Welcome to 'Luxury Island'

Welcome to ‘Luxury Island’ Puerto Rico becomes the best high-end property deal in the Caribbean; U.S. and foreign buyers welcome!

By Alexander López pages 16-20

TOP STORY ENERGY WATCH SPECIAL FEATURE Puerto Rico Lutron, New Energy, Green Way blaze surpasses airlift trails in local green economy pages 23, 25, 27 targets, as airlines expand fl ights, Vía Verde clears major hurdle, draws while American nearer fi nal regulatory approval page 24 reshuffl es Prepa’s new effi ciency-driven fund pages 2, 8 lowers rates, raises hopes page 26

For up-to-the-minute local, national, internationalrnational and economic news in English, go to caribbeanbusiness.pr now on 16 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011

The best deal in the Caribbean

Héctor J. Vélez The recession has left lots of high-end properties unsold in Puerto Rico. President There is a growing number of high-income buyers outside the island. Puerto Rico offers unmatched incentives, conditions for them to buy here.

Juan J. Bruno Vice President & Treasurer

José Penabaz Vice President & Audit Director

20 years of commitment to excellence and exemplary service Conclusion: Let’s get out there and sell!

BY ALEXANDER LÓPEZ and condos sitting empty as a result sales & transfer taxes) apart from of newly built condos, that fi gure [email protected] of the island’s long recession. the sale price itself, expressed as a jumps to 90%. In addition to those incentives, percentage of the property value, is Developers in the area have been Innovative Business Solutions in the areas of: hether you are a millionaire the island boasts the lowest prop- the lowest in the Caribbean, and av- working with the airlines to encour- Wlooking for a sunny luxury re- erty taxes anywhere in the U.S., and erage cost per square foot in the city age the establishment of fl ights to • Audit/Assurance • Business Consulting • Financial Advisory treat, an expatriate yearning to return mortgage interest rates under 4%. centers is the second lowest behind new international cities where there to the island of your birth, or just Additional tax shelter incentives Jamaica. are potential buyers. • Tax • Technology and operations looking for a piece of the tropical on passive investments and a fi xed Meanwhile, other jurisdictions un- As reported in the Wall Street Journal (WSJ), Fortune Interna- Caribbean on a budget, Puerto Rico tax rate of 4% for services exported der the U.S. fl ag are demonstrating tional focused heavily on Brazil to Centro Internacional de Mercadeo, 100 Carr. 165 Suite 410, Guaynabo, Puerto Rico 00968 has the ideal property portfolio. from operations in Puerto Rico add that there is signifi cant international sell Jade Ocean, a 50-story building The commonwealth government to the attraction. demand for domestic real estate. in Miami with infi nity pools, a pri- Tel. 787-625-1800 Fax 787-625-1812 has created a broad series of incen- The total cost of buying and resell- According to the Miami Associa- vate movie theater and a children’s tives for the purchase of real estate on ing a residential property, including tion of Realtors, an estimated 60% playroom. www.crowehorwath.net the island that should help develop- all transaction costs (registration, of home sales in South Florida in- In an email, an American Airlines ers sell much of the high-end homes real-estate agent and legal fees, and volve a foreign buyer. As for sales Continued on next page SPECIAL FEATURE 40 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011 FRONT PAGE 17 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011

Continued from previous page price of staying in a hotel, they could rent an apartment for two months. spokeswoman said, “It makes busi- Then they discover that for what KEOGH Report ness sense to promote Miami not only they pay in rent, they could pay six as a place to visit, but also as a place months of a mortgage,” said Puerto to live.” Rico Secretary of State Kenneth Mc- Puerto Rico must look to foreign Clintock. “This is part of the market buyers to drive sales when local inves- that we must target to reinvest in real tors are limited and remain hesitant. estate in Puerto Rico. Currently, less than 2% of all prop- “We need to market traditional Keogh Plan: Save for the future, reduce current tax burden erties sold in Puerto Rico are sold to tourism and residential tourism in an nonresident buyers. There is a fl at integrated, multidisciplinary manner 29% capital gains tax on sales of to a broader spectrum of potential HÉCTOR ORTIZ, CPA Moreover, Social Security alone isn’t enough to TAX MANAGER real estate; however, new