Frank Sánchez Ruiz
Managing Member
Puerto Rico tax incentives undercut US mainland
February 19, 2026
Puerto Rico tax incentives are embedded within the territory’s independent tax system, which operates separately from the US federal regime and offers significant advantages for investors.
The most tax-friendly industries are those engaged in export services and products, manufacturing, technology, professional services, tourism, investors, creative industries, and certain financial and insurance activities, among others. Covered services/areas generally include consulting, software development, marketing, engineering, R&D, shared services, films, tourism, agriculture, and eligible manufacturing operations, among others.
Key benefits include a fixed 4% income tax rate, tax-free on Puerto Rico–sourced dividend income, and property and municipal tax exemptions generally of 75% and 50%, respectively. The individual resident investor tax decree provides tax benefits resulting in no income tax on interests, dividends, and capital gains.
Puerto Rico also adopted the remote employee provisions pursuant to Act 36 of 2020. This Act allows employers to hire Puerto Rican residents without the employer being considered engaged in trade or business in Puerto Rico. The employee must be a bona fide resident and must provide services to clients/employer without nexus in Puerto Rico. Employees must meet residency tests, maintain an office or home office in Puerto Rico, among other prerequisites.
Please contact our firm in Puerto Rico for local advice.
