Employing in
Puerto Rico

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Expanding into
Puerto Rico

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all the registration procedures that need to be done and the documentation required.

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The Commonwealth of Puerto Rico is part of the Greater Antilles archipelago in the eastern Caribbean Sea and is an unincorporated territory of the United States of America. As such, Puerto Rico is neither a US State nor an independent nation. Its citizens cannot vote in US presidential elections, even though they are considered to be US citizens and have free movement between the countries. Puerto Rico’s currency is the US dollar.

Puerto Rico’s economy is entirely separate from the US and had an estimated Gross Domestic Product of 118 billion US dollars in 2022, an increase on 2021’s 106 billion US dollars according to the World Bank. Manufacturing and services dominate the economic sectors, eclipsing agriculture which had been the major component until the mid-20th century.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilised when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to Puerto Rico

Learn all about expanding into Puerto Rico and see what we can do to make your expansion easier.

Download our Guide to Puerto Rico

Learn all about expanding into Puerto Rico and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in Puerto Rico

Hiring Staff
in Puerto Rico

The Main Sectors of the Puerto Rican Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Financial services, insurance, business services and real estate are key elements of the services sector, which comprised just under 50% of GDP in 2021, and showed a marginal increase over the previous year. Trade services benefit from Puerto Rico’s relationship with the US, and the general absence of border controls. Business consultancies have become an increasing factor in the services sector.

Manufacturing accounts for just over 50% of Puerto Rico’s Gross Domestic Product and half of that derives from the pharmaceutical industry. After five decades of production in the field, Puerto Rico has a highly-qualified workforce in producing drugs and medications, medical and surgical equipment, ophthalmic and dental devices, laboratory appliances and clinic furniture. The sector has 30 years’ experience in sterile pharmaceutical production and high-tech manufacturing, which includes pacemakers, implantable defibrillators and vision correcting lenses.

Companies operating on Puerto Rico include Pfizer, Eli Lilly, AstraZeneca and GK Pharma. Textiles and apparel, petrochemicals, machinery, leather, printing, publishing and electronics are part of the island’s manufacturing sector. Aerospace is also represented, both in manufacturing and business support, by international companies such as Honeywell, Raytheon, Lufthansa and Pratt & Whitney.

Part of the services sector, tourism is also a significant stand-alone factor in the Puerto Rican economy. The sector rebounded strongly from the pandemic, helped by freedom of movement for US citizens travelling to the Caribbean island. Statistics suggest that travel and tourism generated US$8.9 billion in 2022, a 39% increase over pre-pandemic 2019. Over 90,000 are employed in the sector, 12.8% more than in 2019. It is also predicted that room bookings will be up 80% in 2023, over 2022. Gambling is also an important element of the sector with more than 20 casinos, all of which must be located in hotels in designated ‘historically important tourism zones’.

This was the leading sector of Puerto Rico’s economy into the 20th century with exports including traditional crops such as rice, coffee, sugar cane and corn. Agriculture now accounts for less than one per cent of GDP, with Puerto Rico importing 85% of food for its population.

As an unincorporated commonwealth territory of the United States, Puerto Rico does not have a central bank and relies on the US Federal Reserve System as its overriding regulatory authority. Within Puerto Rico, the system is overseen by the Office of the Commissioner of Financial Institutions (OCIF), with responsibility for banks, credit unions, member-owned cooperatives and other financial institutions providing specialised services. Banks in Puerto Rico are part of the US cheque-clearing system. Due to this relationship, US banks play a significant role in the Puerto Rican system, through such as Wells Fargo and Bank of America.

Puerto Rico has reserves of metallic minerals, hydrocarbons and precious stones, although mining activity is slight and severely restricted by population density.

The Main Sectors of the Puerto Rican Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Financial services, insurance, business services and real estate are key elements of the services sector, which comprised just under 50% of GDP in 2021, and showed a marginal increase over the previous year. Trade services benefit from Puerto Rico’s relationship with the US, and the general absence of border controls. Business consultancies have become an increasing factor in the services sector.

Manufacturing accounts for just over 50% of Puerto Rico’s Gross Domestic Product and half of that derives from the pharmaceutical industry. After five decades of production in the field, Puerto Rico has a highly-qualified workforce in producing drugs and medications, medical and surgical equipment, ophthalmic and dental devices, laboratory appliances and clinic furniture. The sector has 30 years’ experience in sterile pharmaceutical production and high-tech manufacturing, which includes pacemakers, implantable defibrillators and vision correcting lenses.

