Puerto Rico has long been known as la Isla del Encanto—the Island of Enchantment, a beautiful and enthralling place to vacation. However, since 2012, the government of Puerto Rico has been busy creating a new identity for Puerto Rico: an island that’s open for business.

As a U.S. territory, Puerto Rico is a relatively simple market for an established U.S. business to expand into. Additionally, as the country’s most populated territory, it offers more than 3 million potential customers. It’s also becoming an incubator for start-ups, and if you’re willing to relocate to Puerto Rico, the benefits get even more enticing.

If you’re looking to expand into a new market—or start a new business—let’s explore the five reasons you might consider doing it in Puerto Rico.

#1: Solid Infrastructure to Support Business

Puerto Rico most recently made headlines around the devastation the island experienced from Hurricane Maria in 2017. However, after much of the island’s power and communication infrastructure was destroyed, the island’s government decided to turn the disaster into an opportunity. They viewed Puerto Rico as a “blank canvas” that could be rebuilt from the ground up, this time with business in mind.

In the last few years, they’ve worked with both Tesla and the solar company SunRun to modernize their energy grid. The government is also working with major mobile carriers to build a 5G cellular network. Additionally, high-speed Internet and fiber optic cable services are now widely available. In other words, new businesses in Puerto Rico will benefit from communications and power infrastructure that’s stronger than ever before.

Additionally, in Puerto Rico, U.S.-based entrepreneurs will find a familiar atmosphere in which to get things done. Customs is modernized, with an online portal for easy payments. Modern highways crisscross the island, making deliveries much easier than in many other parts of the world. UPS, FedEx, USPS—everything runs very similarly to what you’d find in the continental U.S. The island also hosts the largest convention center in the Caribbean, giving you a sense of how Puerto Rico is increasingly becoming a hub for business in the area.

So while you’ll find several cost benefits to doing business in Puerto Rico (more on that to come!), you’ll still enjoy cutting-edge conveniences that make it simple to do business.

#2: Highly-Educated Labor Force

Puerto Rico’s skilled labor force has drawn the attention of the manufacturing sector and attracted many businesses to the island. Although Spanish is the most widely spoken language on the island, about half of the island’s population speaks English regularly. (Compare that to a country like India, which has about a 10% English-speaking rate.)

But what makes Puerto Rico so unique is the highly-educated nature of its workforce:

  • From 1960 and 2000, the average education of Puerto Rican workers doubled from 6.2 to 12.2 years. In comparison, the average education of American workers is just over 13 years.
  • Additionally, the country boasts a 94% literacy rate and a 67% high school graduation rate, which is on par with Florida and Georgia.
  • Finally, according to a report from the World Economic Forum, Puerto Rico ranks third in the world for the availability of scientists and engineers. Additionally, the island graduates around 22,000 STEM students each year.

In summary, if you’re looking for a skilled, educated labor force, you’ll find it in Puerto Rico. And since Puerto Ricans are American citizens, you won’t have to go through any kind of visa process to hire your employees.

And while we’re on the topic of the laws in Puerto Rico…

#3: Legal and Structural Similarities to the Continental U.S.

If you’re at all concerned with the fact that Puerto Rico is a Spanish-speaking island, know that all of the laws you’ll need to review and forms to complete are available in English. You’ll also find that most everyone you’ll encounter in the business world—and in the government—speaks English well.

Additionally, when it comes to the laws governing businesses, you’ll find many similarities with the continental U.S.:

  • Partnerships, corporations, and LLCs work very similarly.
  • Many familiar payroll companies, such as ADP, operate in Puerto Rico.
  • The Puerto Rico banking system is regulated under US laws by the Federal Deposit Insurance Corporation (FDIC).
  • Employment laws share significant similarities with ones you’ll find in the continental U.S. Workers also pay Medicare and Social Security taxes, making them eligible for program benefits.
  • Everything operates on the U.S. dollar, eliminating the hassles of exchange rates or the difficulties of moving money between countries.
  • You’ll also enjoy full intellectual property protection, which has been a challenge to doing business in other countries, such as China.

By doing business in Puerto Rico, you’ll also be welcomed with open arms by the island’s governing bodies.

#4: Active Government Support & Investment

Entering a new market is much simpler when the local government is actively courting new businesses—and creating incentives.

The Puerto Rican government has invested heavily in public-private partnerships, by hosting summits and courting potential partners. The Puerto Rico Public-Private Partnerships Authority (P3) continues to solicit private businesses for collaborative projects, offering many opportunities for organizations that want to operate in Puerto Rico.

If you’re willing to relocate to Puerto Rico, even more possibilities become available. The government-backed startup accelerator, Parallel18, offers equity-free grants of $40,000 to assist startups. Since its establishment in 2015, it’s received 2,741 applications from over 60 countries and accelerated 119 companies.

The one hitch? At least one founder who can make business decisions must live on the island. However, if you are interested in moving to Puerto Rico, there’s a full set of tax benefits available to you.

#5: Tax Benefits for Bonafide Relocation

If you’re willing to move your primary residence to Puerto Rico, you’ll enjoy a whole host of tax benefits, primarily due to two laws initiated in 2012:

  • Act 20, which offers a low 4% corporate income tax rate for companies who relocate, as well as a 100% exemption on distributions from earnings and profits, among other benefits.
  • Act 22, which targets high-net-worth individuals by promising 0% tax on interest, dividends and capital gains earned while living in Puerto Rico.

Under these acts, you’ll enjoy significantly lower tax rates than you’d experience in the continental U.S.

However, your relocation can’t be in name only. The Puerto Rican government takes the residency requirement very seriously, and you’ll have to pass three tests to be considered a bonafide resident who’s eligible for these tax benefits:

  1. The presence test, which tracks your physical location.
  2. The tax home test, which examines your primary place of employment (or residence, if you don’t have a primary place of employment).
  3. The closer connection test, which looks at things like where your family lives, where your belongings are located, and more. In other words, if your family lives in Florida, you likely won’t pass this portion of the test.

It might seem burdensome, but the tax savings can be significant. In fact, they’re large enough that more than 1,500 people from the continental U.S. have flocked to the island since 2012 when the island began promoting its tax benefits.

Puerto Rico: Open for Business

If you’re considering expanding or opening a new venture, where you decide to locate that business can very well determine its future. How easy (or difficult) will it be to do business? What kind of workforce will be available in the area? What kind of laws will govern this new venture? What kind of advantages can you secure from the local authorities? What kind of taxes will you need to pay? In all these arenas, Puerto Rico can offer you a distinct advantage, one that deserves to put this territory on your list for consideration.




Want to talk to an expert about operating in Puerto Rico? Need help getting freight to or from the island? We can help! We provide door-to-door service for your Puerto Rico freight. From pick-up to delivery you’ll have a single point of contact, so you’ll always know where your goods are on their journey. To get started, just get in touch with us for a complimentary consultation.

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