housing home buyers.” HORWATH VÉLEZ & CO. PSC support most retirees’ lifestyles. A report on the incentives under Law 132 provide no Foreign investors have yet an- fi nancial future of the Social Security program capital gains tax for new residential other incentive to buy in Puerto oday, the main savings and tax-planning tool indicated that if major changes aren’t made, the properties and a 50% reduction on Rico: as a path to U.S. citizenship, Tavailable for self-employed individuals and Social Security Administration will only be able future capital gains taxes for existing as reported exclusively last week by owners of unincorporated businesses is the Ke- to pay 76% of scheduled benefi ts starting in 2037. properties. CARIBBEAN BUSINESS. ogh plan. Under this qualifi ed retirement plan, That is why entrepreneurs should have another Hato Rey-based GB Realty Inc. That is made possible through the contributions made are 100% tax deductible up savings mechanism for retirement other than works aggressively to put its clients EB-5 Immigrant Investors program, to certain limitations. In addition, accumulated Social Security benefi ts. in touch with international investors which allows a foreign national to contributions and earnings are tax deferred until If you are considering a Keogh for your through global real-estate networks establish permanent residency by the individual begins withdrawing funds from business, you must establish the plan on or before Leading Real Estate Companies investing $1 million and creating the plan. The purpose of the plan is to help indi- Dec. 31. Once created, contributions to the plan of the World and Luxury Portfolio or preserving 10 or more jobs in the viduals save for the future while reducing their can be made until the tax return fi ling due date. International. U.S. current tax burden. Our recommendation is to consult your business “We are pushing the industry to “We need to market traditional “I don’t know of any jurisdiction that In certain rural or depressed areas Ⅲ Keogh plan funds are held in a trust, which adviser before you set up a retirement plan. place Puerto Rico on the map for tourism and residential tourism in an has this type of initiative.” of the U.S., the investment is re- is tax exempt and provides protection from the international/global market with integrated, multidisciplinary manner —Economic Development & duced to $500,000. These are known creditors. Furthermore, as assets of the trust all the sales & marketing tools that to a broader spectrum of potential Commerce Secretary José Pérez-Riera as designated regional centers and are separate from the assets of the institution “When retirement time Leading and Luxury Portfolio pro- home buyers.” the government of Puerto Rico is managing the trust, in the event said institution comes, the individual must vide our fi rm,” said Ani González, —Secretary of State currently exploring the possibility fails, assets of the trust are protected. The plan vice president of GB Realty. “They Kenneth McClintock of acquiring this designation. also provides for higher contribution limits than decide whether to receive have powerful advertising tools that other retirement plans. Under the new Puerto Rico the funds in a lump sum will enable GB Realty’s clients to U.S. home sales market was approxi- detached single-family homes, 61% PRICES AT AN ALL-TIME LOW tax reform, the maximum deductible contribution market and sell in the international mately $1.07 trillion. Of those sales, having chosen this type of property; The government has recently ex- is the lesser of $49,000 per year or 100% of the or in periodic payments. A market. The real-estate industry has $82 billion were to international however, 36% chose condominiums tended real-estate incentives that are participant’s compensation. Plan holders can become driven by brand, and we buyers—that’s 7.7% of the total. or townhouses—a proportion much unmatched by any of their type in also contribute the maximum amount ($5,000) lump-sum distribution will believe in the Leading and Luxury In fi scal 2011, which ended June larger than domestic buyers. the world. There are no future capi- to an IRA (individual retirement account) while be subject to a preferential Portfolio brands.” 