Companies operating on Puerto Rico include Pfizer, Eli Lilly, AstraZeneca and GK Pharma. Textiles and apparel, petrochemicals, machinery, leather, printing, publishing and electronics are part of the island’s manufacturing sector. Aerospace is also represented, both in manufacturing and business support, by international companies such as Honeywell, Raytheon, Lufthansa and Pratt & Whitney.

Part of the services sector, tourism is also a significant stand-alone factor in the Puerto Rican economy. The sector rebounded strongly from the pandemic, helped by freedom of movement for US citizens travelling to the Caribbean island. Statistics suggest that travel and tourism generated US$8.9 billion in 2022, a 39% increase over pre-pandemic 2019. Over 90,000 are employed in the sector, 12.8% more than in 2019. It is also predicted that room bookings will be up 80% in 2023, over 2022. Gambling is also an important element of the sector with more than 20 casinos, all of which must be located in hotels in designated ‘historically important tourism zones’.

This was the leading sector of Puerto Rico’s economy into the 20th century with exports including traditional crops such as rice, coffee, sugar cane and corn. Agriculture now accounts for less than one per cent of GDP, with Puerto Rico importing 85% of food for its population.

As an unincorporated commonwealth territory of the United States, Puerto Rico does not have a central bank and relies on the US Federal Reserve System as its overriding regulatory authority. Within Puerto Rico, the system is overseen by the Office of the Commissioner of Financial Institutions (OCIF), with responsibility for banks, credit unions, member-owned cooperatives and other financial institutions providing specialised services. Banks in Puerto Rico are part of the US cheque-clearing system. Due to this relationship, US banks play a significant role in the Puerto Rican system, through such as Wells Fargo and Bank of America.

Puerto Rico has reserves of metallic minerals, hydrocarbons and precious stones, although mining activity is slight and severely restricted by population density.

Commercial Laws in
Puerto Rico

Puerto Rico Department of the Treasury (Departamento de Hacienda):  Responsible for collecting taxes and implementing the Internal Revenue Code.

United States Internal Revenue Service (IRS): Responsible in some instances for collecting taxes from residents of Puerto Rico. The IRS has a ‘tax coordination’ or ‘tax implementation’ agreement with Puerto Rico.

Puerto Rico Department of Labour and Human Resources: This includes divisions such as the Bureau of Work Norms and the Anti-Discrimination Unit.

The Puerto Rico State Insurance Fund Corporation: The labour support organisation to provide compensation for employees suffering workplace accidents.

The US Department of Labour:  Includes such as the Equal Employment Opportunity Commission.

General requirements

Despite being a territory of the United States of America, different regulations apply to drawing up contracts in certain respects. In the US, unless a contract specifies otherwise, employment is ‘at will’ in most States. This is not the case in Puerto Rico and contracts are the norm, either in writing or verbally agreed. Under the terms of the Unjust Dismissal Act, if an agreement does not give a termination date it is considered permanent and indefinite. Written contracts can be in any language that is understood by the parties. An employee’s signature is confirmation they understand and fully agree with the terms.

Commercial Laws in
Puerto Rico

Puerto Rico Department of the Treasury (Departamento de Hacienda):  Responsible for collecting taxes and implementing the Internal Revenue Code.

United States Internal Revenue Service (IRS): Responsible in some instances for collecting taxes from residents of Puerto Rico. The IRS has a ‘tax coordination’ or ‘tax implementation’ agreement with Puerto Rico.

Puerto Rico Department of Labour and Human Resources: This includes divisions such as the Bureau of Work Norms and the Anti-Discrimination Unit.

The Puerto Rico State Insurance Fund Corporation: The labour support organisation to provide compensation for employees suffering workplace accidents.

The US Department of Labour:  Includes such as the Equal Employment Opportunity Commission.

General requirements

Despite being a territory of the United States of America, different regulations apply to drawing up contracts in certain respects. In the US, unless a contract specifies otherwise, employment is ‘at will’ in most States. This is not the case in Puerto Rico and contracts are the norm, either in writing or verbally agreed. Under the terms of the Unjust Dismissal Act, if an agreement does not give a termination date it is considered permanent and indefinite. Written contracts can be in any language that is understood by the parties. An employee’s signature is confirmation they understand and fully agree with the terms.

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