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Alternatively, businesses organized under the laws of a state of the United States or a foreign country may register to be authorized to conduct business within Puerto Rico as a foreign corporation. These businesses must file with the Puerto Rico State Department a Certificate of Authorization to do Business.
Puerto Rico will soon be replacing its existing state-level sales and use tax with a value added tax (VAT) system.
Sales and use tax: 11.5 percent on most goods and services. 10.5 percent on goods and services not subject to municipal SUT. 4 percent on designated professional services and services rendered to other merchants (Special SUT).
Excise tax: depends on the category of goods. Sales and use tax: 11.5 percent on most goods and services. 10.5 percent on goods and services not subject to municipal SUT.
If you're a bona fide resident of Puerto Rico during the entire tax year, you generally aren't required to file a U.S. federal income tax return if your only income is from sources within Puerto Rico.
Under General Corporation Law, a foreign corporation or a limited liability company must register with the State Department of Puerto Rico before conducting business locally.
U.S. businesses can operate in one or several states or they can operate in a foreign country. Most businesses must register where they are doing business, and that might mean registering as a domestic or foreign business, or both.
The new tax contributes 1% to the municipality level and 10.5% to the "state" level. The IVU was scheduled to expire on 1 April 2016, to be replaced with a value-added tax (VAT) of 10.5% for the state level, with the 1% IVU continuing for the municipalities.
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.
Because Puerto Rico is a United States territory, corporations are not subject to federal taxes unless earnings are repatriated. In turn, the corporate tax structure provides benefits of operating at a United States jurisdiction while providing tax benefits of a foreign country.