Since 2003, Healy Consultants Group assists multinational Clients with Puerto Rico business set up. Our services include i) Puerto Rico company incorporation ii) government license registration iii) corporate bank account opening iv) employee recruitment and visa strategies and v) Puerto Rico office rental solutions.

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Puerto Rico business setup summary

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• Advantages of Puerto Rico company registration

  • Puerto Rico company registration is quick and easy. For example:
    • A Puerto Rico limited liability company can be incorporated with just one director, who can be of any nationality and who can be either an individual or company.
    • There is no minimum paid-up capital requirement to set up a Puerto Rico company.
    • The Puerto Rico Corporate Registry normally issues a certificate of incorporation within five working days of the application being submitted.
  • Puerto Rico is an attractive, low-cost manufacturing and import/export base because:
    • It has a network of three free zones around the country which offer generous tax advantages including i) zero tax on the import and export of goods ii) zero inventory taxes for foreign and domestic merchandise iii) no time limits on storing goods in free zone warehouses and iv) zero charges for moving merchandise from one free zone to another.
    • Labour costs are low. In January 2022, the country launched a minimum wage of US$8.50 per hour.
    • As a US territory, goods imported from the US are free of duty.
    • Exporting from Puerto Rico is simple. Customs formalities are quick, and the country has modern ports serving the US, Central America and the Caribbean with short sailing times.
    • Puerto Rico is well located near, and enjoys good trade and economic ties with, various Caribbean nations including the Dominican Republic and the US Virgin Islands. The island is also well placed to serve larger markets in Central America as well as the US.
  • Puerto Rico is a stable, safe jurisdiction and is a less risky location in which to set up a business than some of its Caribbean neighbours. For example:
    • It is politically stable (unlike, for example, Haiti) with a low risk of major destabilising events, such as coups or military intervention.
    • Crime rates are lower than most Caribbean nations.
    • Corruption levels are lower than in most Caribbean countries. Investors are afforded protection in the local courts, and contract bidding processes are transparent.
  • In addition to free zone tax incentives, the Puerto Rico government offers a range of other incentives to encourage investment in certain sectors. For example:
    • New tourism-related businesses receive 100% exemption from municipal license tax (90% for existing businesses).
    • Foreigners investing more than US$500,000 in a new Puerto Rico business are eligible for the Immigrant Investor Program’s EB-5 investor visa. Holders of this visa are also eligible to apply for residency in the US. The Immigrant Investor application is usually processed within six months.
  • Compared to many Caribbean countries, Puerto Rico has good infrastructure and a competitive economy. The country scores in the top 20% on the Global Competitiveness Index of 2019. It is especially noted in the index for its good i) institutions ii) health and primary education sectors iii) innovation and iv) labour market efficiency.
  • Puerto Rico companies are generally not subjected to US tax returns if the only source of income is from Puerto Rico.
  • In addition to manufacturing, Puerto Rico attracts large investments in tourism. Before Covid, the island received almost five million visitors per year, mostly affluent visitors from mainland US and Europe. The government offers incentives for foreign investors in Puerto Rican tourism ventures.

• Disadvantages of Puerto Rico company registration

  • Outside free zones, Puerto Rico is not a low tax country. Registered businesses are subject to i) a corporate tax levied at a standard rate of 37.5% ii) withholding tax on dividends remitted outside of the country levied at 10% and iii) VAT at a standard rate of 11.5%.
  • Puerto Rico is a small and limited domestic consumer market, with only three million inhabitants. That said, per capita GDP is a healthy US$32,280 in 2020.
  • English-speaking entrepreneurs and investors may encounter language challenges in everyday business interactions, for example in business meetings, networking events or bank interviews. Although, Puerto Rico is a US territory, the language of business is Spanish, and less than 10% of the population speak English.
  • No countries have signed a double taxation avoidance agreement with Puerto Rico.
  • Both domestic and international Puerto Rico companies that earn more than US$10 million are subject to audit requirement. Financial statements are required to be submitted with a CPA-licensed audit report.

• Best uses for a Puerto Rico company

  Because of low operating costs and government incentives, a Puerto Rico company is ideal for manufacturing or tourism-related activities.