30, 3,393 new and 10,567 existing According to the “Profi le of In- tal gains taxes on the purchase of contributing to a Keogh plan. Héctor Ortiz, CPA, tax manager at tax rate of 10% or 20%. In Similarly, Trillion Realty Group homes were sold in Puerto Rico. If ternational Home Buying Activity new residential property, and there When retirement time comes, the individual Horwath Vélez & Co. PSC Inc., the exclusive affi liate of Chris- the island were able to attract the 2011” report by the National Asso- is a 50% reduction on future capital must decide whether to receive the funds in a order to benefi t from the tie’s International Real Estate for same percentage of nonresident pur- ciation of Realtors, 45% of all inter- gains taxes for existing property. lump sum or in periodic payments. A lump-sum Puerto Rico, including Vieques and chasers as the average in the main- national sales were under $200,000. In addition, there are zero capital distribution will be subject to a preferential tax rate 10%, the trust has to be Culebra, is meeting in December land U.S., an additional 193 new and In the $200,000-to-$500,000 range, gains taxes on the sale of existing of 10% or 20%. In order to benefi t from the 10%, exemption is $11,000, and it is $15,000 for those organized in Puerto Rico with the top 15 real-estate brokers of 814 existing homes would have been 37% of the properties were sold properties, and there is a $5,000 de- the trust has to be organized in Puerto Rico and 60 years or older. Therefore, prior to retirement, a Brown Harris Stevens, the Christie’s sold, for a total of 1,007. to international buyers and 18% duction from ordinary income for must meet certain investment requirements. On careful evaluation must be made to maximize the and must meet certain affi liate in New York City. Going one step further, if Puerto bought properties valued at more capital loss on the sale of existing the other hand, periodic payments will be taxed, at possible tax alternatives provided by law. investment requirements.” “We are going to present the best Rico had been able to sell to inter- than $500,000. homes for up to 15 years, prompt- ordinary tax rates, according to the excess of such At present, people can’t rely on Social Security high-end real-estate properties to the national buyers at the same rate as The report further indicated that ing sellers to be less hesitant about distribution over the tax exemption provided by benefi ts as their main source of savings for —Héctor Ortiz top New York brokers to place Puerto Florida, another 1,051 new and 3,278 foreign buyers paid cash for 62% of lowering their price. law. For individuals under 60 years of age, the tax retirement due to the uncertainty of the program. Rico on the map of their exclusive cli- existing homes would have been the properties. Puerto Rico has the Property taxes and recording fees ents and investors,” said Letty Gutiér- sold. This is the type of sales activ- luxury of not only being able to at- have also been signifi cantly reduced rez, a partner at Trillion. “Puerto Rico ity that is necessary to help bring the tract international buyers, but buy- on new and existing properties; and, has excellent real-estate properties construction industry and the entire ers from the U.S. mainland as well. there are a wide variety of fi nancing and opportunities. We are going there economy of Puerto Rico out of its There is no reason why the Puerto alternatives as well. to share our knowledge of the benefi ts current long-term recession. Rican real-estate market can’t reach The passing of these incentives has Puerto Rico has to offer.” Furthermore, foreign buyers are levels of nonresident penetration been benefi cial to the local real-es- more likely to buy on the high end comparable with those found in tate industry. Two real-estate broker- TARGET: FOREIGN INVESTORS of the market. In the mainland U.S., other locations such as Miami and ages have signed up with Coldwell In the mainland U.S., the rate of the average price paid by interna- Panama City, Fla. Banker to sell high-end properties home sales to international buyers tional buyers was $315,000; by “Many people visit family in Puerto under the Previews International is higher than in Puerto Rico. In the comparison, the overall average was Rico and stay in hotels for seven to Luxury brand name. $218,000. International buyers favor 10 days. They fi gure out that for the 12 months ending in March, the total Continued on page 18 Fr o n t p a g e 18 CARIBBEAN BUSINESS Thursday, december 8, 2011 Continued from page 17 which a hurricane strikes a mild incon- Square feet prices, venience compared with other parts of “At Coldwell Banker, we have the the Caribbean and even Florida. No. 1 resource program for selling largest city, US$ Frequently, storm shutters are inte- luxury homes, specifically in the Ca- grated into the facade and are push- ribbean, through our Previews Inter- Bermuda $732.63 button operated. This allows them national brand name,” said business