For foreign investors who want to enter Latin America or the Caribbean, doing business in Puerto Rico can be a great option, as it can offer the best of both worlds, providing many of the benefits of having a commercial launch in the regions, while still retaining some of the advantages that investors can enjoy at home.
This is because Puerto Rico has retained many of the cultural and economic features that are usually associated with Latin America and the Caribbean, but it still has status as a US territory, maintaining strong ties with the United States that can be very favorable to foreign investors, especially those from the US mainland, Canada, and other English-speaking countries.
Puerto Rico is located in the Caribbean, amount the Greater Antilles, and has a registered population of 3.19million, and a gross domestics product of $104.99billion.This gives Puerto Rico a gross national income of $21,970, which is one of the highest in the region.
The economy in Puerto Rico is dominated by manufacturing, with industry accounting for more than 50% of GDP most years. The services sector accounts for most of the rest, whereas agriculture generates only 1% or less.
This economic division is also reflected in the trade profile of Puerto Rico. Some of the key export goods that are produced in Puerto Rico include pharmaceuticals, medical equipment, computers, and garments. Fish and rum are important exports too.
The majority of Puerto Rico’s is with the mainland United States, but thanks to US participation in a range of free trade agreements means that businesses that are based in Puerto Rico are offered preferential access to a large number of markets across the region. However, the economy does rely heavily on the United States, and it does receive several forms of federal economic aid from the US.
Puerto Rico has seen a real increase in interest from international investors in the last few years. This interest has come with a rise in foreign direct investment (FDI), most from Canada, Mexico, Germany, and Spain. The most popular sectors for investment include software and IT services, the telecommunications industry, manufacturing, and food and beverages.
If you are interested in entering Latin American and the Caribbean and are considering doing business in Puerto Rico, then read on to learn about the very best reasons for why doing business in Puerto Rico could be the best choice for your business.
Puerto Rico is a US territory. This status means there are a number of advantages to doing business in Puerto Rico. As Puerto Rico has the US dollar as its official currency, this makes doing business a simpler process and means that you can make significant saving son transferring your capital into and out of the country if you are an investor who is based in the US or who does a large amount of business in dollars.
The status of a US territory also means that many official processes are often based on US systems. This means that you will have a lot less red tape to contend with, compared with other countries in the region. If you are a manufacturer, you can base your manufacturing in Puerto Rico, but still label your goods as ‘Made in the USA’, quite truthfully. This can make consumers more likely to trust your products.
Doing business in Puerto Rico has a range of tax benefits, such as act 60 tax incentives, that make it a very enticing option for investors. Some of these benefits include a 4% income tax rate, a 100% tax exemption on distributions from earnings and profits, and a 90% exemption from personal property taxes for some kidneys of businesses.
These benefits mean that many goods and services are a lot cheaper in Puerto Rico than they are in the United States or anywhere else. However, they still effectively provide a lot of the benefits that investors look for in a tax haven, while still remaining on US soil.
Situated between the Dominican Republic and the US Virgin Islands, Puerto Rico has a prime location, which means it can enjoy easy access to markets throughout Latin America and the Caribbean.
It has strong ties with the US, so there are regular flights between Puerto Rico’s capital, San Juan, and several major US cities. A direct flight to Miami from the Luis Munoz Marin International Airport takes less than three hours.
As it is a US territory, Puerto Rico has better infrastructure than many other Latin American countries, with well-developed, schools, hospitals, highways, and public services. Due to the well-established industrial base, the island counts on infrastructure to support the import/export economy, with international trade largely channeled through San Juan’s container port.
Puerto Rico has a well-established industrial base that is prime for investment, but it also has a strong start-up scene. This has made the region a hub for innovation recently. This startup ecosystem is supported by a program called Startup 18, which is an accelerator based in San Juan. The program has raised more than $126million in investment and boosted more than 200 businesses.
If you are interested in doing business in Puerto Rico, but you think you will only plan on a short-term or a limited-scale operation, then you might find that hiring a professional employer organization (PEO) in Puerto Rico could be a good idea to make your job easier.
This can help, as a PEO based locally will be able to find and hire staff for you while making sure that your hiring complies with all local laws. They will provide you with workers faster than you would be able to find them yourself. By taking this off your hands, you will have time to get to know the market better ahead of your investment.
You’ll have control over workloads and schedules, but you will be able to avoid company formation in Puerto Rico, as the PEO can manage your payroll and all related admin.