Chapter Seventeen

Act 60 and Your Business

The individual investor provisions of Act 60 (Chapter 2) and the export services provisions (Chapter 3) can be extraordinarily powerful in combination — but they require careful structuring and genuine operational substance.

Chapter 3 — Export Services in Brief

Under Chapter 3 of Act 60, eligible businesses operating in Puerto Rico that export services to clients outside the island can qualify for:

A flat 4% Puerto Rico income tax rate on eligible export service income

100% exemption on dividends distributed from exempt business earnings

Up to 75% property tax exemption on business property

Up to 50% municipal license tax exemption

Eligible service categories are broad — consulting, technology, legal, financial, marketing, accounting, and many others. The business must have a genuine presence in Puerto Rico: a real office, real operations, and at minimum one full-time employee on the island (which can be the owner).

Combining Chapter 2 and Chapter 3

Many Act 60 residents operate both: they hold an Individual Investor decree under Chapter 2 (for personal investment income) and an Export Services decree under Chapter 3 (for business income). When properly structured, this combination can produce an extraordinarily tax-efficient overall financial picture.

The structuring requires careful attention to:

How income is characterized between personal and business

How the business is organized (LLC, S-Corp, C-Corp — each has different implications)

How compensation from the business to the individual owner is structured

How the Puerto Rico sourcing rules apply to both the individual and the business

This is the area where the quality of your professional team matters most. Get it right in the setup and it runs smoothly for years. Get it wrong and you're looking at restructuring costs, potential compliance exposure, and a great deal of avoidable stress.

⚠ Important Notice

The combination of IRI and Export Services benefits involves complex tax structuring that varies significantly by business type, income character, and individual circumstances. Do not attempt this without experienced professional guidance. The right structure is powerful. The wrong structure is expensive.

This chapter provides a general overview of Act 60's business provisions. It is not legal or tax advice. Individual and business structuring under Act 60 requires qualified professional guidance specific to your situation.

Substance Has to Match the Structure

A Puerto Rico entity, address, and bank account do not by themselves relocate a business. Where the work is performed, where decisions are made, who the clients are, how employees and contractors are managed, and how income is sourced all matter. Build an operating map with Puerto Rico tax counsel and your CPA before changing invoices, payroll, contracts, or ownership.

Keep a decision file: board minutes, contracts, travel records, office expenses, payroll records, and the ordinary evidence showing that Puerto Rico is where the business is actually directed. Compliance is strongest when the documents describe the life and operation you genuinely have.