Are you one of those aspiring entrepreneurs about to grow your business in 2024? Sure, the opportunities are countless when you think of it. At International Wealth, we suggest you consider Puerto Rico.
The jurisdiction offers valuable incentives for customers, both non-resident and resident, who want to expand their businesses, protect funds, trade, invest assets, and increase wealth. The options are no doubt very appealing.
Puerto Rico, also known as the Island of Opportunities, comes with many benefits for business development and investment in 2024:
- unparalleled business climate in the Caribbean
- generous tax incentives
- technically advanced financial and banking products and services
- high-speed Internet and fiber optic cable
- top quality personnel
- well-developed network of highways
- availability of seaports and air hubs
- modern schools
- international public health care standards
- high-quality private medical facilities.
What is more, the cost of living in Puerto Rico is a lot lower than in the USA.
Puerto Rico’s banks are especially popular with U.S. citizens and companies that provide offshore services and benefit from bank accounts in Puerto Rico.
Types of corporate structures in Puerto Rico
Before we proceed with discussing the specifics of corporate accounts, think about what business structure would be suitable for your enterprise. Puerto Rico offers various options, including corporations, limited liability companies (LLCs), and partnerships.
Each structure comes with its own set of benefits and considerations, including tax implications, liability, and management instruments.
The choice of corporate structure depends on the nature, size, and goals of your business, the number and type of owners, the liability and management preferences, and the tax implications. Therefore, consult a professional advisor before deciding on the best corporate structure in Puerto Rico for your business.
Legal and regulatory requirements
Puerto Rico has a legal framework for corporate accounts that is based on U.S. laws and regulations, as well as the local ones.
Supervised by the Office of the Commissioner of Financial Institutions of Puerto Rico (OCIF), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve System (FRS), Puerto Rico’s banks are subject to the same rules and standards as the U.S. financial institutions.
As of 2024, the laws and rules regulating their activities encompass the Bank Secrecy Act, the USA Patriot Act, the Foreign Account Tax Compliance Act, and the Common Reporting Standards.
Choosing the right bank
Puerto Rico has a diverse and competitive banking sector, which offers a full range of banking products and services to its customers. Selecting the right banking partner is a critical decision for businesses establishing corporate accounts in Puerto Rico.
Major banks on the island offer a range of services, including tailored solutions for remote operations.
These are the oldest and the most trusted first-choice institutions that we recommend:
- Banco Popular de Puerto Rico: The largest and oldest bank in Puerto Rico, Banco Popular has a market share of 47.4%, according to the OCIF. You will find various corporate accounts here, e.g., checking, savings, money market, certificates of deposit, and more.
- FirstBank Puerto Rico: FirstBank Puerto Rico is the second largest bank in the country, offering exceptional service quality and selection. Apart from a variety of corporate accounts, the list of services includes online and mobile banking, wire transfers, foreign exchange, and trade finance.
- Oriental Bank: Number 3 in the banking industry of Puerto Rico, Oriental Bank is the place to go for both personal and corporate accounts and a multitude of other banking services and products.
Before you decide on a particular bank in Puerto Rico to set up your corporate account, consider its reliability and availability, services, products, and related fees, the quality of customer services, and the available online banking options.
In the long run, this is what will help you manage your corporate finances efficiently.
Tax incentives for corporations
Puerto Rico, a scenic island and a strategic center, offers tempting tax incentives for corporations. Needless to say, a deep knowledge of local tax laws and regulations is essential for optimizing their financial structure.
Act 20 of 2012 is designed for businesses that export services from Puerto Rico. It offers tax benefits, with 4% corporate income tax, 0% dividends tax, and 100% property and municipal tax exemption, for 15 to 20 years, renewable for 10 years. This act appeals to businesses seeking tax relief in Puerto Rico.
Act 22 of 2012 is for individuals who become residents of Puerto Rico and invest in local businesses.
It comes with tax advantages, such as 0% federal income tax, 0% interest and dividends tax, and 0% capital gains tax, for 15 to 20 years, renewable for 10 years. For investors seeking a tax-friendly environment, Act 22 is a source of financial opportunity.
Act 60 of 2019 extends benefits to both businesses and individuals on the island. It offers tax benefits, such as 4% corporate income tax, 0% dividends tax, 100% property and municipal tax exemption, 50% municipal license tax exemption, and 25% research and development tax credit, for 15 to 25 years, renewable for 15 years. If your company is in the R&D sector, it can benefit from this legislative instrument.
Act 273 of 2012 is for businesses providing financial services to Puerto Rico non-residents. The incentives offered thereunder are 4% corporate income tax, 0% dividends tax, 100% property and municipal tax exemption, and 6% withholding tax on interest payments to non-residents.
It is meant for financial service providers and makes Puerto Rico an attractive jurisdiction to base operations.
Please mind that some business types are not allowed to open corporate accounts in Puerto Rico:
- offshore companies
- cryptocurrency-related businesses
- businesses operating in Afghanistan, Cuba, Iran, North Korea, Sudan, Syria, and some other jurisdictions.
Due to compliance and security reasons, they may face rejection or refusal from Puerto Rico banks.
It usually takes 2 to 3 weeks for a Puerto Rico bank to decide on a non-resident corporate account application. To speed things up, please send us the scanned copies of your documents and the required bank forms.
Don’t hesitate to reach out to International Wealth to learn about specific Puerto Rico banks and their corporate account terms. For more information on corporate bank accounts and other opportunities abroad, please read here.