In 2024, Puerto Rico is still high on the list of top destinations for companies in need of top-notch banking services. The reason behind the appeal of corporate banking in Puerto Rico is simple enough: the jurisdiction lures business founders with its unique advantages that cater to diverse industry needs. From multinational corporations to local startups, companies opt to bank in Puerto Rico for a myriad of reasons, ranging from financial incentives to strategic advantages.
Take advantage of tax breaks and economic incentives
One of the primary reasons why companies bank in Puerto Rico is the array of tax and economic incentives offered by the government. Under Act 20 (Export Services Act) and Act 22 (Individual Investors Act), businesses and individuals benefit from favorable tax rates, including exemptions from federal taxes on Puerto Rican-sourced income. To give you a better picture, under Act 20, export service businesses enjoy favorable tax treatment, including a mere 4% corporate income tax rate, full exemption on distributions and dividends, and a substantial 90% tax exemption on property and municipal taxes. Meanwhile, Act 22 offers a 100% tax exemption on passive income like dividends, capital gains, and interest, provided investors establish bona fide residency in Puerto Rico. Not only do these incentives reduce their tax burden but also enhance the competitiveness of businesses in Puerto Rico, making it a highly appealing jurisdiction for banking and financial activities.
Irresistible appeal of Puerto Rico’s integration with US financial powerhouse
A compelling reason for companies to choose banking in Puerto Rico in 2024 is the seamless access to the powerful financial system of the United States, which is among the largest and most sophisticated globally. Using the US dollar as its currency, Puerto Rico benefits from direct access to the Federal Reserve System, the US payment infrastructure, and the expansive US capital star2news markets. This integration ensures stability, efficient and secure payment processing, as well as access to diverse financial instruments and investment opportunities.
We will tell you more, Puerto Rico boasts a thriving banking sector, comprising both local institutions and international players. It comes with a comprehensive suite of financial services and products tailored to varying business needs. With a commendable bank account penetration rate of 88.9%, as per the World Bank, Puerto Rico demonstrates a high level of financial inclusion, further bolstered by its supportive regulatory environment. Recent legislation promoting the development of fintech, digital assets, blockchain, and crowdfunding platforms underscores Puerto Rico’s commitment to staying at the forefront of financial innovation. These factors collectively make Puerto Rico an attractive and competitive destination for corporate banking, facilitating access to finance and allowing businesses to diversify their funding sources. Ultimately, this is a major contribution to the island’s economic resilience.
Bright future of corporate banking in Puerto Rico
What is there in it apart from the current economic magnetism of Puerto Rico for businesses? Let’s take a look at the nation’s future. In 2024, the island’s economy is expected to rebound following years of recession, debt crises, natural disasters, and the pandemic. Projections indicate that Puerto Rico is likely to experience a growth rate of 2.5%, as forecasted by the International Monetary Fund. This positive outlook is supported by several key factors, including the infusion of federal relief funds, the implementation of a debt restructuring plan, initiatives for infrastructure investment, and strategies aimed at reviving the tourism sector.
The sources of the nation’s wealth are its strategic geographical location, skilled workforce, and thriving niche sectors. Here belong pharmaceuticals, celebrity net worth biotechnology, aerospace, and renewable energy. Taken together, they turn Puerto Rico into an inviting place for corporate banking, paving the way for new opportunities and increasing demand for financial services and products among corporations and businesses eager to participate in the island’s economic recovery.
Variety: the spice of life
In addition to Puerto Rico, you are welcome to consider several other jurisdictions that offer similar corporate banking terms in 2024. Among them are Singapore, the Cayman Islands, Belize, and Seychelles. Just like Puerto Rico, these nations offer a blend of tax incentives, financial access, and economic stability tailored to the needs of businesses and corporations. Boasting reputable banking sectors, they provide a spectrum of financial services and products that meet various demands. Many of these jurisdictions impose low or no CRS compliance requirements, thus bolstering the privacy and security of offshore bank accounts. Depending on the specific objectives of your business, you might find them to be attractive alternatives to Puerto Rico as far as corporate banking in 2024 is concerned.
- Singapore: With its friendly business environment, a low corporate tax rate of 17%, and no taxes on capital gains or dividends, Singapore is among the top destinations to do business globally. The government’s tax policies are exceptionally favorable here. Just imagine, that you won’t have to pay any taxes on capital gains or dividends distributed to shareholders. Sounds great, doesn’t it?
- Cayman Islands: For years, Cayman Islands has been a premier international financial center, attracting businesses engaged in offshore banking, investment funds, and structured finance transactions. Companies here pay no income, capital gains, or wealth tax. This is a significant cost consideration meaning that they are subjected to a minimum tax burden, which leaves foreigners more profits to reinvest.
- Belize: A leading offshore banking jurisdiction in the Caribbean, Belize is known for its strict confidentiality and strong security. The country is famous for its flexible legislation that supports financial activities, providing privacy and stability for investors. The nation’s zero-tax regime for offshore companies makes Belize attractive for businesses willing to save on taxes. The jurisdiction also has a low minimum deposit requirement for offshore bank accounts, which is convenient for individuals and corporations willing to efficiently manage their assets.
- Seychelles: The jurisdiction is one of Africa’s fast-growing offshore banking hubs, offering banking convenience, accessibility, and a strong regulatory framework. Companies in Seychelles benefit from a low corporate tax rate of only 1.5%. Seychelles also boasts a wide network of double tax treaties with over 20 states, which makes it a strategic jurisdiction for international financial transactions.
For further details about Puerto Rico banks and how to open corporate accounts both in the jurisdiction and globally, don’t hesitate to get in touch with the International Wealth expert team!