Serving Clients Off the Island? You May Be Leaving Money on the Table There is a persistent and costly myth in Puerto Rico: that Act No. 60-2019, as amended, known as the Puerto Rico Incentives Code (“Act 60”), is a tax break reserved for wealthy foreigners. Local business owners hear “tax incentives” and assume the conversation isn’t about them. So they keep paying full freight, year after year, while a tool built largely for them sits unused. The numbers tell a different story. Roughly 65% of Act 60’s incentives are dedicated to Puerto Rico’s own economic development, and more than 60% of all decrees granted over the last 27 years have gone to Puerto Rican entrepreneurs. The most popular of these, by a wide margin, is the Export of Services decree (formerly Act No. 20-2012, as amended). It currently draws the highest volume of decree applications at the Department of Economic Development and Commerce (DDEC). If you provide a service from Puerto Rico to clients located outside the island, this chapter was written with you in mind. What “Export of Services” actually means The phrase sounds technical, but the idea is simple. You are exporting a service when you perform it from Puerto Rico for a client located somewhere else. Your office, your team, and your work stay on the island. Your customer are in the US (think Florida, Texas, New York), Virgin Islands, Spain, Latin America, or anywhere beyond Puerto Rico. That’s it. You don’t ship a product. You don’t open a foreign branch. You simply do what you already do, for clients who happen to be elsewhere. The rule that matters most: the 4% rate applies only to income generated from Puerto Rico through exported services. If your business serves both local and international clients, that’s fine. You request a decree covering the export portion of your income, and that portion is taxed at the preferential rate while your local work is treated normally. The condition is recordkeeping: you must maintain books, records, and billing that clearly separate export income, costs, and expenses to the satisfaction of the Treasury Secretary. The 4% rate then applies to the export portion, and your local work is taxed normally. The benefits: more than just a lower rate Securing an Export of Services decree is not a one-time discount. It is a contract between your business and the Government of Puerto Rico, carrying constitutional protection and lasting up to 15 years, with the option to renew for another 15 years. Because it is an agreement with the government itself and not with any particular administration, it gives you a stable foundation to plan around for years at a time. The core benefits include: 4% fixed income tax rate on income derived from your eligible export activity. 100% exemption on dividends. Distributions of those earnings to you as the owner are fully exempt. 75% exemption on real and personal property taxes (CRIM). 50% exemption on municipal taxes (patente). For a business owner, the dividend exemption alone can be transformative. It means the profit you pull out of the company to reinvest or pay yourself isn’t eroded a second time. The PYME advantage: a 2% rate for smaller businesses Small and medium businesses (“PYME” by its Spanish acronym) have an additional gear. If your business has an average business volume of $3 million or less over the prior three taxable years and had not begun operations before Act 60 took effect, you may qualify as a “New PYME.” That status lowers the rate from 4% to 2% for the first five years of the decree. During those five years, you also pay 0% in municipal taxes (patente) and 0% in property taxes (CRIM). After year five, the rate steps to 4% and the property and municipal exemptions move to 75% and 50% for the remainder of the decree. It’s worth understanding that the PYME rate is a modifier applied on top of an Export of Services decree, not a standalone program. You qualify under Export of Services first, then layer the PYME rate on top if eligible. For a growing company, that is essentially capital you fund your own expansion with, instead of sending it to the government. Does your service qualify? Probably. Act 60 lists 19 categories of eligible service activities, and they are broad. They include: Research and development. Scientific, technical, or commercial research performed in Puerto Rico for clients elsewhere. Think third-party contract research, contract labs, product testing, and innovation work where the findings are delivered to a company off the island. Advertising and public relations. Agencies and consultants that build campaigns, manage media, handle press, and shape reputation for clients located outside Puerto Rico. Consulting. One of the broadest categories. It expressly covers economic, environmental, technological, scientific, managerial, marketing, human resources, IT, and audit consulting. Most advisory firms with