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Creative Industries (Exports)
Tax incentive for creative industry businesses providing services to clients outside Puerto Rico, including design, multimedia, and creative production.
11 min
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Section Code:
2031.01(A)-1 (a)-9
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Purpose:
Exports — 2031.01(A)-1 (a)-4 to 5
Overview
The Creative Industries export incentive under Section 2031.01(A)-1(a)-9 of Act 60-2019, as amended, provides preferential tax treatment for creative businesses that serve clients located outside Puerto Rico. This designation supports a broad range of creative services and production activities.
Qualifying businesses pay a fixed four percent (4%) corporate income tax rate on income derived from creative services provided to clients outside Puerto Rico. The program attracts design studios, multimedia production companies, animation studios, content creation businesses, and other creative enterprises that can operate from Puerto Rico while serving export markets.
The key distinction of this designation is its comprehensive coverage of creative industries beyond advertising, PR, or marketing. This includes graphic design, industrial design, multimedia production, animation, video production, content creation, and other creative disciplines that produce creative works or services.
Puerto Rico's creative talent and production capabilities support diverse creative businesses. The incentive enhances competitiveness for Puerto Rico-based creative companies serving U.S. and international clients.
Key Benefits
Corporate Income Tax Rate
Creative industry businesses approved under this designation pay a fixed four percent (4%) tax rate on income from qualifying creative services to clients outside Puerto Rico. This rate applies for the decree term of fifteen (15) to twenty (20) years.
Compared to standard Puerto Rico rates of thirty-seven and a half percent (37.5%), savings exceed ninety percent (90%).
Dividend Tax Treatment
Dividends distributed from decree income to shareholders outside Puerto Rico face zero percent (0%) withholding. Creative business owners can extract profits efficiently after corporate tax.
Property Tax Exemptions
Creative businesses receive exemptions from property taxes on studios, production equipment, creative technology, and other assets.
Municipal Tax Exemptions
Decree holders are exempt from municipal license taxes on qualifying creative services revenue.
Creative Ecosystem
Creative businesses benefit from Puerto Rico's creative community, talent pool, and potential integration with other creative industries and productions.
Requirements & Obligations
Business Structure and Registration
Applicants must establish a Puerto Rico legal entity to conduct creative operations and hold the decree. The entity must register with Puerto Rico authorities and obtain necessary licenses.
Export Revenue Threshold
At least eighty percent (80%) of gross income must derive from creative services or productions provided to clients outside Puerto Rico. Services to Puerto Rico clients do not qualify. Detailed client and revenue records are required.
Creative Industries Definition
Services must constitute qualifying creative activities including graphic design, multimedia production, animation, video production, content creation, industrial design, interactive media, or related creative services and productions. The work must be substantially performed from Puerto Rico.
Service Delivery from Puerto Rico
Creative work, production, and design must be substantially performed in Puerto Rico by Puerto Rico-based creative professionals. Client interactions may occur elsewhere, but core creative production must be from Puerto Rico.
Employment Requirements
Creative businesses must hire at least one (1) full-time Puerto Rico resident employee within six (6) months of decree issuance. Creative professionals, designers, producers, and technical staff count toward requirements.
Physical Presence
The business must maintain facilities in Puerto Rico where creative work is performed. This may include studios, production facilities, or creative workspaces. Business records must be kept in Puerto Rico.
Compliance and Reporting
Annual compliance reports must document employment, revenue sources, client locations, and creative projects. Records must demonstrate that qualifying creative services are performed from Puerto Rico for non-Puerto Rico clients.
How to Apply
The application process for the Creative Industries export incentive typically requires four (4) to six (6) months from planning to decree issuance.
The process begins with assessing whether the creative business model qualifies. Companies should confirm that services constitute creative industries activities, that at least eighty percent (80%) of revenue comes from non-Puerto Rico clients, and that creative work can be effectively produced from Puerto Rico. Consultation with Puerto Rico advisors helps confirm eligibility.
During planning, companies establish a Puerto Rico legal entity and begin operations setup. This includes entity formation, banking, securing studio or production space, and establishing presence. Some creative principals relocate while others hire local creative talent.
The formal application is submitted to PRIDCO and includes descriptions of creative services, portfolio or showreel examples, client base analysis, production capabilities, financial projections, and employment plans. Creative work samples may help demonstrate capabilities.
PRIDCO reviews the application over approximately sixty (60) to ninety (90) days. Staff may request additional information about creative services, client relationships, or production capabilities. Applications demonstrating genuine creative capabilities and Puerto Rico commitment receive favorable consideration.
Upon approval, the decree is issued specifying terms and obligations. After issuance, the company must meet employment and operational milestones within specified timeframes.
This information is educational and should not be considered legal or tax advice. Applicants should consult with qualified legal and tax professionals familiar with Puerto Rico incentive programs before making any business decisions or submitting applications.
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