October 23, 2017787.777.1909
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Puerto Rico is the answer to maximize the return on your capital investment with the advantages of foreign tax incentives within a United States framework.

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Is there an appropriate infrastructure to conduct business?

Puerto Rico is the smallest of the Greater Antilles islands in the Caribbean and boasts one of the most dynamic economies in the Caribbean But as a place for doing business, Puerto Rico is still a well-kept secret.

  • With a GDP of approximately $64.84 billion,  and a 3.8 million population the island has the highest GDP per capita of Latin America.
  • For the past 50 years it has been a manufacturing powerhouse, producing many of the top drugs in the U.S. as well as medical devices.
  • It is also home to one of the most sophisticated financial markets in the hemisphere, including a vibrant mutual funds market of $14 billion as well as financial firms exceeding $34 billion in clients’ assets.
  • Puerto Rico is able to offer many opportunities due to its unique combination of tax laws, incentives,  and full access to the U.S. market
  • There is an abundant well-educated labor pool
  • Availability of state-of-the-art telecommunications infrastructure
  • Ample U.S. style road system, modern and reliable utilities as well as world-class commercial ports
  • Easy access by air to most major U.S. cities

How’s life in Puerto Rico?

You have probably heard of Puerto Rico as a wonderful tourist destination. But it is also a great place to live. With your investment here you will want to visit often, perhaps even stay once you discover all Puerto Rico has to offer. Here you’ll find:

  • Top-notch high schools with a long tradition of excellence and placement in top ranked U.S. universities.
  • A housing market with emphasis on high-end living units that feature architectural design of the highest order.
  • Fine dining with a wide array of venues offering the best the world has to offer as well as the unique and absolutely delicious Puerto Rican nouvelle cuisine.
  • A vibrant arts scene with museums, theaters and many performing arts venues all over the Island.
  • A shopping experience that includes the largest mall in the Caribbean and most of the US retail chains with presence all across the Island. Soon, these chains will be joined by high-end retail outlets Nordstrom’s and Saks Fifth Avenue.
  • World-class hotels and golf courses and some of the most beautiful beaches in the world.

Is it safe to put my money there?

The island has been part of the U.S. since 1898 and those born in Puerto Rico have been citizens of the U.S.A. since 1917. We share a common currency, common defense and citizenship with the U.S. and all federal laws apply to Puerto Rico. The U.S. legal framework plus our political stability provide a low security risk for investors.

  • Puerto Rico offers investors the security offered by federal laws and regulations as well as compliance with international regulations that demand transparency.
  • As one of the few places on the white list of international banking centers, Puerto Rico offers the investor an opportunity to invest and favorable tax treatment with no taint from being seen as a shady tax haven.
  • Puerto Rico is home to about 30 International Banking Entities with assets of over $40 billion. IBEs must be created with at least $5 million in capital and request a license from the Office of Financial Institutions of Puerto Rico (www.cif.gov.pr).
  • The island has good air connections and infrastructure as well as the kind of ample availability of specialized financial resources to manage large funds.

Your money is as safe in Puerto Rico as it would be anywhere else in the United States but with valuable tax advantages for individuals and corporations that are not available on the mainland.

How do I know if Puerto Rico is the right decision for my project?

Let us help you discover why Puerto Rico IS the answer. We are successful businessmen in Puerto Rico and are very much aware of the options available to businesses elsewhere in the world. That’s why we can unequivocally state that Puerto Rico offers unparalleled opportunities. To illustrate the many possibilities available, we have drawn hypothetical examples of potential ventures that could be developed in Puerto Rico.

So, if you are an entrepreneur and you are looking for the best place to develop your business, we urge you take a look at our examples and do the math. Consult your tax attorney or consultant and you will see you are dealing with incredible business possibilities that are real and accessible. Don’t take our word for it, do your homework. Once you start seeing what is available, we are certain that you will come up with even more projects to develop in Puerto Rico. So, let’s take a look at those examples…

Example A: Making the most of the Incentives Act
The software entrepreneur who sets up a new venture in Puerto Rico’s Hi-Tech Corridor

Let’s say you are an entrepreneur who has a small software design firm with a hot new e-discovery product that is going to revolutionize the legal world because of its capacity to understand language. Berkshire Hathaway has spotted your product and you have a juicy offer to consider, yet you would like to remain independent. However, selling for an attractive sum could help you start a new business that would design innovative software applications for a number of industries. You are having a hard time deciding on what is the best course to follow. Then you learn of the Economic Incentives Act for the Development of Puerto Rico.

You learn you would pay 4% on capital gains so you decide to sell your business, and self-finance a new venture settling in Puerto Rico’s west coast.

You set up your company near the Rafael Hernández International Airport in Aguadilla, the island’s second international airport, on the island’s hi-tech corridor, where the Las Americas Technology & Research Park is under development. This technology park is geared towards export projects in computer and information technologies with common areas managed by the nonprofit PRTEC, a nonprofit committed to the development of a collaborative environment between private companies, government entities and academia.

You take advantage of the highly touted engineering school at nearby Mayagüez to hire promising young talent. You contract employees and get a tax credit from the government for creating new jobs. Your company starts to crank out innovative new software solutions.

