Doing Business in Puerto Rico

It is hard to say.
PR in the past had such bureaucracy and convoluted system to get permits that it could take months to get a permit.

New laws have been recently put in place to smooth out the permit process, also there is movement to centralize more services into a single office, in the past you had to go to different places during the permit phase.

If you are young and an entrepreneur there are NGOs that will help you get started and. provide some of the capital, kind of like the Shark Tank TV program.

There is talk of using some of the closed schools for office spaces for small business.

As to taxes ...... If you are local the taxes are high at the moment, but if you have not been a resident of PR for the last 6 years there are huge tax advantage programs aimed at attracting new investors. Check out Act 20 and Act 22. See also FB group Puerto Rico Act 20/22 Resource Group Service Providers and Jobs Board

One of those programs is for those that invest, and basically the pay 4% tax on somethings and nothing on others. The other plan is for those that want to use the island as a base to export services, again it has a similar taxation.
See: http://puertoricotaxincentives.com/act- … vices-act/
See: http://puertoricotaxincentives.com/act- … stors-act/

In order to take advantage you have to move to Puerto Rico once approved.

As to the economy ..... The economy will be contracting around 6 percent before things get better, likely it will stabilize in 5 years and start very sly growth in 10 by 15 years the numbers should start looking promising.

This is the time to invest in land and properties, when they are cheap, there are a bunch of investors buying up bad mortgage pools and distressed property. If you wait there won't be any good deals.

PR is part of the US, the government can not nationalize your business, your risk is in the area of insufficient infrastructure and maybe not enough interest on your goods and services.

What I will be researching is whether my business of manufacturing my product with imported materials and marketed as an export product will qualify for  act20/22? Any insights would be appreciated.

As a man that is planning and preparing to move my business and family to PR, I have reviewed and researched everything I can find about PR and the future vision of the Government of PR (GPR) and I like what I see, for me, my business, my employees and the people of PR. 

(Not throwing you into the mix, at all) but the vast majority of the "News Media" I have read and heard, ALL do there best to put a negative spin on the changes GPR is doing to turn the ship around. All you read and hear is "PR IS DEFAULTING ON THEIR DEBT AND THEIR WORLD IS CRASHING TO THE GROUND!!!!" POOR POOR PR PEOPLE AND WHY WOULD ONE WANT TO LIVE THERE!!!!!" and a lot more is said beyond that simple illustration.

There are several things to consider before writing your article. This is my opinion and I am sure there will be those that disagree and others that agree.

1. The USA is in far worst debt and more bankrupt than PR. The only difference is the USA controls the printing press to pump out the Fiat Currency that we call the USD. I COMMEND GPR for sitting down and saying "HOUSTON, WE HAVE A PROBLEM, WE HAVE GOT TO MAKE CHANGES" and making aggressive changes with proven steps that WILL and NOT OVERNIGHT change the financial and economic position of PR and its people for the better. Does anyone see the USG doing this, NO!!

2. Yes the GPR created their mess by agreeing to the Bond deal (Tax Free). BUT they were heavily coerced and now the Bond Owners (Wall Street per say) are crying because either they will have to negotiate a major haircut or hope that the USG will do a bail out and then the PR People and the US Tax Payer get hurt even more. BOND INVESTORS, hear me, it was an investment!!! Put your big boy pants on and take your losses. Heck you can write it off for the next several years. BUT if that happened, all the Wall Street Brokers would not get their Coms. SORRY GUYS!!!

The position the GPR is taking on their debt and working to cut costs is the right actions. Everyone (including myself) can come in as a Monday Morning Quarterback. But as a whole, they are heading in the right direction. You can not have more going out than is coming in. SIMPLE MATH

3. The Tax Incentives will bring in additional finances for PR and start rebuilding their economy. Jobs are slowing being created and money is being invested back into the economy. As Rey sated, it will take years for things to turn around and right the ship. BUT if the PR People will stand firm and be patient, the ship will change directions and PR CAN BECOME THE SINGAPORE / HK of the CARIBBEAN. Then IF the USG will get their heads out of their butts, make positive changes and stop trying to follow the failed European Policies down the Socialist road, the US will greatly prosper as well.   

Sorry to get so wordy and this is a BIG can of worms. I am sure there will be some that will disagree and that is ok. BUT we have plenty of good solid current proof, history and financial data that shows that the actions GPR has taken (if they stay the course) will bring positive change and better for the PR People.

I encourage you as writer to think about the way you steer and present the article. I encourage you to SHOW THE CUP HALF FULL INSTEAD OF HALF EMPTY!!!

Have a blessed day!!!

Check out:

http://www.businessinpuertorico.com/en

&

https://prbusinesslink.com/

Hope this helps. I may be wrong but I do believe you will qualify under one of their Programs. I also think I read that you do not have to pay VAT on your imported Materials. I hope I am correct on that.

Have a blessed day!!

Mrkpytn wrote:

What I will be researching is whether my business of manufacturing my product with imported materials and marketed as an export product will qualify for  act20/22? Any insights would be appreciated.

See act 20 22 fb group

PR is terrible for business. See my earlier posts for details and analysis.

Btw, the "Wall Street types" who are crying over a haircut are predominantly pension funds, meaning it would be working Joes and Jills taking the haircut.

Really didn't want to get into JOS66's post.  I'd prefer to try and stay on the topic of the thread.

Severinguiton, the first thing you need to check out is Act 20.  It's designed to attract foreign business to PR, provided, among other things, that it is "service sector."   I suspect, Mrkpytn, that your manufacturing business won't qualify for Act 20.  I assume Severinguiton, that your IT business is service, not manufacturing.  Anyway, there are substantial tax incentives for the business.  Nevertheless, you and your employees will pay 11% sales tax, high income taxes, and some of the highest utility rates in the U.S.  It's quite the trade-off.