a defined specialty fit somewhere here. Advisory services on any industry or business. A catch-all within consulting. Where category 3 names specific disciplines, this covers advisory work on matters tied to any industry, giving room for niche or cross-disciplinary advisors. Creative industries. It reaches ticket sales made outside Puerto Rico (or bought by tourists here), transmission and recording rights sold to audiences off the island, musical productions, and eSports and Fantasy League events held in Puerto Rico. This is the category built for entertainment, media, and content producers. Construction blueprints, engineering, architecture, and project management. Design and technical services for projects, including the drawings themselves and the management of the project, performed for external clients. Professional services. Specifically legal, tax, and accounting. A Puerto Rico law firm or CPA serving mainland or foreign clients exports under this category, as long as the work doesn’t touch Puerto Rico (more on that limit below). Centralized management services. Strategic direction, planning, distribution, logistics, and budgeting run out of a company’s headquarters or regional offices. It also explicitly covers strategic and organizational planning of processes, distribution, and logistics for persons outside Puerto Rico. This
The Tourism Tax Benefits Puerto Rico Built for You
Act 60 Tourism Incentives Puerto Rico, Explained for Entrepreneurs Who Actually Build Things Puerto Rico’s Act 60 Tourism Chapter isn’t just for major hotel chains. It’s a powerful tax framework built for the entire visitor economy, from mountain glamping to nautical charters. When Mateo first walked his family’s acreage in the mountains of Utuado, he didn’t see just a coffee farm. He saw a destination. He envisioned luxury tents above the clouds, farm-to-table dining, and guided agrotourism tours: a business built around the land he already owned. What he didn’t immediately see was the legal and financial framework that would make it bankable. Like most Puerto Rican entrepreneurs, Mateo initially dismissed Act 60’s Tourism Chapter as something for billion-dollar hotel chains, not a startup in the cordillera. He also thought maybe he could turn to short-term rentals. The turning point came when he sat down with me and realized Puerto Rico’s Act 60 tourism incentives weren’t written just for the Ritz and there is a better way to do tourism in Puerto Rico than with AirBnB. Act 60 was written for the visitor economy, i.e. businesses that support tourism (from locals and foreigners). Every business that contributes to why people visit Puerto Rico, and spend money while they’re here, has a seat at this table. What Actually Qualifies as “Tourist Activity” On the lodging side, the qualifying designations are broader than most entrepreneurs expect. Traditional hotels and condohotels qualify with a minimum of fifteen units, a front desk, and employment requirements. Posadas Puertorriqueñas and Guest Houses operations with seven or more units. Bed and breakfasts (minimum three rooms, resident owner, breakfast required). For those building in the agricultural space, agro-lodging, which refers to accommodations with three rooms integrated into a property operated by a bona fide farmer with a tourism incentive extension, is also an eligible designation. Glamping operations with seven or more units qualify, as do tourist villas, defined as a minimum of seven separate units. Hostels with twelve or more beds and one room, round out the lodging side. The experience side is equally broad. Nautical tourism operations such as vessel charters and jet ski rentals qualify, as do tourist marinas. Agrotourism tours on bona fide agricultural land, theme parks, golf courses operated by or associated with a qualifying hotel, casinos operated within a qualifying tourism project, and medical tourism facilities serving patients traveling from around the globe are all eligible as well. And if a project doesn’t fit neatly into any of those categories, there is a catch-all provision under Section 5(i): the Secretary of DDEC has discretionary power to qualify facilities or activities that significantly stimulate the visitor economy. Also, important to note that lenders and property owners that rent their property to tourism developers can also benefit from incentives. Hotels Condohotel Bed and breakfast Posada Guest House Touristic Villa Agrotourism Paradores Vacation Club Glamping Golf course Nautical Tourism Tourism Marina Medical Tourism 15 year contract 4% Income Tax 0% Distributions 75% exemption on real and personal property taxes (CRIM) 50% exemption on municipal taxes (patente) 100% exemption on SUT 100% 4% capital gains 12% royalties The Decree: Your Tax Environment, Contractually Guaranteed Accessing Act 60’s benefits requires obtaining a tax exemption decree, a