BVI $546.83 to double as a security system— development executive Guy Sánchez. Barbados $541.07 residents who travel frequently can “All the government incentives are Cayman Is. $507.62 simply push a button to roll down the Turks & Caicos Is. a great help to our economy and in- $404.22 shutters and leave their homes im- dustry, but only if the message gets St. Kitts & Nevis $402.08 Bahamas pervious to the elements and would- out.” $391.96 be intruders. St. Martin $303.51 There is an abundance of quality In many islands, residential con- offerings at all price points through- U.S. Virgin Is. $298.87 St. Lucia $278.15 struction is of wood and gypsum out the island. The early part of the board, which is highly susceptible to past decade produced an extensive Antigua $273.69 Trinidad & Tobago $232.35 damage and destruction in the event level of residential-property devel- of a tropical storm. Even in Florida, opment in all property types. Martinique $216.46 Netherland Antilles $200.86 where most homes are made of con- High-rise luxury condominiums crete, most roofs are still wood. In in the San Juan metro area and on Guadeloupe $200.48 Belize $200.30 Puerto Rico, the majority of proper- the coasts abound. Master-planned ties are built completely out of con- communities on the coast and inland Dominican Republic $179.58 Aruba crete—effectively fortifying them provide resort-style amenities and an $171.68 Puerto Rico against any climate anomaly. enviable quality of life. Several of $143.26 Jamaica $130.16 them, such as Sabanera in Dorado Lo w t a x e s , l o w r a t e s and Palmas del Mar in Humacao, Property taxes in Puerto Rico are have top-notch private schools. Source: Global Property Research Guide minimal. Unlike many states, where Accessible and high-end beach the public-school system is financed communities are available for second- for just over $150,000. Ex p e r i e n c e d b u i l d e r s Of course, if you are looking for real a n d s a f e t y f i r s t primarily by real-estate property home getaways or comfortable retire- taxes, in Puerto Rico, real-estate ment spots. These beach communi- luxury living, there are top-level con- Residential homebuilders on the is- dominiums with all the amenities and land have more than half a century of property taxes are ridiculously low. ties are spread throughout the island, The average real-estate tax in the spanning from numerous projects less convenience in San Juan, and ultra experience in fortified construction. top-level homes and townhouses with Unlike other parts of the Caribbean, U.S., including Alaska and Hawaii, than an hour’s drive from San Juan, in is 1.38% of the assessed value of the Loíza, Río Grande, Fajardo, Naguabo golf courses, pools and beaches with- virtually all residential construction in an hour’s commute from San Juan, in Puerto Rico consists of fortified property. The state with the lowest and Humacao to the east, and Dorado real-estate property tax is Hawaii, and Vega Baja to the west. such as Coco Beach, Bahía and Dora- concrete. Most luxury properties and do Beach East. These luxury condos many condominiums have power with a rate of 0.4%. By comparison, Prices are low in Puerto Rico. the property tax in Puerto Rico is According to the Global Property and homes start in the $700,000s and generators, cisterns and storm shut- go up into the millions. ters. This makes the rare occasions in only 0.0591%—less than one-sixth Guide, coastal apartments in the San of Hawaii’s. Juan metropolitan area cost an aver- Meanwhile, if the property is your age of $231,425 for a one-bedroom Property transaction costs (%) primary residence and is assessed at unit, $373,687 for a two-bedroom less than $150,000, it is exempt from and $468,288 for three bedrooms. Puerto Rico 8.82% Netherland Antilles 9.00% taxes. The recent government incen- There are absolute bargains in Aruba 9.00% tives have even made taxes exempt St. Martin the marketplace now at every price 9.00% on new residential property of any point. A three-story, three-bedroom Montserrat 10.10% U.S. Virgin Islands 10.11% cost for five years. penthouse in “El Bosque de la Villa Barbados 12.08% Mortgage rates on properties in Dominican Republic de Torrimar” in the upscale mu- 12.30% U.S. jurisdictions are at an all-time nicipality of Guaynabo, a high-end Trinidad & Tobago 13.16% Belize 15.80% low and appear to be still dropping suburb in the San Juan metro area, Guadeloupe 16.30% as ongoing concerns about the Euro- Martinique recently sold for $275,000. 