The purpose of Act 60 Export of Services is to promote the development of new businesses in Puerto Rico
Chapter 3 under the Puerto Rico Incentives Code (Act 60) provides for the Export of Services. Export Services were originally provided for under Act No. 20 of January 17, 2012 which established the "Act to Promote the Export of Services" (commonly known as 'Act 20'). Act 20 was later amended to include additional export services activities and specifically added 'Export Trading Companies' dedicated to the international trade of 'Goods' for consumption outside of Puerto Rico. Both Export of Services and Export Trade are provided for under separate Sections in Act 60.
The entirety of Act 60 is an economic development program. As with virtually all economic development programs, various tax incentives are used to attract, retain and expand businesses, create jobs, and induce investment into the community the economic development program serves. In this case, the community is the entire Commonwealth of Puerto Rico, a U.S. Territory. These Puerto Rico tax incentives have stimulated the inbound transfer of foreign businesses and investment to Puerto Rico. Many of these businesses are from the U.S. Since 2012 under Act 20, and continuing under Act 60, Export Services participants have helped to establish Puerto Rico as an international Export Services Hub. Act 60 continues to encourage existing local businesses to expand their services to persons and businesses outside of Puerto Rico, including to the United States.
Below is a brief description of the Act 60 Export Services program under each Section as provided by the Puerto Rico Department of Economic Development and Commerce (DEDC) and the Puerto Rico Incentive Code.
Act 60 Export Services Overview - Section 2031.01
ELIGIBLE BUSINESS
Section 2031.01 - The Export of Services applies with respect to any Person (natural or juridical) with an office or bona fide establishment located in Puerto Rico which carries out or may carry out the service activities, inside or outside Puerto Rico, that are considered Services for Export, and will be considered an Eligible Business for the tax incentives under Section 2031.01 when issued an Act 60 Export Services tax exemption decree.
Piloto151, our preferred co-working facility, qualifies as a 'bona fide' office and establishment for use under Act 60 as required.
SERVICES for EXPORT - NO CONNECTION to PUERTO RICO
Services for Export must be services rendered to benefit the following, provided that the services DO NOT have a Connection to Puerto Rico:
- A foreign Person (natural or juridical outside of Puerto Rico).
- A trust whose beneficiaries, trustors, and trustees are not Resident Individual Investors.
- An estate whose decedent, heirs, legatees, or executors are not Resident Individuals of Puerto Rico, or in the case of the decedent, had been a Resident Individual of Puerto Rico.
- A Person engaged in business in Puerto Rico provided the services do not have a Connection to Puerto Rico, and the services are intended for a client of said Person that also complies with any of the provisions under this section (said Person is also an Act 60 Eligible Business).
A Connection to Puerto Rico is when Services for Export are somehow related to Puerto Rico, including services associated with the following:
- Business or profitable activities which have been or shall be carried out in Puerto Rico;
- Advice on the laws and regulations of Puerto Rico, procedures and administrative orders of the Government of Puerto Rico, its agencies, public corporations, instrumentalities, or municipalities, as well as the precedents of the Courts of Puerto Rico;
- Lobbying with respect to the laws of Puerto Rico, regulations, and other administrative orders. For these purposes, lobbying shall mean any direct or indirect contact with elected officials, employees, or agents of the Government of Puerto Rico, its agencies, instrumentalities, public corporations, or municipalities with the intent of influencing any action or determination of the Government of Puerto Rico, its agencies, instrumentalities, public corporations, or municipalities;
- The sale of any property for use, consumption, or disposition in Puerto Rico; or
- Any other activity, situation, or circumstance related to Puerto Rico that is prescribed in the Incentives Regulations or other determination, administrative decision, or circular letter.
Act 60 Export Services Overview - Section 2031.01
ELIGIBLE BUSINESS
Section 2031.01 - The Export of Services applies with respect to any Person (natural or juridical) with an office or bona fide establishment located in Puerto Rico which carries out or may carry out the service activities, inside or outside Puerto Rico, that are considered Services for Export, and will be considered an Eligible Business for the tax incentives under Section 2031.01 when issued an Act 60 Export Services tax exemption decree.
Piloto151, our preferred co-working facility, qualifies as a 'bona fide' office and establishment for use under Act 60 is required.
SERVICES for EXPORT - NO CONNECTION to PUERTO RICO
Services for Export must be services rendered to benefit the following, provided that the services DO NOT have a Connection to Puerto Rico:
•. A foreign Person (natural or juridical outside of Puerto Rico).
•. A trust whose beneficiaries, trustors, and trustees are not Resident Individual Investors.
•. An estate whose decedent, heirs, legatees, or executors are not Resident Individuals of Puerto Rico, or in the case of the decedent, had been a Resident Individual of Puerto Rico.
•. A Person engaged in business in Puerto Rico provided the services do not have a Connection to Puerto Rico, and the services are intended for a client of said Person that also complies with any of the provisions under this section (said Person is also an Act 60 Eligible Business).
A Connection to Puerto Rico is when Services for Export are somehow related to Puerto Rico, including services associated with the following:
• Business or profitable activities which have been or shall be carried out in Puerto Rico;
• Advice on the laws and regulations of Puerto Rico, procedures and administrative orders of the Government of Puerto Rico, its agencies, public corporations, instrumentalities, or municipalities, as well as the precedents of the Courts of Puerto Rico;
• Lobbying with respect to the laws of Puerto Rico, regulations, and other administrative orders. For these purposes, lobbying shall mean any direct or indirect contact with elected officials, employees, or agents of the Government of Puerto Rico, its agencies, instrumentalities, public corporations, or municipalities with the intent of influencing any action or determination of the Government of Puerto Rico, its agencies, instrumentalities, public corporations, or municipalities;
• The sale of any property for use, consumption, or disposition in Puerto Rico; or
• Any other activity, situation, or circumstance related to Puerto Rico that is prescribed in the Incentives Regulations or other determination, administrative decision, or circular letter.