formal binding contract with the Government of Puerto Rico protected by the constitution. A decree typically runs 15 years with the option to renew for an additional 15. For a startup navigating unpredictable early revenue, that kind of stability is itself a strategic asset. Under the Tourism Chapter, a qualifying business enjoys a 4% fixed income tax rate on eligible tourism income. For businesses with annual revenue under $3 million in their first year, the PYME (Small and Medium Business) designation reduces that rate to 2% for the first five years, a meaningful advantage during the period when cash flow is most constrained. The income tax rate is only part of the picture. The decree also provides a 100% exemption on dividends, meaning profits distributed to the owner are not taxed at the individual level. For overhead, the law offers a 75% exemption on real and personal property taxes (CRIM) and a 50% exemption on municipal taxes (patente). For operations under construction, the 100% sales and use tax and excise tax exemption on qualifying goods, services, and 75% exemption on construction materials can represent a significant reduction in build-out costs. Tourism: Non-Dilutive Capital for the Build Tax Credits While the decree protects what you earn, Tourism Investment Tax Credits help fund the project itself. Think of these as government-issued certificates with a specific dollar value tied to your qualifying investment: non-dilutive capital that doesn’t require giving up equity. Under Act 60, entrepreneurs choose between two credit structures based on their cash flow needs. The 30% Tax Credit Option is front-loaded and favored by projects with significant upfront construction costs. An initial 10% of the credit is released upon obtaining financing, with the remaining 20% distributed in three parts starting at the anniversary of the first guest’s arrival. The 40% Tax Credit Option offers a larger total credit but is back-loaded: the entire 40% is distributed across three equal installments beginning only after that first anniversary of the commencement of operations and first guest stay. Choosing between them is a function of when the project needs capital most. Larger projects or those that the construction may take years will often prefer the 30% structure for its earlier liquidity. A project with lower construction costs but higher operational ramp-up may find the 40% structure more advantageous over time. Three Ways to Turn Credits into Cash Sophisticated operators do not wait for a tax liability to monetize these certificates. There are three primary paths. The most straightforward is direct offset: applying the credit against the business’s own Puerto Rico income tax liability, dollar for dollar. Alternatively, the tax credits can be sold on the secondary market to a third-party taxpayer for cash, which is the most common route. Conservative underwriting typically assumes 90 to 92 cents on the dollar, though peak demand around tax season has driven secondary market pricing as high as 94 to 95 cents. For those
No le pague taxes a Hacienda – legalmente.
Incentivo para Jóvenes Empresarios en Puerto Rico: Una Oportunidad para el Éxito Empresarial Puerto Rico tiene incentivos increíbles. El mejor es para que los empresarios jóvenes creen su negocio sin preocuparse del Hacienda, el CRIM o patentes municipales. La Ley Núm. 60-2019, según enmendada, conocida como el Código de Incentivos, (“Ley 60”) provee el Incentivo para Jóvenes Empresarios en Puerto Rico ofreciendo un apoyo financiero significativo para que estos jóvenes entre 16 y 35 años conviertan sus sueños en realidades. Este incentivo proporciona exenciones completas contributivas y beneficios económicos diseñados para fomentar la innovación, retención del talento joven y el crecimiento económico entre los jóvenes empresarios. 1. Beneficios Claves del Incentivo Los jóvenes empresarios que califiquen pueden disfrutar de los siguientes beneficios: Exención del 100% sobre el impuesto sobre ingresos – Aplica a los primeros tres años de operación o hasta alcanzar $500,000 en ingresos brutos, lo que ocurra primero. Exención del 100% sobre impuestos municipales, incluyendo: Impuesto sobre la Propiedad Mueble e Inmueble (CRIM) – Exención del pago de impuestos sobre bienes raíces y equipos comerciales. Patente Municipal – Exención del impuesto municipal normalmente aplicado a los ingresos de los negocios. Si eres Joven Empresario admitido a la práctica de la medicina, de la pediatría, sea un(a) cirujano(a) dentista o practique alguna especialidad de la odontología tienes un proceso expedito de solicitud. 2. ¿Quiénes son Elegibles? Para calificar al Incentivo para Jóvenes Empresarios, los solicitantes deben cumplir con los siguientes requisitos: Tener entre 16 y 35 años. Ser residente de Puerto Rico. Tener un grado de escuela superior o grado equivalente o estar estudiando para estos propósitos. Para un nuevo negocio en Puerto Rico que no haya estado operando previo a radicar la solicitud de decreto. Que el negocio no haya sido operado por una afiliada o por razón de reorganización. 