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ACT 20
Export Services Act
Formally known as the “Export Services Act”, incentives new Puerto Rican service-based businesses with a variety of tax benefits. Since 2012, Act 20 has attracted over 2,000 new businesses to the island and is a part of a large initiative to transform Puerto Rico from a manufacturing economy to a 21st century, service-based economy.
BENEFITS
4% flat corporate income tax rate vs. 21% in the US
100% exemption of profit and earnings distributions
Receive 100% exemption on property taxes
Receive 60-90% exemption on local taxes
The Legislative Assembly of Puerto Rico has explicitly listed 20+ industries that can qualify for Act 20 treatment. In addition to the following list, any other service may be acceptable depending on various economic factors.
- Accounting
- Advertising
- Agricultural
- Architecture
- Consulting
- Distribution
- Engineering
- Financial Services
- Investment Banking
- Legal Manufacturing
+ More
- Medical
- Public Relations
- R&D
- Software
- Telecom
- Trading
In addition to qualifying as an eligible service, Puerto Rico has straightforward procedures that must be met for Act 20 compliance.
- Receive approval from Puerto Rican government (6 week waiting period)
- Pay $750 Application Fee
- Must be a new Puerto Rican business with no nexus elsewhere