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Puerto Rico

Overview

Puerto Rico, officially known as the Commonwealth of Puerto Rico (Estado Libre Asociado de Puerto Rico), is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the U.S. Virgin Islands and the British Virgin Islands. In addition to a strong legal framework, highly skilled bilingual workforce and outstanding infrastructure, the aggressive tax incentives that Puerto Rico offers, make the island a highly attractive destination to conduct businesses. In 2019, Puerto Rico’s GDP was $105 billion.

Diversification of the economy, coupled with investments and funding from the US, has created an economic environment that does not rely solely on tourism for financial prosperity. A diverse industrial sector has surpassed agriculture as the primary source of economic activity and income. The main drivers of Puerto Rico's economy are manufacturing, primarily pharmaceuticals, textiles, petrochemicals, and electronics; followed by the service industry, notably finance, insurance, real estate, and tourism.

The Puerto Rico Government offers a range of incentives in economic development areas of interest like: agriculture, capital investment funds, feature films, international banking, international insurers, solid waste disposal facilities, tourism, and manufacturing. The corporate tax rate in Puerto Rico is 37.5%. Puerto Rico corporations and non-Puerto Rico corporations engaged in trade or business in Puerto Rico face a corporate tax rate composed of two parts; a“normal” tax, which is fixed at 20%, and a “surtax.” The Biden administration would create a new general business credit equal to 10 percent of certain expenses incurred in connection with onshoring a foreign business to the U.S. or Puerto Rico (or American Samoa).