Puerto Rico is a very interesting market to consider doing business in or expanding into. Though maybe not the first choice for businesses in every industry or market, Puerto Rico offers a wide array of opportunities for others. Its strategic location in the Caribbean gives it a unique positioning, allowing for close relations to other Caribbean islands, as well as a convenient connection to the United States and Latin America. Businesses that operate in the private sector are poised to do especially well in Puerto Rico in the coming years, especially as improvements in infrastructure are erected. Tourism, textiles, manufacturing, and technology are among the most important industries.
If you are considering Puerto Rico as a potential location for your company to expand to, or are interested in developing markets, the following article will offer some excellent insight on reasons it is a very viable option.
Federal Tax Exemption
As you may know, the United States is one of the few countries globally that continues to tax its citizens, even if they reside elsewhere. Some entrepreneurs have been faced with the decision to either renounce US citizenship and forfeit legal protections that come with the affluent nation or suck up the losses in hopes of coming out on top despite the regulations from the IRS. This can be a major stumbling block for some startups that may be seeing large profits straight out the gate but are then impeded by Uncle Sam demanding his cut.
However, Puerto Rico — a commonwealth nation — has the great benefit of exempting its citizens from US federal taxes, while still extending the legal protections of US citizenship that is offered to citizens in the other 50 states and territories. The only catch is that Puerto Rico must be the primary residence for at least half the year (183 days each calendar year).
If no federal income taxes sounds enticing, also factor in the fact that Puerto Rico offers a fixed 4% personal income tax rate. This is in contrast to states like New York and California that may tax entrepreneurs up to 50% – 60% of their income (with federal taxes). This can be a significant amount of savings for those that can run their business remotely or hire native Puerto Ricans with the excess capital.
Low Personal Property Taxes
If you own property, you owe it to yourself to move to Puerto Rico. Thanks to Acts 20 and 22, Puerto Rico offers a 90% personal property tax exemption to entrepreneurs that specialize in the manufacturing and export services industries.
No Tax on Capital Gains
If you are concentrating on growing your investment portfolio, then Puerto Rico again offers an unmistakable opportunity: there are no taxes on dividend income or capital gains. By contrast, those who live in the other parts of the US can be subject to 15% – 20% taxation that puts a damper on one’s carefully chosen portfolio.
Puerto Rico’s Knowledge-Based Economy
Much like other fast-growing economies like Ireland, Puerto Rico has been quick to realize that the commonwealth’s recent turn of events may be leading to a brain-drain, where ambitious specialists in STEM fields move to where the money is. To ensure that the smart and talented people stay, Puerto Rico offers Act 73, which entails a 50% tax credit on research and development expenditures. This is good news for the future of Puerto Rico, considering that nearly 22,000 STEM graduates have been educated in PR. While a large majority move out to tech hubs and more stable economies, Puerto Rico hopes that its talented workforce will stay and create an economic powerhouse in the near future.
An Alternative: Virtual Phone Numbers
So, you may still be on the fence about Puerto Rico, especially since other US locations may offer more immediate opportunities. There is an easier way to tap into Puerto Rico without the risks and overheads: Puerto Rico virtual phone numbers. Essentially, a virtual phone number allows businesses and individuals to route calls to and from Puerto Rico by subscribing with a service provider, like Global Call Forwarding. The use of virtual phone numbers is only limited to an entrepreneur’s imagination. This allows companies to hire comparatively cheaper US-based employees in Puerto Rico as part of their strategy, or to test the waters to see whether their business gains traction in Puerto Rican markets without the risks of establishing a physical presence.
Author Bio: Tom Senkus has been a freelance writer for over 15 years. As an avid traveler and businessman, he frequently writes about little-known trends before they hit the newsstands, like cryptocurrency. For more info, visit tomsenkuswriter.com.