Why bring your business to Puerto Rico?
Simple. Given its very particular political, economic, social and geographical condition, Puerto Rico offers unique advantages and valuable incentives to those who invest in the Island. We can help.
- Major Filing Requirements Applicable to Puerto Rico Operations
- Funding a Startup: A Brief Guide to Financing Alternatives
- Checklist of Major Tax Requirements
Puerto Rico, located in the Caribbean, is strategically located between North America and South America and is the link between the United States and the Latin America markets. Since the 1950’s leading multinationals, such as pharmaceuticals, information technology companies, leading hotel flags and more recently renewable energy projects have opted to establish operations in Puerto Rico and reap the incentives and other benefits that our jurisdiction offers.
The Island enjoys a wide cultural diversity founded in the different backgrounds of people that have converged in the Island throughout its history. Many of our residents, who are United States citizens, are fully bilingual (Official languages are Spanish and English). Puerto Rico has highly educated human capital; more than 30,000 university degrees are granted annually, including 10, 000 in the science, mathematics and technology areas. Therefore, most of its workforce is highly educated and focused on providing a high standard of quality and services.
Puerto Rico, the smallest of the Greater Antilles, boasts beautiful coasts and beaches, luscious rainforests, dry forests, bioluminescent bays and mountainous areas that make it an ideal destination for touristic purposes. Old San Juan, located in the north area of the capital, San Juan, has multiple historic venues that offer a look into its rich history. Also, the average temperature of 85 degrees Fahrenheit provides ideal weather all year long.
Puerto Rico’s current population is approximately 3.8 million and the median age of Puerto Ricans living in the Island is between 32 and 37. Puerto Rico’s GDP is $62.8 billion and the GDB per capita is $22,994.
The United States dollar is the official currency of Puerto Rico and no passport is required for United States citizens when traveling to and from Puerto Rico and the United States. Our main airport is easily accessible from most hubs (New York, Miami, Texas, Panama City and Madrid) and travel within the Island is extremely accessible and fast.
Puerto Rico enjoys United States constitutional, legal, financial and regulatory protection, including for intellectual property and Homeland Security matters. Its banking system is regulated under the United States laws and insured by the Federal Deposit Insurance Company (FDIC) and our access points are protected by the U. S. Customs and Border Patrol. Puerto Rico enjoys the benefits of being a United States free trade zone and our citizens and residents enjoy federal grants and funds available to the United States citizens located in the mainland. It also shares common military defense with the US.
Puerto Rico’s energy system has a capacity exceeding 5,500 megawatts and water and sewage system throughout the Island; both utility services are publicly operated. Puerto Rico offers a modern transportation system with various components including a metro system known as the Tren Urbano. World class venues, such as the Puerto Rico Convention Center and the Puerto Rico Coliseum, have made Puerto Rico a vibrant business hub and a leading destination for groups and conventions.
On the tax front, Puerto Rico enjoys fiscal autonomy. The local tax system is regulated by the Department of the Treasury of Puerto Rico. Because Puerto Rico is a United States territory, corporations are not subject to federal taxes unless earnings are repatriated. In turn, the corporate tax structure provides benefits of operating at a United States jurisdiction while providing tax benefits of a foreign country. Puerto Rico has also developed laws providing incentives and tax exemption benefits for multiple industries and activities, including manufacturing, research and development, exports services, tourism and film, among others. Recent legislation provides aggressive benefits to individual investors that become Puerto Rico residents.
This page intends to provide a general overview of the benefits and exemptions available in Puerto Rico in the following areas:
- Energy
- Export Services
- Film
- Incentives to Individuals that Relocate to Puerto Rico
- Manufacture
- Tourism
* The materials and information provided by Ferraiuoli LLC on this website are for informational purposes only and should not be construed as legal, tax or financial advice.
FAQs
Employers in Puerto Rico are subject to the taxes imposed by the Federal Insurance Contributions Act (FICA) (Social Security and Medicare taxes) and the Federal Unemployment Tax Act (FUTA). An employer is a person or organization for whom a worker performs services as an employee.
Is freight taxable in Puerto Rico? ›
Puerto Rico is part of the U.S. Customs territory and therefore no customs duties are assessed on products coming from the mainland United States. There is, however, a 11.5 percent excise tax (sales tax) applied on products imported into the island, as well as on those produced locally.
