Why Entrepreneurs Are Choosing SXM Over Panama & Puerto Rico in 2026

For location-independent entrepreneurs seeking to legally reduce their tax burden, three Caribbean and Central American jurisdictions dominate the conversation: Puerto Rico (Act 60), Panama (territorial tax), and Sint Maarten (Penshonado). Each offers genuine tax advantages. But in 2026, a growing number of high-earning entrepreneurs are choosing Sint Maarten — and the reasons go beyond the headline tax rate.

Puerto Rico Act 60: Impressive Rates, High Compliance Bar

Puerto Rico's Act 60 (formerly Acts 20 and 22) offers a compelling headline: 4% corporate tax on export services income and 0% capital gains tax on assets acquired after becoming a bona fide Puerto Rico resident. For eligible businesses, this is remarkably low.

The catch: Act 60 compliance is demanding and actively scrutinized. The IRS and Puerto Rico Department of Economic Development and Commerce both audit Act 60 claimants aggressively. Requirements include:

• Genuine bona fide Puerto Rico residency (183+ days in PR, no closer connection to the US mainland)
• Actual business activities conducted from Puerto Rico — not just a P.O. box or nominal office
• Annual charitable contribution of $10,000 to local Puerto Rico organizations
• Purchase of a Puerto Rico home (primary residence) and SER (principal residence report) filing
• Business with actual clients or customers in Puerto Rico or outside the US

The IRS launched a specific compliance campaign targeting Act 60 claimants, and penalties for improperly claimed benefits are severe. Additionally, US citizens under Act 60 still have the IRS looking over their shoulder — the territorial tax exemption benefits are available, but the compliance scrutiny means legal and accounting costs are substantial.

Panama: Territorial Tax Has Appeal — But Complications Lurk

Panama operates a territorial tax system: income derived from outside Panama is not subject to Panamanian income tax. For entrepreneurs with foreign-source business income, this can mean very low or zero Panamanian tax on that income. The Panamanian corporate rate on domestic income is 25%.

Panama's appeal for entrepreneurs includes: no capital gains tax on offshore assets, US dollar economy, well-developed banking sector, strategic time zone (ET-aligned), and relatively low cost of living. The Panama Friendly Nations visa provides residency for citizens of many countries.

The complications: Panama's territorial tax system can be difficult to maintain cleanly for entrepreneurs with business activities that touch both offshore and domestic markets. Panama has received increased OECD and FATF scrutiny, which has tightened banking access for international business structures. And the lifestyle — while pleasant — lacks SXM's combination of English-first environment, Dutch legal framework, and US/Europe flight connectivity.

Sint Maarten Penshonado: Why It Wins for the Right Profile

For entrepreneurs aged 50+ with passive investment income, business sale proceeds, or income from a business that can be restructured as SXM-based, the Penshonado program delivers advantages that neither Puerto Rico nor Panama can match:

• Non-US framework: Unlike Puerto Rico, SXM is completely outside the US tax system. No IRS audit campaigns, no bona fide residency tests under US territorial law, no USVI-style compliance nightmare.
• 10% flat rate on worldwide income: Including passive investment income, dividends, and pension distributions — categories that Puerto Rico's Act 60 and Panama's territorial system do not optimize as cleanly.
• No capital gains tax: Matching Cayman Islands and USVI on this dimension.
• No inheritance tax: Panama has no inheritance tax; Puerto Rico has an inheritance tax for estates above certain thresholds.
• English language, Dutch legal system: Contracts, courts, and government administration in English. Dutch Caribbean legal stability and rule of law.
• Direct flights: Miami (3 hours), JFK (4 hours), Atlanta (4 hours), Amsterdam (9 hours). Better US/Europe connectivity than Panama for most US-based entrepreneurs.

For a detailed comparison of how your specific income structure would be treated under Penshonado versus Act 60 or Panama, BrightPath Caribbean's CaribTax team conducts personalized jurisdiction analysis sessions. The right answer depends on your specific age, income type, home country obligations, and lifestyle preferences — book a session to get yours.