Your new business in Puerto Rico would have the following benefits:

  • You could either pay a 4% fixed income tax rate with a 12% withholding tax on royalty payments made to non-residents or you pay 8% fixed income tax rate and a 2% withholding tax on royalty payments made to non-residents.
  • Distributions would be 100% tax exempt while a gain on a sale of stock would be 4% during the term of the grant.
  • Up to 50% credit for research and development expenses tied to intangible property during the year of the investment
  • Up to 10% credit for industrial energy consumption
  • 35% of credit for purchase of products manufactured in Puerto Rico that are recycled which can enable you to cut costs on the packaging of your product
  • $5,000 for each job creation credit for each job created during the first year and sustained for three years
  • 90% exemption on qualifying real and personal property
  • 60% exemption on the payment of volume of business tax and other municipal taxes, up to 75% for small and medium-sized businesses.
  • 100% tax exemption for five years for headquarters and regular exemption afterward, 100% exemption of property tax during construction period
  • 50% credit for investment in renewable energy generation equipment.
Example B: Making the most of the Incentives Act
The renowned law firm seeking to globalize its services selects Puerto Rico for its regional base

On a short vacation trip to the island, one of the principals of a leading law firm in New York finds out that Puerto Rico offers incredible incentives to companies that want to establish a base from which to export services to the region or the world. He realizes that Puerto Rico would be the perfect place to set up the regional offices of the firm as it expands to Latin America. 

The island’s history as a colony of the Spanish empire for four centuries and as part of the U.S. since 1898 has made it one of the few places in the world where both the civil code and common law are practiced side by side in the island’s courts. The full grasp of common law and civil law will provide prospective clients with the assurance that they will be well advised in their ventures if they seek to engage in commerce between the U.S. and Latin America.

The firm’s offices in Puerto Rico would have the following benefits:

  • Either pay a 4% fixed income tax rate with a 12% withholding tax on royalty payments made to non-residents or pay 8% fixed income tax rate and a 2% withholding tax on royalty payments made to non-residents.
  • Distributions would be 100% tax exempt while a gain on a sale of stock would be 4% during the term of the grant
  • $5,000 for each job creation credit for each job created during the first year and sustained for three years
  • 90% exemption on qualifying real and personal property
  • 60% exemption on the payment of volume of business tax and other municipal taxes, up to 75% for small and medium-sized businesses.
  • 100% tax exemption for five years for headquarters and regular exemption afterward, 100% exemption of property tax during construction period
Example C: Making the most of the Incentives ActThe European wind turbine manufacturer seeks to expand market in U.S.

You are a large wind turbine manufacturer seeking to expand your market in the U.S. and make the most of president Obama’s renewable energy policies. You research potential places to manufacture the wind turbines in U.S. territory and come across what Puerto Rico has to offer, you learn that you have:

  • Two alternatives for your business to pay income tax and royalty payments:
    • 4% fixed income tax rate and 12% withholding tax on royalty payments made to non-residents;
    • Or, you pay 8% fixed income tax rate and 2% withholding tax on royalty payments made to non-residents.
  • Distributions would be 100% tax exempt while a gain on a sale of stock would be 4% during the term of the grant.
  • Up to 10% credit for industrial energy consumption.
  • 35% of credit for purchase of products manufactured in Puerto Rico that are recycled which can enable you to cut costs on the packaging of your product.
  • $5,000 for each job creation credit for each job created during the first year and sustained for three years.
  • 90% exemption on qualifying real and personal property.
  • 60% exemption on the payment of volume of business tax and other municipal taxes, up to 75% for small and medium-sized businesses.
  • 50% credit for investment in renewable energy generation equipment.
  • Incentives available to train employees.

You can also make the most of the available foreign trade zones, in which you would not pay duties until the product is ready to enter the U.S. market. If intended for export, it would not pay duties at all in the U.S. You also have available the services of the Port of the Americas, a transshipment port located in the southern city of Ponce.

Example D: Making the most of the Incentives Act
Relocation of headquarters or the establishment of regional headquarters in Puerto Rico

You are a major distributor of electronics servicing the Caribbean and Latin America. For years your regional headquarter has been located in Florida. As you seek ways to reduce costs and be closer to your clients, you examine the benefits Puerto Rico offers for the establishment of headquarters or regional headquarters. You find there is ample commercial space available at great prices. And more importantly, you qualify for generous benefits under the Economic Incentives Act, although you are a distributing company. Your company would:

  • Pay 4% fixed tax rate.
  • Corporate headquarters would enjoy 100% real property tax exemption for five years.
  • After the five year period, the company would have 90% exemption on qualifying real and personal property.
  • 60% exemption on the payment of volume of business tax and other municipal taxes, up to 75% for small and medium-sized businesses.
  • Up to 10% credit for industrial energy consumption.
  • 25% of credit for purchase of products manufactured in Puerto Rico.
  • $5,000 for each job creation credit for each job created during the first year and sustained for three years.
  • Training credits available.
Example E: Making the most of the Incentives ActThe Entrepreneur seeking new science to expand recycling possibilities

You have a company that is working on developing new products out of recycling materials. You visit the island and as you discover that the Economic Incentives Act applies its generous incentives to R&D business and to recycling technologies.

Your ongoing business in Puerto Rico would have:

  • Two alternatives for your business to pay in terms of income tax rates and royalty payments. You either pay:
    • 4% fixed income tax rate and 12% withholding tax on royalty payments made to non-residents;
    • Or, you pay 8% fixed income tax rate and 2% withholding tax on royalty payments made to non-residents.
  • Distributions would be 100% tax exempt while a gain on a sale of stock would be 4% during the term of the grant.
  • Up to 50% credit for R&D expenses tied to intangible property during the year of the investment.
  • Up to 10% credit for industrial energy consumption.
  • 35% of credit for purchase of products manufactured in Puerto Rico that are recycled which can enable you to cut costs on the packaging of your product.
  • $5,000 for each job creation credit for each job created during the first year and sustained for three years.
  • 90% exemption on qualifying real and personal property.
  • 60% exemption on the payment of volume of business tax and other municipal taxes, up to 75% for small and medium-sized businesses.
  • 50% credit for investment in renewable energy generation equipment.

Your researchers can also benefit from the Scientific Investigators Incentives Act and not pay income tax.

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