What is needed to do business in Puerto Rico? ›
Register your business name with the local government where your business is located. If you are a corporation, you will also need to register with the Department of State in Puerto Rico, or with the Department of Corporations and Trademarks in the U.S. Virgin Islands.
Is Puerto Rico a good place to do business? ›
It's more than just an island vacation destination. Puerto Rico offers many benefits, especially for citizens and businesses of the United States. Between the cost of living, tax rates, and other incentives, there are many good reasons for doing business in Puerto Rico.
Do LLC pay taxes in Puerto Rico? ›
If your LLC is taxed as a Puerto Rico corporation, you'll need to pay corporate income tax. Puerto Rico's corporate tax rate is 37.5%.
What is the rule 60 in Puerto Rico? ›
Once you live in Puerto Rico, your passive income is now “Puerto Rico source income,” and Section 933 of the Internal Revenue Code says you don't have to pay federal taxes on Puerto Rico source income. Act 60 says you don't have to pay Puerto Rico taxes on passive income.
What is exempt from sales tax in Puerto Rico? ›
Exempt transactions include prescription medicines; insulin; taxable items acquired for certain manufacturing operations (e.g., raw materials); and food and ingredients for food (except for prepared food, diet supplements, sweets and carbonated drinks).
Do I need a commercial invoice for Puerto Rico? ›
Documenting Your Puerto Rican Shipments
A shipment to Puerto Rico doesn't need to go through customs because it is a domestic package. However, you will need a commercial invoice, and if the value of the shipment exceeds $2,500 US you will also need Electronic Export Information.
What is the 4% excise tax in Puerto Rico? ›
Background. Act 154, enacted in October 2010, established a special 4% excise tax on the sale of products that are manufactured in Puerto Rico and acquired by a member of the manufacturer's controlled group. The 4% excise tax also applies to services rendered by a controlled group member.
How much does an LLC cost in Puerto Rico? ›
Puerto Rico LLC Cost. The initial cost to start an LLC in Puerto Rico is $250 to register your business with the Department of State. After that, you'll have a yearly recurring cost of $150 for your Annual Fee, which keeps your LLC current with the state.
Filing and forming an LLC in Puerto Rico requires a $250 filing fee. Under Puerto Rico law, an LLC uses a limited liability company agreement, or LLCA, to govern the internal affairs and administration of the LLC. This is valid regardless of what it is called, but the law says that they must be written.
How much does it cost to open a business in Puerto Rico? ›
The cost of incorporating a company in Puerto Rico varies depending upon the legal structure a company takes while setting up. For a for-profit organization, applying for a Certificate of Incorporation is approximately $150. The filing fee for limited liability firms is $250.
What makes the most money in Puerto Rico? ›
The highest paying industries in Puerto Rico are finance, insurance, and real estate, followed by professional and technical services.
What is the #1 industry in Puerto Rico? ›
Manufacturing is the largest economic sector of the island; composing almost half (about 46%) of its gross domestic product (GDP) through more than 2,000 manufacturing plants scattered throughout the island.
Why are millionaires moving to Puerto Rico? ›
The answer lies in Puerto Rico's unique financial incentives and generous tax breaks. No federal income tax on passive income is one such perk attracting high net worth individuals to this tropical paradise. This means if you're making money from investments or rental properties – it remains untouched by Uncle Sam.
Why are there no federal taxes in Puerto Rico? ›
Puerto Rico holds a unique position as an unincorporated U.S. territory. Under Internal Revenue Code (IRC) §933, Puerto Rico source income is excluded from U.S. federal tax.
Is Puerto Rico a tax haven for companies? ›
Puerto Rico's Act 60 promotes investment in Puerto Rico through tax incentives. These tax benefits include zero tax on passive income, including capital gains, dividends, and interest. Other tax benefits from Act 60 include: 2-4% corporate tax.
Does Puerto Rico file taxes with IRS? ›
Residents of Puerto Rico must file a federal tax return with the IRS to claim the CTC, even if they don't have a filing requirement and have little or no income from a job, business or other source.
Is a Puerto Rico corporation a foreign corporation for US tax purposes? ›
Corporate - Corporate residence
A corporation organised or created under the laws of Puerto Rico is a domestic corporation. A domestic corporation is a resident corporation even if it does not conduct business operations in Puerto Rico. A corporation created elsewhere is considered a foreign corporation.
