Puerto Rico or Bahamas: where should your business be based?
The Bahamas ranks higher in the index, =15 against 22. Which suits you depends on where the owners live, what the company is for and how it will be run.
Pillar by pillar
Doing business, side by side
Tax
The normal tax is 18.5% plus a surtax of up to 19%, giving a top rate of 37.5%. An Act 60 export services decree fixes the rate at 4%, with dividends from that income exempt. There is no VAT; the sales and use tax is 11.5%.
There is no corporate income tax. Groups with revenue of EUR 750 million or more pay a 15% Domestic Minimum Top-up Tax, and VAT is 10%.
Set-up
A stock corporation is formed online with the Department of State for $150, or an LLC for $250, with no set waiting period. A corporation files a $150 annual report by 15 April; an LLC pays a $150 annual fee.
The Registrar General's Department registers an IBC in 48 hours, or 1 hour by express service. The government fee is USD 350 for authorised capital up to USD 50,000 and USD 1,000 above.
On the ground
The certificate must name a designated office and a resident agent in Puerto Rico. Directors need not live there, and audited accounts are needed once the volume of business passes $10 million.
An IBC is formed through a licensed financial and corporate service provider, which acts as registered agent with a registered office in The Bahamas. Economic substance rules apply to relevant activities.
Ownership
There is no beneficial ownership register. FinCEN's March 2025 interim rule removed federal beneficial ownership reporting for companies formed in the US, including Puerto Rico.
Registered agents file beneficial ownership details to a secure search system run by the Attorney General's Office. Only named authorities can search it.
Residence
US citizens can move to Puerto Rico freely. Foreign nationals need US immigration status, such as an EB-5 green card from $800,000 in a targeted employment area or $1,050,000 elsewhere.
Economic permanent residence needs USD 1 million in real estate or Central Bank bonds, held for 10 years. Dependants can apply for an annual permit to reside, and home owners for a home owner resident permit.
Living and working
Currency
US dollar.
The Bahamian dollar, pegged at par to the US dollar. US dollars are widely accepted.
Time zone
UTC-4 all year, with no daylight saving.
UTC-5, or UTC-4 in summer, the same as New York.
Personal tax
Puerto Rico income tax rises to 33% above $61,500 of net taxable income. Long-term capital gains and dividends are taxed at 15%.
There is no personal income tax, capital gains tax, inheritance tax or wealth tax. Employees pay 4.65% national insurance up to a wage ceiling of BSD 3,510 a month.
Flights
San Juan's Luis Munoz Marin airport has nonstop flights to about 60 destinations, mostly on the US mainland, plus Madrid, Bogota and Panama City.
Lynden Pindling International Airport in Nassau has about 57 scheduled nonstop destinations, including seasonal routes, with direct flights to London Heathrow, Toronto and most large cities on the US east coast.
Puerto Rico vs Bahamas: common questions
Puerto Rico: The normal tax is 18.5% plus a surtax of up to 19%, giving a top rate of 37.5%. An Act 60 export services decree fixes the rate at 4%, with dividends from that income exempt. There is no VAT; the sales and use tax is 11.5%. The Bahamas: There is no corporate income tax. Groups with revenue of EUR 750 million or more pay a 15% Domestic Minimum Top-up Tax, and VAT is 10%.
Puerto Rico: A stock corporation is formed online with the Department of State for $150, or an LLC for $250, with no set waiting period. A corporation files a $150 annual report by 15 April; an LLC pays a $150 annual fee. The Bahamas: The Registrar General's Department registers an IBC in 48 hours, or 1 hour by express service. The government fee is USD 350 for authorised capital up to USD 50,000 and USD 1,000 above.
Puerto Rico: The certificate must name a designated office and a resident agent in Puerto Rico. Directors need not live there, and audited accounts are needed once the volume of business passes $10 million. The Bahamas: An IBC is formed through a licensed financial and corporate service provider, which acts as registered agent with a registered office in The Bahamas. Economic substance rules apply to relevant activities.
Puerto Rico: There is no beneficial ownership register. FinCEN's March 2025 interim rule removed federal beneficial ownership reporting for companies formed in the US, including Puerto Rico. The Bahamas: Registered agents file beneficial ownership details to a secure search system run by the Attorney General's Office. Only named authorities can search it.
Puerto Rico: US citizens can move to Puerto Rico freely. Foreign nationals need US immigration status, such as an EB-5 green card from $800,000 in a targeted employment area or $1,050,000 elsewhere. The Bahamas: Economic permanent residence needs USD 1 million in real estate or Central Bank bonds, held for 10 years. Dependants can apply for an annual permit to reside, and home owners for a home owner resident permit.
Read more
Still weighing Puerto Rico against Bahamas?
A short call settles what a ranking cannot: your residence, your structure and your timeline.