Frequently Asked Questions

• Puerto Rico is not just about beautiful beaches, rainforests, and music, in fact around 47% of the Island’s GDP comes from manufacturing activities (7% Tourism & Hospitality and 46% other activities).

• 12 of the world’s top 20 pharmaceutical companies in addition to many other leading industrial manufacturers have a significant presence on the Island.

• Puerto Rico offers a perfect blend of attractive financial incentives, a talented and bilingual workforce, and advanced logistical infrastructure capabilities all on US soil.

Yes, Puerto Rico is a commonwealth of the United States, meaning Puerto Ricans and those who relocate to the Island maintain U.S. citizenship and the protections under US federal law.

• Puerto Rico holds a unique position wherein the U.S. Government classifies Puerto Rico as an independent taxation authority by Federal Law codified on the Title 48 of the United States Code as 48 U.S.C. § 734. Under this distinction, the Island has its own tax code and version of the IRS (called Hacienda). Additionally, under Internal Revenue Code (IRC) §933, Puerto Rico source income is excluded from U.S. federal tax.

• This designation allows Puerto Rico to create unique tax incentives encompassing reduced tax rates, attractive tax credits, and other payment exemptions to attract businesses and individuals to relocate and invest into the Island.

• Whereas U.S. citizens are normally subject to worldwide taxation, regardless of the source derived from, IRC §933 provides an exception for residents of Puerto Rico, excluding their Puerto Rico source income from U.S. federal tax.

• Under Puerto Rico’s Act 60-2019, as amended (“Act 60”), the following general benefits are made available:

  • 4% flat corporate tax (1.0% for novel industries).

  • 0% rate on dividend distributions.

  • 75% property tax exemption.

  • 75% construction tax exemption.

  • 50% municipal license tax exemption.

  • 50% exemption on other municipal taxes.

• In addition to tax savings, Puerto Rico offers:

  • Attractive tax credits that can be sold to third parties at a discount.

  • Cash grants for machinery & equipment, infrastructure investments, and job creation.

As a U.S. commonwealth, all the products manufactured in Puerto Rico qualify as ‘Made in USA.’

Under Act 60 (previously Act 22-2012, as amended (“Act 22”)), bonafide residents of Puerto Rico who were not a resident during the period of January 17, 2006 to January 17, 2012 benefit from:

• 0% rate on dividend distributions.

• 0% on interest income.

• 0% on short-term and long-term capital gains.

Under Act 60-2019, the Island offers attractive non-dilutive funding (meaning that the funding does not impact the equity ownership) in the form of cash grants and tax credits that can be sold for cash to third-parties with a Puerto Rico tax liability.

A unique element to the Puerto Rico tax credits is that under Act 60, they are third-party assignable, meaning that the company generating the tax credits has the right to either use them to offset their own tax liabilities or to sell them to a third-party at a discount to their face value. The price for tax credits varies based on demand, however, DECA Analytics usually places credits between $0.88 and $0.92 per $1.00 in credits.

Puerto Rico is unique in that the incentives offered under Act 60 are excellent collateral for companies seeking financing. Both the cash grants and the tax credits represent cash back into the company that can be used as collateral.

• Yes, Puerto Rico has an exceptional bilingual workforce with one of the highest concentrations of STEM graduates with over 50 institutions of post-secondary learning graduating approximately 25,000 bachelor degrees and 5,000 post-graduate degrees in science annually.

• The Island is the 6th highest concentration of scientists and engineers in the world and leads the nation in the concentration of pharmaceutical, medical device, and high-tech manufacturing expertise.

• The local workforce of multigenerational U.S. citizens is bilingual in English and Spanish, giving local companies the perfect opportunity to tap into global markets.

• Yes, much of the Island’s utility infrastructure has seen significant improvements since Hurricane Maria, with billions more of funding currently allocated to further improve reliable water and electrical access.

• Puerto Rico’s tap water is also safe and is overseen by the US government, being held to the same high standards for consumption by the EPA the same as any mainland US state.

• Electricity in Puerto Rico is also just like in the US, except for being significantly more expensive per kWh than the typical mainland State. Puerto Rico has historically been prone to natural disasters such as hurricanes and earthquakes– resulting in severe damages to its electricity transmission and distribution infrastructure. However, the US Department of Energy is actively providing Puerto Rico energy system stakeholders support to enable planning and improved operations of the electric power grid with more resilience against further disruptions. Additionally, under CDBG-DR funding, the energy grid is receiving billions of additional US funding to fully modernize the energy infrastructure of the Island. Within Puerto Rico, there is also significant investments in renewable energy underway with a commitment to meet 100% of electrical needs via renewable sources by 2050.

• With regards to internet, Puerto Rico is one of the US jurisdictions with both 5G and IoT network capabilities. Puerto Rico has high levels of broadband connectivity that is carried to the Island by submarine cables. However, availability is not uniform with the large urban areas and rural areas near large manufacturers having the best access.