16.30% pean debt crisis have investors seek- Currently on the market in Dorado, Cayman Islands 18.58% St. Vincent & Grenadines 18.82% ing the relative safety of mortgage- in the gated “Hacienda los Molinos” Turks & Caicos Islands 19.15% backed securities that fund most U.S. Bahamas community, is a four-bedroom, six- 21.26% home loans. bathroom, 4,800-square-foot, cus- BVI 21.84% St. Lucia 21.96% For instance, the rates on standard tom-built mansion with a pool on a Anguilla 24.66% 30-year mortgages averaged 4% for Jamaica half-acre lot for only $499,000. 27.01% the week ending Nov. 3, down from Even for the more cost-sensitive Antigua 28.00% Dominica 28.45% 4.1% the previous week. During buyer, on the east coast of the island St. Kitts and Nevis 29.79% the same period last year, rates on in the fishing village of Naguabo Bermuda 31.00% Grenada 42.56% 30-year fixed-rate mortgages were there are three-bedroom, two-bath- at 4.24% before climbing to 5% in room units in the beachfront “Cala de February. The all-time low for this Húcares” resort-style development Source: Global Property Research Guide Continued on next page SPECIAL FEATURE 38 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011 FRONT PAGE 19 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011 Continued from previous page been a resident of the island for the type of mortgage is 3.94% in 1971. past 15 years will be exempt from KEOGH Report The legal framework in Puerto tax payments in Puerto Rico for all Rico is an attractive component of income generated from interest and the real-estate market. dividends. Puerto Rico is a U.S. territory pro- In addition, after becoming a resi- tected by the U.S. Constitution and dent of Puerto Rico, an IRI is com- laws. Intellectual property protection pletely exempt from capital gains is the same as in the mainland U.S. taxes. These exemptions are valid The island benefi ts from the appli- until Jan. 1, 2036, providing ample BBVA partners with local self-employed cability of the U.S. Constitution and time for individuals to benefi t from through Keogh plan presence of the federal court system. the program. U.S. currency is used and banking There is also new legislation that is regulated under the U.S. system seeks to stimulate exports by pro- BY CB STAFF for capital appreciation and interest. $400,000 post-taxation income. As fessionals and attract foreign talent. What is contributed to the plan from of tax year 2012, a person will be (Federal Deposit Insurance Corp.). It falls under U.S. Customs & Border Exported services include those pro- lready one of the most preferred the salary is deductible from the able to deduct 25% for a plan, but vided to individuals or organizations net income. For example, a self- with a maximum of $49,000. Protection jurisdiction and partici- Aretirement plans in Puerto Rico, pates in U.S. trade agreements. that have no link to Puerto Rico as Keogh plans are sure to remain pop- employed professional, such as the Keogh plans are named after the defi ned by the law. The legislation owner of a small marketing fi rm who late Eugene James Keogh (1907- There is also access to federal funds ular even when in 2012 the limit on for infrastructure, social programs, provides for a fi xed tax rate of 4% contributions to such a plan will be earns $60,000 in net income a year, 1989), a member of the U.S. House The view from the rooftop terrace at Sunset Paradise Villas in Rincón, one of on income generated for eligible ex- can contribute a maximum of 25% of Representatives from New York, education and research among other 25% to a maximum of $49 million, areas. Puerto Rico’s many quaint guesthouses, which are also known as paradores. ported services. whichever is less. of that income. That contribution who proposed the fi rst version of This rate could be reduced to 3% if would be some $12,000, or 20% this type of pension plan, aimed at Property rights are similar to those “Puerto Rico is characterized by in the mainland U.S., with most 90% of all gross income is generated an economy composed of small of the net income after reducing offering the self-employed security by the provision of exported servic- the contribution (multiply 20% comparable to that of the retirement properties having a title. In other ju- and midsize businesses, as well as risdictions, such as Panama, a comes. There is no tax on the payment of self-employed people,” said Rafael times $60,000, then subtract the plans available to employees of a dividends and a 90% exemption on result from $60,000 to get $48,000; corporation. mon form of real-estate ownership Colón-Ascar, president of BBVA is called “right of possession.” This the payment of property taxes for call Securities in Puerto Rico. “Keogh next, calculate 25% of $48,000, or Keogh plans can only be centers, corporate headquarters and $12,000). established through a trust and must type of property is owned by the lo- plans not only represent one of the cal or national government and is in warehouse & distribution centers. best instruments for investing for In Puerto Rico, until this year, be registered at the Puerto Rico The decree is valid for 20 years a person could deduct 25% from Treasury Department before the essence leased under a defi ned set of retirement, but also provide a very parameters for a period of time. from the establishment of the busi- fl exible and accessible way to invest contributions up to a limit of a end of the taxable year (Dec. 31). ness and can be extended 10 more A self-employed person or small Puerto Rico provides two levels and contribute to the plan.” of security for property ownership. years if the business can demonstrate A Keogh plan is essentially a “The truth is that the most important element in or midsize business creates a trust, that the extension would be in the opens an account with a fi nancial All titled properties in Puerto Rico retirement plan for individuals who are recorded in the Property Regis- best social and economic interest of are self-employed, those who have or establishing a fund or plan to invest in, such as institution, acts as trustee of the plan Puerto Rico. and manages the investment with a try, which details the succession of operate an unincorporated business, a Keogh plan, is discipline—the discipline to ownership of the property for centu- “I don’t know of any jurisdiction are owners of more than 10% of a broker. that has this type of initiative,” said put that money in the plan and not touch it, so “We help our clients set up the most ries all the way back to early Span- special partnership or corporation, ish colonial times. Furthermore, title Economic Development & Com- or for whom a substantial portion benefi cial plan for them, and put top A custom-built mansion with a pool on a half-acre lot in the merce (DDEC) Secretary José R. in reality the amount of money doesn’t matter; legal resources at their disposal to insurance is required for fi nanced of their income stems from work property and is extremely affordable “Hacienda los Molinos” community, with four bedrooms, six bathrooms and Pérez-Riera. carried out on their own. what matters is that people keep in mind that the help them in the registration,” Colón- 4,800 square feet, sells for only $499,000. Through 2020, any net income gen- Ascar said. “More importantly, both for those buying with cash. Through a Keogh plan, a percentage objective of that investment is for retirement.” Because of Puerto Rico’s territo- erated from rental income is tax-free, of the plan holder’s income is put we and our legal resources help making Puerto Rico an attractive clients by keeping that fund up-to- rial status, fi nancing with U.S. fed- into an account where it is invested —Rafael Colón-Ascar, president of BBVA Securities in Puerto Rico eral government guaranteed loans is market for investment properties. Continues on next page available. These loans, which include Puerto Rico is undeniably the pre- Federal Housing Administration, mier shopping location throughout Veterans and Rural, can be bundled the Caribbean. Unlike other destina- by banks and sold on the secondary tions in the Caribbean, the island is market. home to the widest variety of goods The effect of this is that local banks’ and services in the region and attracts interest rates are exceptionally low. thousands of shoppers every year. Should an owner decide to sell the The island also showcases the larg- property, these advantages are an at- est mall in the Caribbean—Plaza Las traction for buyers, as well. Américas—with over 2.1 million There are myriad recently passed square feet of shopping space occu- tax shelter incentives for new resi- pied by more than 300 stores. The dents of Puerto Rico. As previously largest JC Penney store in the world, reported (CB Nov. 10, Nov. 17), Puerto Rico is well-known for its beaches and corals, but the island also boasts a with a full four fl oors, is located in there is new legislation aimed at at- broad menu of inland tourism attractions enjoyed by tourists and residents alike: the mall. tracting resident investors (IRI by its an old fortressed city, the only tropical rainforest in the U.S. forest system, an The highest-grossing Radio Spanish acronym) as well. extensive underground cave system, colonial towns, quaint spots throughout the Shack and Puma stores in the world Under the plan, a person who hasn’t island and much more. Continued on page 20 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, FRONT PAGE 20 CARIBBEAN BUSINESS THURSDAY, DECEMBER 8, 2011 37

