ACT 60

Export Incentives

With an established qualifying business, owners can enjoy tax benefits: 

• 4% corporate tax rate
• 100% tax exemption from earnings and profits distributions
• 50% municipal tax exemption
• 75-100% tax exemption on municipal and state property taxes depending on the size of your business for its first several years of operation

Your business model must be solid and focus on exporting services outside of Puerto Rico. The business owner must take out a reasonable salary for themselves (which is not tax exempt). Businesses that thrive under this Act are consulting firms, auditing firms, or even marketing businesses. 

How to Qualify

Existing businesses can qualify one of these two ways:

1. Move entire business and employees to PR and stopping all operations within the US. 
2. So the business can be taxed under Act 60, you will need to establish a Puerto Rican secondary location for your business and record business income, expenses, and profit related to this new entity. 

There is a one-time fee on your initial application of $750. After, your annual report will require a $300 fee. 

Individual Resident Investor Tax Incentive

The investor tax incentives are the most sought after and are very generous: 

• 100% tax exemption from PR income taxes on all dividends
• 100% tax exemption from all PR incomes taxes on interest
• 100% tax exemption from all PR taxes on short- and long-term capital gains
• 100% tax exemption on all crypto-assets

Take note: To qualify you must become a bona fide resident of Puetro Rico—meaning Puerto Rico becomes you tax home. 

Residency Test Overview for Passing: 

There are 3 main tests to pass: 

1. Be present in Puerto Rico 183 days each tax year
2. Have your main office or primary residency in Puerto Rico, making it your tax home
3. Purchase a home in PR, move family and yourself entirely there, register to vote on the island and have a Puerto Rican driver’s license. Make a thorough commitment to the island life. 

Capital Gains before Moving

Capital gains acquired prior to moving are treated entirely different depending on when they were accrued: 

• They will be taxed at the US rate if within 10 years of your move
• If they’re done so 10 years after your move, they will be taxed at Puerto Rico’s flat tax rate and no US taxes will be owed on them

Applying for the Individual Resident Investor Act

Due with your application is a $750 fee that is submitted to the Office of Industrial Tax Exemption. Once approved, you will pay the one-time acceptance fee of $5000. And afterwards, annually, you will have to make a charitable donation of $10,000 and pay the $300 fee with the report.