Tax Benefits Act 60 Manufacture Services

Puerto Rico’s Act 60, widely known as the Incentives Code, is one of the most attractive tax frameworks for businesses wanting to expand or relocate manufacturing operations. If you’re in the manufacturing or industrial processing world, Act 60 opens the door to massive tax savings, global competitiveness, and long-term stability.

What Is Puerto Rico’s Act 60?

Act 60 is a legal structure that consolidates Puerto Rico’s incentive programs into a single, streamlined system. It offers tax benefits to companies that provide eligible services to clients outside Puerto Rico.

In simple terms?
If your business manufactures goods or provides manufacturing-related services for clients outside Puerto Rico, you could qualify for extremely low taxes.

Why It Matters for Manufacturing Companies

Manufacturing is a cornerstone of Puerto Rico’s economy. Act 60 encourages companies to expand operations, create jobs, and contribute to the island’s export sector. In return, manufacturers get tax rates that are almost unheard of in many jurisdictions.

Understanding the Act 60 Incentive Structure

Overview of Export Services Under Act 60

Act 60 places manufacturing under the “export services” category. To qualify, your services must be provided to clients outside Puerto Rico or for distribution outside the island.

How Manufacturing Fits Into the Export Services Category

Manufacturing services are considered exportable because the goods produced are intended for markets outside Puerto Rico.

This may include:

• Assembly of electronic components

• Industrial product finishing

• Pharmaceutical development

• Packaging and labeling for international shipments

If the end product leaves Puerto Rico, your business likely qualifies.

Key Eligibility Requirements for Manufacturers

To qualify under Act 60, manufacturing businesses must:

• Operate in Puerto Rico

• Conduct eligible manufacturing activities

• Export goods or services outside Puerto Rico

• Comply with employment and location-based requirements

Tax Benefits Available for Manufacture Services

4% Corporate Tax Rate

Perhaps the biggest benefit:
Act 60-certified manufacturing companies are taxed at only 4% on eligible income.

This allows companies to reinvest capital, stay competitive, and scale operations.

100% Exemption on Dividends

Distributions from Puerto Rico operations to owners or shareholders may receive full exemption from Puerto Rico income tax when properly structured.

75%–90% Property and Municipal Tax Exemptions

Act 60 provides major relief from:

• Municipal taxes

• Property taxes

• Construction taxes

Certain projects may even qualify for 90% exemptions, depending on location.

Exemptions for R&D and Industrial Innovation

Companies involved in research, development, or advanced manufacturing processes can qualify for additional incentives, making Puerto Rico an innovation-friendly hub.

Types of Manufacturing Activities Covered

Light Manufacturing

Examples:

• Clothing

• Accessories

• Consumer goods

• Assembly of small parts

Industrial Processing and Assembly

This includes:

• Refining

• Fabrication

• Machinery assembly

• Specialty component manufacturing

Technology Manufacturing and Electronics

Puerto Rico has become a rising point for tech hardware manufacturing, including:

• Circuit boards

• Smart devices

• Semiconductors

• Digital components

Pharmaceutical, Biotech, and Medical Devices

Puerto Rico is already known globally for its pharma industry.
Act 60 makes it even more attractive for:

• Medicine production

• Biotechnology development

• Medical device manufacturing

Digital and Software-Based Manufacturing Services

The global manufacturing world now includes digital products.
Examples:

• Software-as-a-service systems

• Digital engineering

• AI and automation systems

These services may also qualify as “export services.”

How to Qualify for Act 60 Manufacturing Incentives

Application Process With the Office of Incentives

Businesses must submit:

• A detailed application

• Business plan

• Proposed activities

• Financial statements

Approval grants a 15- or 20-year tax decree, guaranteeing stability.

Compliance Requirements

You must:

• Maintain proper payroll records

• Submit annual reports

• Meet employment obligations

• Stay within eligible activity parameters

Maintaining Eligible Activity

Consistency is key. The company must continue to:

• Export products

• Document sales

• Demonstrate ongoing activity

Why Businesses Choose Puerto Rico for Manufacturing

Strategic U.S. Territory Advantage

Puerto Rico offers a unique blend of:

• U.S. jurisdiction

• Global tax competitiveness

• Access to U.S. legal protections

Lower Operational Costs

Labor, energy, and facilities often cost less compared to mainland U.S. and many global hubs.

Strong Workforce and Infrastructure

Factories, industrial zones, and skilled labor are widely available across the island.

Common Mistakes Businesses Make

Misunderstanding “Export” Requirements

Your goods must be sold to markets outside Puerto Rico to qualify.

Poor Documentation

Missing paperwork or inaccurate income reporting can create compliance issues.

Not Meeting Compliance Obligations

Annual filings, fees, and reports are required to maintain Act 60 benefits.

Best Practices for Maximizing Act 60 Benefits

Working With Tax Attorneys and Compliance Experts

Professionals ensure:

• Regulatory compliance

• Proper tax planning

• Maximum savings

Setting Up Proper Accounting Systems

Document everything. Export income must be clearly separated.

Long-Term Planning for Incentive Certification

Think ahead. The tax decree is long-term, so your business strategy should be, too.

Case Example (General & Non-Specific)

A mid-sized electronics company moved part of its assembly operations to Puerto Rico.
By qualifying under Act 60:

• Its corporate tax rate fell from 21% to 4%

• It gained 90% exemptions on property taxes

• It expanded its workforce at lower cost

Within three years, the company reinvested savings into automation and global distribution.

Final Thoughts

Act 60 Manufacture Services incentives offer one of the most beneficial tax frameworks available today. Whether you’re in industrial manufacturing, pharmaceuticals, tech production, or digital manufacturing, Puerto Rico provides unmatched advantages. With proper planning and compliance, your business can enjoy long-term tax stability, competitive growth, and a strategic global position.

FAQs

1. Does every manufacturing company qualify under Act 60?

No, only companies providing manufacturing services for export markets qualify.

2. How long does the Act 60 tax decree last?

Typically 15 to 20 years, depending on the project.

3. Are startups eligible for Act 60?

Yes, as long as they meet the export and activity requirements.

4. What is the minimum tax rate for Act 60 manufacturers?

The standard rate is 4%, one of the lowest available.

5. Can digital or software-based products qualify?

Yes—digital manufacturing services may qualify if exported outside Puerto Rico.