Puerto Rico Memo on Company Relocation: A Comprehensive Guide Introduction: Puerto Rico is a Caribbean island, an unincorporated territory of the United States, with a unique status that offers various tax incentives and business advantages. This detailed memo aims to provide a thorough understanding of Puerto Rico's potential for company relocation, discussing various types of Puerto Rico Memos on Company Relocation and their benefits. 1. Puerto Rico's Economic Benefits: Puerto Rico offers an array of economic incentives to attract companies, such as Act 20 (Export Services Act) and Act 22 (Individual Investors Act). Act 20 provides substantial tax incentives for service-based businesses, while Act 22 offers tax exemptions for individual investors, including 0% tax on interest, dividends, and capital gains. These incentives aim to foster economic growth, job creation, and investments within the island. 2. Puerto Rico Memo Types: a) Act 20 Company Relocation Memo: An Act 20 Company Relocation Memo provides detailed information on how a company can relocate its service-based operations to Puerto Rico. This memo outlines the eligibility criteria, application process, and tax incentives available under Act 20, including a 4% corporate tax rate. It also highlights the importance of establishing substantial presence, hiring local employees, and compliance with Puerto Rico laws. b) Act 22 Individual Investor Memo: An Act 22 Individual Investor Memo focuses on attracting high net worth individuals interested in relocating to Puerto Rico. This memo elaborates on the qualifying criteria, application process, and the range of tax exemptions available under Act 22. It emphasizes the need to become a Puerto Rico resident, invest in real estate, and contribute to the local community. c) Act 73 Manufacturing Incentives Memo: An Act 73 Manufacturing Incentives Memo targets manufacturing companies seeking to relocate or expand their operations in Puerto Rico. This memo provides insights into the benefits offered by Act 73, including tax exemptions on income derived from manufacturing activities, partial tax exemption on property, and tax credits for R&D initiatives. It outlines the application process, requirements, and compliance with local regulations. 3. Key Considerations for Company Relocation: i) Competitive advantages: The memo should emphasize Puerto Rico's strategic location, skilled workforce, and access to regional and international markets, which can contribute to a company's growth and profitability. ii) Infrastructure: It is essential to discuss Puerto Rico's modern infrastructure, including airports, ports, and reliable telecommunication systems. This ensures seamless connectivity for businesses with their global counterparts. iii) Business-friendly environment: The memo should highlight Puerto Rico's commitment to business-friendly policies, including streamlined permitting processes, intellectual property protection, and flexible labor laws, ensuring a conducive environment for company relocation. iv) Quality of life: Puerto Rico offers a high standard of living with beautiful beaches, rich cultural heritage, and a vibrant lifestyle. The memo should mention these aspects to attract potential business owners and investors. Conclusion: Puerto Rico is a prime destination for company relocation, offering numerous captivating advantages through various memo types. Act 20, Act 22, and Act 73 are prominent incentives that cater to different business needs. Companies considering relocation to Puerto Rico can leverage these memos to make well-informed decisions about their expansion plans, taking advantage of Puerto Rico's economic benefits, infrastructure, and business-friendly environment while enjoying a superior quality of life.
Puerto Rico Memo on Company Relocation
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U.S. citizens who become bona fide residents of Puerto Rico can maintain their U.S. citizenship, avoid U.S. federal income tax on capital gains, including U.S.-source capital gains, and avoid paying any income tax on interest and dividends from Puerto Rican sources.
A U.S. company that wishes to do business in Puerto Rico may choose to either form a new subsidiary entity or register an existing company. In order to determine the best option, the company should consult an attorney familiar with tax laws and the company's business activities and structure.
Act 22 of 2012 also known as the Act to Promote the Relocation of Investors to Puerto Rico (Spanish: Ley para Incentivar el Traslado de Inversionistas a Puerto Rico) is an act enacted by the 16th Legislative Assembly of Puerto Rico that fully exempts local taxes on all passive income generated by individuals that
How to Incorporate in Puerto Rico. To start a corporation in Puerto Rico, you'll need to do three things: appoint a registered agent, choose a name for your business, and file Certificate of Incorporation with the Department of State. You can file online or by mail. The certificate costs $150 to file.
To make amendments to your limited liability company in Puerto Rico, you must visit the Department of State's website and provide the LLC's name and its registration number (this can be found by doing a name search for your LLC). Then you'll be given the option of selecting the type of amendment you'd like to make.
One of the greatest of many Puerto Rico tax benefits is the Act 60 Investor Resident Individual Tax Incentive (formerly Act 22), which allows you to pay 0% federal or Puerto Rico capital gains tax on all capital gains incurred during the time that you qualify as a bona fide Puerto Rico resident living in Puerto Rico.
Commonwealth taxesAll federal employees, those who do business with the federal government, Puerto Rico-based corporations that intend to send funds to the US, and some others also pay federal income taxes (for example, Puerto Rico residents who earned income from sources outside Puerto Rico.
If you only move the company, though, on your personal tax income, you'll be paying the federal government their fair share of your Puerto Rico sourced income. But the island of Puerto Rico will still give you all the same breaks. So, if you only move your company, you would have to think of Puerto Rico as your state.
If you move to Puerto Rico under the provisions of recent legislation, you can retain your American citizenship and still pay no taxes to the IRS. You will have to pay territorial taxes in Puerto Rico, but these are much more modest.
The announcement is related to Act 22, which seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income once an individual becomes a resident of Puerto Rico.