3. Restricciones Tener solo un negocio nuevo. No tener otros decretos. Solo aplica a negocios que comenzaron luego de radicar la solicitud con el Departamento de Desarrollo Económico y Comercio (DDEC). El negocio sólo puede ser dueño jóvenes empresarios. 4. ¿Cómo Solicitar el Incentivo? El proceso de solicitud es más sencillo que otros decretos y está diseñado para agilizar el inicio de negocios: Organización: Determina si vas a formar una compañía como corporación intima, compañía de responsabilidad limitada o vas a operar como un DBA. Es importante que tu selección permita que los ingresos de la compañía fluyan a tu planilla, ya que el decreto es tuyo. Si no sabes que es mejor para ti, consulta una abogado o CPA que sepa. Prepara los documentos y la solicitud: Vas a necesitar describir la entidad, cual es el negocio que vas a ofrecer, si vas a tener un producto o servicio, y cuantos empleados vas a tener (te puedes incluir). También recomendamos explicar como generaría el negocio ingresos y alguna proyección de ingresos si la tienes. Recopila la Documentación Requerida – Debes obtener e incluir: Declaración jurada Copia de tu certificado de nacimiento, Identificación con foto emitida por PR o USA; Diploma de escuela superior, equivalente, o educación posterior. Si esta cursando estudios de escuela superior una evidencia que certifique dichos estudios. De Hacienda certificados de no deuda y radicación de planillas últimos 5 años (los consigues en SURI). Certificado de deuda de CRIM. Certificado de cumplimiento de ASUME De ser una compañía, se necesita adicionalmente De Hacienda certificados de no deuda y radicación de planillas últimos 5 años (los consigues en SURI). Certificado de deuda de CRIM. Certificado de cumplimiento de ASUME Certificado de formación o incorporación Información adicional que puedes proveer, pero no es requerida automáticamente por DDEC: registro de comerciante; un plan de negocios o, aunque sea unos párrafos explicando tu visión del negocio, plan de contratación y como la compañía va a generar ingresos; sí haz participado de alguna incubadora; certificado de antecedentes penales; curriculum vitae o resume y otros documentos que denoten tu capacidad de operar un negocio con éxito. Solicitar a través del Portal de Incentivos – Envía tu solicitud en línea a través del Portal de Incentivos de Puerto Rico. Aprobación y Cumplimiento – Una vez aprobado, presentas la aceptación mediante declaración jurada. Luego, debes proveer copia del decreto al CRIM y a la oficina de patente de tu municipio. Recuerda que el decreto te exime de pagar contribuciones sobre ingresos, de propiedad mueble e inmueble al igual que patente. No obstante, debes hacer las radicaciones apropiadas según sean requeridas y recuerda que tienes que pagar debes cumplir con todos los requisitos para mantener la elegibilidad a las exenciones. 5. Apoyo Adicional para Jóvenes Empresarios Puerto Rico también ofrece otros programas para fortalecer el éxito de los jóvenes empresarios, tales como: Incubadoras y Aceleradoras de Negocios – Programas como Grupo Guayacán, Parallel18, y Colmena66 ofrecen mentoría, redes de contactos, herramientas y acceso a capital. Subvenciones y Préstamos a Bajo Interés – El Banco de Desarrollo Económico (BDE) proporciona financiamiento y el decreto de joven empresario que puede hacer elegible para otros fondos del DDEC son los fondos de incentivos económicos y los créditos de investigación y desarrollo. Este apoyo financiero para ayudar a los emprendedores con su capital inicial. Estos recursos ayudan a los jóvenes empresarios a desarrollar modelos de negocio sostenibles y a recibir orientación de expertos. 6. ¿Por qué Puerto Rico? Puerto Rico cuenta con una combinación ideal de ubicación estratégica, jurisdicción estadounidense y beneficios contributivos para negocios, lo que lo convierte en un destino atractivo para los jóvenes empresarios. Además, el costo de vida es más bajo que en muchas ciudades principales de EE. UU., permitiendo a los emprendedores maximizar sus recursos financieros. La Ley 60 reemplazó la Ley Núm. 135-2014 con el objetivo de simplificar y mejorar el acceso a incentivos para jóvenes empresarios. Aunque los beneficios se mantienen en gran medida, la nueva ley ofrece un proceso más centralizado, exenciones más claras y mayor estabilidad en su implementación. Conclusión El Incentivo para Jóvenes Empresarios bajo la Ley 60 es una oportunidad única para jóvenes que desean establecer un negocio en Puerto Rico. Con hasta tres años de exenciones contributivas al 100% o hasta $500,000 en ingresos brutos, los jóvenes empresarios pueden construir el negocio de sus sueños y quedarse con más dinero