Rey is the eternal optomist, especially when it comes to the economy.  Lord knows I hope he's right, but I fear that he under-estimates what it will take to get the island's economy moving in the right direction.  A University of Puerto Rico economist recently estimated that the response to the financial crisis would contract the economy by 25%.  The governor, who has a strong interest in painting the rosiest picture, has said that economic growth won't happen for ten years.  That's ten years of things getting worse, before the economy turns around.

Rey is absolutely right about the red tape, and there is some noise about rationalizing the bureaucracy.  I don't expect that to happen soon.  There are too many people employed by this woefully inefficient system to streamline it.  So navigating the bureaucracy is a significant cost to business on the island.

Lastly, though the economic picture looks bleak, it provides opportunities for employers.  As official unemployment figures hover around 3 times that of the mainland, and as the workforce participation rate is well below half the population (about 40%), there are lots of people looking for jobs.  Moreover, the university system is heavily subsidized (my college charges about 20 times as much as UPR), so there should be recent college graduates with some knowledge of IT.  You may be able to recruit them before they decide to leave the island.

Thanks of lot for your answers. I does help me, though opinions are shared.
The article would indeed focus on tech preneurs, meaning high skilled IT people looking for a place to start an IT and web based service (such as Expat.com, Uber, Air BnB). So nothing oriented to the PR market only. That kind of business would need a good IT infrastructure (high speed internet, submarine cables), a tax friendly state, a pool of talented people...

And despite the bleak future newspapers are predicting for PR, it ranks 41st in the GEDI ranking, which is not bad.

Angel List, which is a worldwide database of startups, shows that PR hosts around 80 startups. This is less than Jamaica, but we find in PR 4 times more investors (which is very important when it comes to get funding).

I'll do additional research but again, thanks everyone for your valuable experience.

Even though the economy in the island is at its worse, this is all temporary. I do agree with most of the members about the Tax Act.  Businesses and investors are relocating due to Act 20/22 and so on.....

Mrkp..I have 2 very close friends that does exporting and they qualify.

Here's a link that might help with the topic
It covers most of the info you will meed to get informed in doing business amd movimg to Puerto Rico.
http://livinginpuertorico.com/moving-puerto-rico-us/

I think Puerto Rico is worth a mention, if you are talking about tech entreprenuers, and considering the island's proximity to the USA (NY/FL) and being a territory are positives along with Act 20/22. 

No doubt challenges remain and the path is not certain.
Tech companies can be created anywhere these days with things like Amazon Web Services hosting practically everything. 
Young tech entreprenuers  love being a part of the next big place or thing.

Given the beaches, climate,  and natural beauty .. these are big draws for the type of lifestyle they enjoy.


I also see some opportunity in Puerto Rican tech companies tapping into the large young latin consumer base whether it is social media or online stores.

Elcalipocho wrote:

Tech companies can be created anywhere these days with things like Amazon Web Services hosting practically everything.

"Tech companies" need highly skilled, English speaking app developers and software engineers.  PR lacks this pool of talent.  Start-ups also need to be close to venture capital firms and the markets.  PR is in another world relative to Silicon Valley.

"Amazon Web Services" operates massive data centers needing ready access to equipment, highly skilled data center technicians and (most of all) multiple sources of reliable commercial power.  PR does not have a reliable, well developed power infrastructure.  Besides, mass storage of data in the Caribbean (think hurricanes) would be imprudent.  All of PR data storage needs could be run out of a garage.

Startups need a relatively small amount of people to get going, some of which would consider locating to PR under the right circumstances.
AWS does not need to be located on the island to develop apps or run them.

In post #85 of this thread I posted information on the Rule of Law ranking of countries: https://www.expat.com/forum/viewtopic.p … 26&p=3

Related to the topic of this thread for those that find these rankings interesting is the "Ease of Doing Business" ranking done annually by the World Bank Group:

http://www.doingbusiness.org/rankings

Selected rankings:

1.  New Zealand
7.  United Kingdom
8.  United States

22.  Canada

31.  Switzerland

40.  Russia

53.  Colombia
55.  Puerto Rico

62.  Costa Rica

70.  Panama
78.  China

114.  Ecuador

Recently PR passed some laws to ease the way permits are issued, minimize the cases where a health and ecology study is needed and also passed the single employer law.

In theory the single employer rule is to allow the goverment to easily move resorces around to where they are needed most supocecedly this means fewer employees would be needed instead of having people sit on their hands because they are not needed that day or week. Its ability to work correctly and quickly is very much in question. Also it is a problem to employees that may have to drive 2 hours to their reassingment. There may also be problems if people may have to be retrained.

It is unlikely that we will see any gains from all of the above measures for a year or two and the government is likely to fudge the number to make themselves look good.

The problems with the unification of municipalities from 78 to about 20, would likely cause more layoff, and chaos in the provision of services. The savings are not likely to be there and the quality of service is likely to decline just like the one caused by single employer rule.

Yes we as citizents need the savings but i am not convinced that the government measures have been well though out, so I expect chaos for the next two years before we see any posible benefit to the people and new businesses.

Because of all the money that was cut out of municipalities, many are strugling to survive, long run I expect much higher property taxes, probably double or triple.

The separation of responsabilities between the government, municipalities and NGOs is already confucing and many times there are items that are nobody's responsability. I would prefer the elimination of municipalities and NGOs and have all and everything be the responsibility of the central government. This would mean one single way to do every function regardles of town and each function having a budget that is island wide.

Less expense, less power strugles, less local elections but nobody is listening to me, the politicians are doing what is good for them.