Continued from page 19 such as the W in Vieques and small, in terms of travel time from the U.S. diverse culture for visitors and resi- locally owned guesthouses known mainland and other regions. A typi- dents alike. The island was discov- are also located there, as is the as paradores. There are more than cal fl ight between San Juan and Mi- ered in 1493 on Christopher Colum- 255,000-square-foot Macy’s, which 20 casinos on the island. ami takes about 2½ hours; 3 hours bus’ second trip to the Americas. is the only one located outside of the The Ritz Carlton Reserve, the only from Orlando, Fla.; 3½ from New San Juan is one of the oldest cities in Tech solutions ease updates 50 states. six-star hotel in the Caribbean, will York; 4 from Boston; and 5½ from the Americas and certainly the old- There are also two major outlet be opening its doors in 2014. Hun- Dallas. est in the U.S., and one of the most in payroll systems malls, and dozens of high-end bou- dreds of restaurants of all types make Additional airlines are continuing diverse cities on the island. tiques in the Condado section of San Puerto Rico a culinary paradise. to add fl ights to Puerto Rico from The climate is typically warm Many still adapting to new Juan and throughout the cobblestone “Puerto Rico has more golf cours- various destinations with increasing year-round, averaging 82 degrees streets of Old San Juan, which also es, marinas, high-end restaurants, frequency. This year, three airlines— Fahrenheit, although during the income-tax deductions features jewelry stores, souvenir casinos, tennis facilities, and all the British Airways, Condor and West- winter it can occasionally dip into BY CB STAFF Among other things, Evertec’s shops, art galleries and designer fac- major franchises that U.S. and Cana- jet—added routes to Puerto Rico. the high 60s. Puerto Rico is in the payroll and tax management tory outlets. dian luxury home buyers enjoy and “The government of Puerto Rico tropical climate zone, with tempera- uman resources (HR) depart- solutions allow for customization of As previously reported (CB Sep. look for,” Sánchez said. “No other has the commitment to continue tures averaging close to 80 degrees Hments in Puerto Rico that are the formulas for income, deductions 15), a new shopping center for up- island offers such amenities and attracting the entry of new airlines in the lower elevations and 70 de- still adapting to new tax dispositions and benefi ts, as well as electronic scale locals and tourists is set to start accessibility.” into our market,” DDEC chief Pérez- grees in the mountains. Between by the local Treasury Department transfer of funds and child support, construction in early 2012. New Cen- can take advantage of technological using ACH (electronic payment tury Development (NCD) and Mich- solutions available in the market that network Automated Clearing House) igan-based Taubman Centers are are designed to ease the process. format, and fi nancial reports. investing $354 million in the Plaza “As of Dec. 31, 2010, changes The solutions not only process International hotel & casino, Puerto in the way employers retain payroll in real time, but also produce Rico’s fi rst completely upscale shop- employees’ income tax deductions statistical reports and records to ping-tourism complex. The high-end mean that individuals should be make analysis easier. They also Nordstrom and Saks Fifth Avenue receiving paychecks for higher facilitate the required fi ling of retailers are confi rmed as anchor ten- amounts,” Evertec HR Solutions reports as a result of payroll process, ants at Plaza Internacional. Manager Wilfredo Cosme explained. such as 941-PR (FICA), 499-R-1B “Mercado Urbano,” or Urban Mar- “Though this is surely good news for (Treasury), driver’s tax return, tax ket, was created by the Government all employees, it has in some ways return fi ling for unemployment and Development Bank (GDB) earlier disrupted business as usual at human disability insurance, and 940-PR this year to stimulate entrepreneur- resources departments lacking agile (FUTA) ship, particularly among the agri- information or payroll systems.” The applications can be integrated cultural sector. The weekly event is Needless to say, compliance with with the accounting system (general currently host to more than 50 par- the new dispositions is required by ledger) and with multiple fi nancial ticipants selling locally produced law and should be part of standard systems, as well as with time & items such as honey, chimichurri