Puerto Rico or Cayman Islands: where should your business be based?
Puerto Rico ranks higher in the index, 22 against 24. 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%.
Companies pay no corporate income, capital gains or withholding tax, and no VAT is charged. Individuals pay no income or inheritance tax.
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.
Registration costs CI$700 to CI$2,568 by capital band. An express service completes within 24 hours for CI$500 more, and no minimum capital applies.
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.
Directors need not live in the islands, but the company must keep a registered office there. Economic substance requirements depend on the activity.
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.
Since 28 February 2025 the beneficial ownership register is open only to persons with a legitimate interest, including journalists, at CI$75 an application.
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.
The Certificate of Direct Investment requires at least CI$1,000,000 invested in a licensed business that generates employment.
Living and working
Currency
US dollar.
Cayman Islands dollar.
Time zone
UTC-4 all year, with no daylight saving.
UTC-5.
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 income, inheritance, capital gains, gift or property tax, but most real estate sales carry 7.5% stamp duty.
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.
Services include British Airways to London via Nassau and Delta and JetBlue to New York; there is no Dubai or Singapore service.
Puerto Rico vs Cayman Islands: 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 Cayman Islands: Companies pay no corporate income, capital gains or withholding tax, and no VAT is charged. Individuals pay no income or inheritance tax.
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 Cayman Islands: Registration costs CI$700 to CI$2,568 by capital band. An express service completes within 24 hours for CI$500 more, and no minimum capital applies.
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 Cayman Islands: Directors need not live in the islands, but the company must keep a registered office there. Economic substance requirements depend on the activity.
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 Cayman Islands: Since 28 February 2025 the beneficial ownership register is open only to persons with a legitimate interest, including journalists, at CI$75 an application.
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 Cayman Islands: The Certificate of Direct Investment requires at least CI$1,000,000 invested in a licensed business that generates employment.
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