BY RAFELLI GONZÁLEZ COTTO AND EFRÉN RODRÍGUEZ MARTÍNEZ
A list of foreign corporations authorized to do business in Puerto Rico provided by the local State Department revealed that between September 2017 and August 2018, 1,146 foreign companies received government approval to establish themselves on the island.
During the specified period when these companies from abroad were duly registered to operate locally after hurricanes Irma and Maria struck the island in September, up until August of this year, the monthly trend of corporate formations rose from tens to hundreds. May 2018 saw the largest number of registered businesses: 115. Meanwhile, the month with the fewest registrations was September 2017, naturally due to the effect of back-to-back hurricanes affecting government operations, and when only eight companies were approved.
Although Puerto Rico’s controlled foreign corporation (CFC) structure allowed income from products sold to the U.S. mainland to be exempt from federal taxes, on Dec. 22, President Trump signed the Tax Cuts & Jobs Act, under which the island is now treated as a foreign jurisdiction, and forces companies to pay higher taxes than corporations on the U.S. mainland. CFCs on the island must now pay a 12.5 percent tax on intellectual property.