payroll procedures. Evertec’s HR attendance and human resources sauce, fl owers, coffee, incense, gour- Solutions is one of the products modules. met cheeses, artisan bread, sangria, available locally for that purpose. “One of its best features is the chocolate liquor, fruits, vegetables “Because of these changes, payroll possibility of having a trial run and much more. departments have to alter the way before payroll is actually processed, “The Urban Market provides a ACCESSIBILITY Riera said. “The arrival of these air- Luis Muñoz Marín International they calculate deductions and other in order to verify its effect in pay, point of sale for local farmers to sell Puerto Rico’s air access is by far lines is excellent news. Business and Airport in Carolina serves as the items. This can be a cumbersome regular schedules and overtime,” their fresh native products and stimu- the best in the Caribbean, and there is leisure travelers can be assured that region’s hub, providing service process both for small and large Cosme said. “The end product is late the agricultural economy,” said no passport needed for U.S. citizens. Puerto Rico has all of the charac- to 20 cities in the U.S. and eight companies,” Cosme noted. “Most of not only compliance with tax laws, Guaynabo Mayor Héctor O’Neill There are three airports with direct teristics of, and is, the most diverse international destinations. the small and midsize employers are but also a system that helps HR in of the event, which has expanded service to the U.S. mainland. Luis and complete destination in the getting by with temporary measures payroll cost control, productivity from Condado to various locations Muñoz Marín International Airport Caribbean.” and arrangements, because not all analysis and implementing best throughout the island including Isla in Carolina serves as the region’s The major seaport on the island local payroll service providers have practices in HR management.” Ⅲ Verde, Canóvanas, Mayagüez, Guay- hub, providing service to 20 cities is located in San Juan, which is the updated their systems.” nabo and Ponce. in the U.S. and eight international largest cruiseship port in the eastern the winter and summer, there is a “What we have done at Evertec is In addition, beginning in Decem- destinations in the Caribbean, North Caribbean and homeport to several temperature variation of about six modify our state-of-the-art informa- ber, the GDB will be introducing an America, South America and Europe cruiseship companies. The port re- degrees. The lowest temperature tion systems to apply the new dispo- “What we have done at Urban Bazaar, modeled after the Ur- including London; Madrid; Caracas, ceives 1.2 million cruiseship passen- ever recorded in Puerto Rico was sitions as required by law,” he added. Evertec is modify our ban Market but focused on fashion, Venezuela; Toronto; and Montreal. gers a year. 38 degrees in the central mountain “By doing it at the highest level, we service and artisanal products. The airport receives more than 10 The island’s principal cargo ports town of Aibonito. made sure a seamless deployment state-of-the-art million passengers a year, making are located in San Juan, Guayanilla El Yunque National Forest was was available to all our current cli- information systems HOTELS AND CASINOS it the busiest airport in the Carib- and Mayagüez, and the island’s larg- a fi nalist for the New 7 Wonders ents as soon as possible. Then we Regardless of where one lives in bean. Rafael Hernández Airport in est deepwater port in Ponce is cur- of Nature designation, and Puerto proceeded to make any adaptations to apply the new Puerto Rico, there is an abundance Aguadilla and Mercedita Airport in rently being redeveloped and will Rico’s beaches are among the best required by individual companies. dispositions as of hotels and guesthouses in every Ponce also operate direct fl ights to soon become one of the Caribbean’s in the world, particularly Flamen- “We are constantly adapting category. the U.S. mainland and charter fl ights principal transshipment facilities. co Beach in Culebra, which is fre- and tailoring our products to our required by law.” There are more than 13,000 hotel to Europe. There are a total of nine quently designated one of the top customers’ needs, so this didn’t —Wilfredo Cosme, Evertec rooms on the island, with numerous airports in operation on the island. CULTURE AND CLIMATE 10 beaches in the world by popular result in a disruption in operations HR solutions manager four- and fi ve-star quality resorts The island is comfortably accessible Puerto Rico offers a rich and travel magazines. Ⅲ for them.”