of Puerto Rico if and when you wish to receive the tax benefits personally.
- File an annual report with the Puerto Rico government.
Eligible Income
Export Services Income is eligible under this program if it is income from eligible services performed within Puerto Rico or income effectively connected with the conduct of a trade or business within Puerto Rico. The work must be done for non-resident individuals and clients external to Puerto Rico, including clients in the US.
Some businesses may require travel external to Puerto Rico for marketing purposes or to maintain current client relationships. Such time performing these non-income producing activities may not need to be counted against the services income. However, if you perform billable activities while traveling outside of Puerto Rico, that income must be counted as US-sourced income and is not eligible for the lower level of income tax.
We Can Help
Our company helps people like you take advantage of Puerto Rico’s excellent tax incentives! We can help you determine which tax incentives are right for you, help you plan your residency and relocation strategy, and simplify the entire process for you.
Contact us for a free initial consultation.
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