5 Ways to Benefit From Puerto Rico’s Post-Pandemic Rebound
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The Covid-19 pandemic has changed the world, likely permanently — our economy, the way we work, our priorities and many other important aspects of modern life have shifted seismically. But now that the worst of the pandemic looks to be at its final stages, business leaders should prepare accordingly, and geographic areas quickest to adapt to these recent financial and cultural changes will be in the best position to thrive in the post-pandemic world.
How can business leaders prepare and take advantage of the unique opportunities that will undoubtedly arise? As the founder of a firm that helps individuals and businesses leverage Puerto Rico’s tax incentives, I’ve predicted that the island will experience an economic boom in the post-pandemic period. Its successful tourism sector, alluring financial incentives, promising workforce, healthy lifestyle and thriving real estate industry create unique opportunities for business leaders.
Among the most attractive business considerations are:
1. A resuscitated tourism sector
Puerto Rico’s well-established tourism industry has continued to grow during the pandemic, opening a number of doors for business leaders. (For example, starting a company that provides travel or support services is a viable and lucrative option.) Americans have recently been subject to restrictions on international travel. As a result, many have chosen this U.S. territory over other destinations like Europe and Central and South America, in part because flying here can be done without a passport, and avoids other international travel restrictions as well. These factors have made travelers more aware of the island’s hospitality industry and natural beauty.
Interestingly, Puerto Rico’s hotel occupancy in July 2021 was 15% higher than the 2019 rate, according to data from Discover Puerto Rico, and it’s expected that once tallied, 2021 visitor numbers will have returned to 2019 levels. These statistics are especially impressive considering that the rest of the Caribbean region is anticipated to have a meager 39% recovery in terms of visitor numbers. In addition, Rafael Hernandez Airport and Mercedita International Airport, which closed in March of 2020, have now reopened.
2. Post-Covid remote worker movement
Due to the pandemic-induced lockdowns and other biosecurity measures, remote work has never been more popular, and Act 60 tax incentives offered to Americans who relocate to Puerto Rico are well suited for companies and individuals who prefer to work remotely. If you move your business to Puerto Rico and/or relocate there yourself, you may be eligible for these lucrative benefits.
The Act 60 Export Services incentive (formerly known as Act 20), for instance, is offered to businesses that operate on the island but sell services remotely to clients elsewhere. Businesses that qualify for this receive a 4% corporate tax rate and a 100% tax exemption on distributions from profits. If your company provides its services virtually or carries out back-office tasks, it can also qualify.
Before the pandemic, many entrepreneurs didn’t believe they could move their companies out of San Francisco, Austin or other tech hubs, but are now realizing that they can hire talent and manage teams away from historical tech hotspots. Many tech employees are also looking to leave high-cost cities and move to more affordable areas that offer a better quality of life. As business leaders build their remote workforces and grasp that they don’t require large urban office spaces to operate, we expect that 2021 will have seen the largest-ever number of individuals and companies moving to Puerto Rico.
3. Lower competition for high-quality employees
Puerto Rico’s talented workforce, which includes many bilingual employees, has actually grown during the past two years. In the decade prior, and particularly in the aftermath of 2017’s Hurricane Maria, many residents decided to leave (some 130,000, according to the U.S. Census Bureau). But now, many native Puerto Ricans who had moved to the mainland are returning to enjoy more time with their families (a partial result of the increased emphasis on family life brought about by the pandemic).
Additionally, Act 20 and Act 60 are drawing larger companies employing Puerto Rican workers, which has become a growing trend. Even as the island coped with a period of economic distress, its universities continue to train talented young workers, so there is a large pool of skilled employees across a variety of industries. Alfredo Martínez, president of the Puerto Rico Builders Association, noted in an article for The Weekly Journal that tax incentives have encouraged “the export of services of many local companies, which have increased their generation of jobs and economic activity.”
4. A healthy company lifestyle
This island of 2.8 million residents enjoys warm, tropical weather year-round and is brimming with striking beaches and nature reserves. It also boasts El Yunque National Forest, the only tropical rainforest in the U.S., as well as large mountains ideal for hiking. For entrepreneurs and staff members who enjoy a balanced lifestyle, outdoor activities and pleasant weather, it’s an ideal headquarters and home.
5. A real estate boom
In 2021, the island’s real estate prices, property sales and rental rates rose considerably, due to the return of native Puerto Ricans and the tourism sector’s success. As a result, real estate has become a promising investment opportunity for U.S. business owners, and prices are expected to continue to rise. Hospitality real estate development is also thriving. Hotel occupancy remains high, with upper-end hotels are experiencing a particularly successful period. Further, several new hotel developments are underway, including the Allmost Homes Hotel in San Juan.