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