Undergoing an economic transformation, Puerto Rico has revived the interest of investors, especially regarding tourism, real estate, and, digital companies. And the reason is that Puerto Rico has certain special benefits and many aspects that attract foreign companies and investors.
The boom in the development of entrepreneurship in this island has taken place in the context of tax incentives, as well as the arrival of funds to help Puerto Rico recover from natural disasters, and the pandemic of COVID-19.
With all this, chances are you might be wondering if Puerto Rico has the favorable aspects necessary for foreign investors. Well, here are four facts that may indicate that this is a good time to put money into the island.
- A good outlook for business
The country remains one of the most competitive economies in all of Latin America and its economy is ranked as one of the highest income earners in the region by the World Economic Forum (WEF).
Puerto Rico is a territory with ideal tax advantages to attract the manufacturing industry and other sectors. It has great human, infrastructure, entrepreneurship, and political factors that outperform those of other Caribbean countries.
The country can benefit from free trade. U.S. participation in a number of free trade agreements offers Puerto Rico-based companies preferential access to a large number of markets in the region. This, particularly, presents many opportunities for domestic and international companies to open profitable businesses in Puerto Rico.
The island emerged from bankruptcy in 2022 and began an outstanding economic growth. In addition, economic laws have been developed to better cope with economic difficulties.
- Part of US territory
Puerto Rico is a territory or commonwealth of the United States of America. This means that while it is not a state of that country, the government has the same responsibility to Puerto Rico as with any other U.S. state.
More than just sharing the U.S. dollar as the official currency, Puerto Rico’s economy, to some extent, operates similarly to any region of the U.S. Therefore, they have common variables, such as direct investment, interest rates, inflation, as well as certain tendencies.
The electrical system, water system, bridges, and roads, among others, are built according to U.S. standards. In addition, the investment you make in Puerto Rico will be protected by the same property rights as any other place in the United States and ruled under Federal Law. This means better legal protection than in other Latin American countries.
When buying a property you have the security that these laws protect your investments. And, as for mortgages, loans and bank accounts, these are also ruled by U.S. laws and regulations, with financial sectors regulated by FINRA, the SEC, and the FDIC.
Its status, however, is one of self-government. Therefore, it has its own state laws and its regulations are subject to what Congress dictates at the federal level.
- Tax benefits
In 2012, Puerto Rico introduced a series of tax benefits that have attracted billionaires to the island. The legislation was amended in 2019 and is now part of an “Incentives Code” known as Act 60.
With these tax incentives, living and working in Puerto Rico becomes more attractive to businesses and investors. A low, flat tax rate of 4% is offered on net corporate income earned on the island, including Internet companies. In addition, taxes on interest, dividend income, and capital gains are minimal or zero for U.S. citizens who meet certain conditions. Not to mention many other tax benefits.
This does not imply that you won’t have any taxes to pay in Puerto Rico. In fact, some investors claim that “there is still too much government in Puerto Rico”. However, there are enough benefits to avoid paying a lot of federal taxes.
If you want to know how you can lower your tax bill and/or meet the eligibility requirements to benefit from these incentives, at Gierbolini Consulting Group LLP we can help you do business in Puerto Rico. Our team is equipped with specialists in commercial, corporate, and tax sectors who can guide you properly in the planning and development phase of your business strategy. So do not hesitate to contact us.
- Prime location
White sand beaches, one of the world’s most immutable climates, colorful coral reefs, eclectic Caribbean-Spanish culture, and architectural vestiges of its colonial past make Puerto Rico a privileged country.
The small island of Puerto Rico is bordered by more than 400 km of coastline with white sands and colorful coral reefs. And its location provides easy access to markets throughout the Latin American and Caribbean region. With all these circumstances, there are many options for opening profitable businesses in Puerto Rico.
Moreover, thanks to its close relationship with the U.S., there are regular direct flights from the Luis Muñoz Marín International Airport in the capital, San Juan to many major U.S. cities. In only 2.5 hours you are in Miami, and it takes 3.5 hours to get to New York.