Puerto Rico Is Open For BusinessClient Alert
Puerto Rico has the highest vaccination in the nation. More than 73% of the total population is fully vaccinated. The U.S. national average is just over 57%. The ports opened in June 2020 and San Juan held its first live concert this past summer. It is important to remember that Puerto Rico is a U.S. territory and there is no need for visas. The banking system is almost identical to the mainland, and the Island uses the U.S. Postal Service and the U.S. dollar as its currency. There are thousands of flights from the U.S. to Puerto Rico daily and all main airlines fly to the Island.
Puerto Rico is known for its tax incentives program to promote the investment of foreign companies in the Island. The Puerto Rico Incentives Code (Act 60) passed on July 1, 2019, has standardized 15-year term tax exemptions, which could be extended for an additional fifteen years. Some of the exemptions are directed to Export (Services and Goods), Financial and Insurance Services, Visitor Economy, Manufacturing, Infrastructure, Farming, Creative Industries, Entrepreneurship, Air and Sea Transport.
All residents of Puerto Rico are exempt from U.S. federal taxes, and Puerto Rico is in charge of making its own local tax laws. As an example, an export service company that sets up an office in Puerto Rico can get a 4% corporate tax rate and full tax exemption on all dividends. The company is only required to hire one local employee if the company's annual revenue is over $3 million. Furthermore, the Act offers full exemption from all local taxes on passive income to individuals that have not lived in Puerto Rico for the last ten years. It also requires the individual to purchase residential property and to donate at least $10,000 a year to a local non-profit.
The location of Puerto Rico in the Caribbean makes it ideal for business. The Island has two international airports, and it has three major ports. Furthermore, Puerto Rico's legal system is similar to the mainland, and the Island’s law schools are approved by the American Bar Association. Attorneys admitted in U.S. jurisdictions can appear ad hoc without much trouble. In addition, there is a United States District Court, and its appeals are taken to the First Circuit in Boston.
Puerto Rico provides similar benefits as any tax haven jurisdiction and also provides a strong rule of law to protect the interest of any business. Puerto Rico is the best of both worlds.