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Marketing Agencies (Exports)
Tax incentive for marketing agencies providing services to clients outside Puerto Rico, offering a 4% corporate tax rate on qualifying export income.
11 min
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Section Code:
2031.01(A)-1 (a)-6
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Purpose:
Exports — 2031.01(A)-1 (a)-18
Overview
The Marketing Agencies export incentive under Section 2031.01(A)-1(a)-6 of Act 60-2019, as amended, provides preferential tax treatment for marketing agencies that serve clients located outside Puerto Rico. This designation supports the establishment of marketing firms in Puerto Rico serving export markets.
Qualifying businesses pay a fixed four percent (4%) corporate income tax rate on income derived from marketing services provided to clients outside Puerto Rico. The program attracts digital marketing agencies, brand agencies, marketing consultancies, and integrated marketing firms that can operate from Puerto Rico while serving U.S. mainland and international clients.
The key distinction of this designation is its focus on marketing services as a distinct category from advertising, PR, or general consulting. Marketing agencies provide strategic marketing planning, digital marketing, content marketing, marketing analytics, brand strategy, and integrated marketing services.
Puerto Rico's bilingual marketing professionals and digital capabilities support marketing agency operations. The incentive enhances competitiveness for Puerto Rico-based marketing agencies serving external clients.
Key Benefits
Corporate Income Tax Rate
Marketing agencies approved under this designation pay a fixed four percent (4%) tax rate on income from qualifying marketing 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.
Property Tax Exemptions
Marketing agencies receive exemptions from property taxes on office equipment, technology systems, and other business assets.
Municipal Tax Exemptions
Decree holders are exempt from municipal license taxes on qualifying marketing revenues.
Digital Marketing Capabilities
Agencies benefit from Puerto Rico's connectivity and technology infrastructure supporting modern digital marketing operations serving global clients.
Requirements & Obligations
Business Structure and Registration
Applicants must establish a Puerto Rico legal entity to conduct marketing 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 marketing services provided to clients outside Puerto Rico. Services to Puerto Rico clients do not qualify. Detailed client and revenue records are required.
Marketing Services Definition
Services must constitute genuine marketing activities including marketing strategy, digital marketing, content marketing, social media marketing, marketing analytics, brand strategy, or integrated marketing services. The work must be substantially performed from Puerto Rico.
Service Delivery from Puerto Rico
Marketing strategy development, campaign execution, and account management must be substantially performed in Puerto Rico by Puerto Rico-based staff. Client interactions may occur elsewhere, but core marketing work must be from Puerto Rico.
Employment Requirements
Marketing agencies must hire at least one (1) full-time Puerto Rico resident employee within six (6) months of decree issuance. Marketing strategists, digital marketers, content creators, and support staff count toward requirements.
Physical Presence
The agency must maintain physical offices in Puerto Rico where marketing work is performed. Business records must be kept in Puerto Rico.
Compliance and Reporting
Annual compliance reports must document employment, revenue sources, client locations, and marketing projects. Records must demonstrate that qualifying marketing services are performed from Puerto Rico for non-Puerto Rico clients.
How to Apply
The application process for the Marketing Agencies export incentive typically requires four (4) to six (6) months from planning to decree issuance.
The process begins with assessing whether the agency's business model qualifies. Agencies should confirm that services constitute marketing activities, that at least eighty percent (80%) of revenue comes from non-Puerto Rico clients, and that marketing work can be effectively performed from Puerto Rico. Consultation with Puerto Rico advisors helps confirm eligibility.
During planning, agencies establish a Puerto Rico legal entity and begin operations setup. This includes entity formation, banking, securing office space, and establishing presence. Some principals and marketing staff relocate while others hire local talent.
The formal application is submitted to PRIDCO and includes descriptions of marketing services, agency capabilities, client base analysis, service delivery model, financial projections, and employment plans. Case studies or portfolio examples may help demonstrate capabilities.
PRIDCO reviews the application over approximately sixty (60) to ninety (90) days. Staff may request additional information about services, client relationships, or marketing capabilities. Applications demonstrating genuine marketing expertise and Puerto Rico commitment receive favorable consideration.
Upon approval, the decree is issued specifying terms and obligations. After issuance, the agency 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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