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Puerto Rico, formally the Commonwealth of Puerto Rico (Spanish: Estado Libre Asociado de Puerto Rico, lit. 'Free Associated State of Puerto Rico,') is a Caribbean island and unincorporated territory of the United States. It is situated in the northeast Caribbean Sea, roughly 1,000 miles (1,600 km) southeast of Miami, Florida.
The Commonwealth is an archipelago in the Greater Antilles situated between the Dominican Republic and the United States. It consists of the namesake main island and numerous other islands, including Mona, Culebra, and Vieques. San Juan, the capital and most largest city, with a population of around 3.2 million people. The official languages of the executive branch of government are Spanish and English, with Spanish predominating.
Puerto Rico was initially populated by a series of indigenous peoples between 2,000 and 4,000 years ago, including the Ortoiroid, Saladoid, and Tano. Following the arrival of Christopher Columbus in 1493, it was colonized by Spain. Other European nations challenged Puerto Rico, but it remained a Spanish territory for the next four centuries. The arrival of African slaves and immigrants, particularly from the Canary Islands and Andalusia, drastically altered the island's cultural and demographic environment. Puerto Rico, in comparison to wealthy colonies like Peru and New Spain, had a minor yet vital position within the Spanish Empire. By the late nineteenth century, an unique Puerto Rican identity started to form, focusing on a mix of indigenous, African, and European components. Following the Spanish–American War in 1898, the United States conquered Puerto Rico.
Puerto Ricans have been US citizens since 1917 and may travel freely between the island and the mainland. However, as inhabitants of an unincorporated territory, American citizens of Puerto Rico are disenfranchised at the national level, do not vote for president or vice president, and typically do not pay federal income tax. Puerto Rico, like four other territory, sends a nonvoting representative to the US Congress. Because Puerto Rico is not a state, it does not have a vote in Congress, which controls it under the Puerto Rico Federal Relations Act of 1950. In 1952, Congress passed a local constitution that allowed US people living on the island to vote for a governor. The existing and future political status of Puerto Rico has long been a source of contention.
Beginning in the mid-twentieth century, the United States government, in collaboration with the Puerto Rico Industrial Development Company, initiated a series of economic programs aimed at transforming Puerto Rico into an industrial high-income economy. The International Monetary Fund classifies it as a developed jurisdiction with an advanced, high-income economy; it ranks 40th on the Human Development Index. Manufacturing (mainly pharmaceuticals, petrochemicals, and electronics) is the largest sector of the Puerto Rican economy, followed by services (namely tourism and hospitality).
Minimum of 6 days for first-year; minimum of 9 days after the first year until the fifth year; minimum 12 days after the fifth year; minimum 15 days after the fifteenth year.
Puerto Rico celebrates 19 holidays, including all of the United States' national holidays as well as its own.
Paid sick leave for the first six months; nine days after the first year until the fifth year; twelve days after the fifth year; and fifteen days after the fifteenth year.
Puerto Rico has introduced 5 days of emergency sick leave for persons suffering from COVID-19 as of April 2020.
8 weeks, divided into four weeks before and four weeks after the delivery, but can also be divided into one week before and seven weeks after the delivery.
Employees in the private sector can take up to 6 months of unpaid leave.
There is no paid time off, but parents can take up to 12 weeks of unpaid, job-protected time off. Companies with fewer than 500 workers must give an extra 12 weeks, paid after the first 10 days, under the Families First Coronavirus Response Act (FFCRA), which runs from April 1 to December 31, 2020.
Employees with one of the Serious Diseases of Catastrophic Character designated under the Special Coverage of the Health Insurance Administration of Puerto Rico are eligible for up to 6 months of special paid leave.
Employers must have "just cause" to terminate an employee based on performance or behavior on the job. If there is no legitimate reason for firing, the employee is compensated with severance compensation.
No notice period is required.
In Puerto Rico, the probationary period is typically nine months for the majority of employees, but twelve months for those classified as "executives," "administrators," and "professionals."
There is no severance pay if the termination is for "just cause." If there is no just cause for termination, the employee is entitled to two months' pay if the termination occurs within the first five years; three months' pay if the termination occurs between five and fifteen years; and three months' pay after fifteen years. Additionally, the employer must pay an additional two weeks' salary for each year of service, up to a total of nine months severance.
In Puerto Rico, the standard workweek is 40 hours, with eight-hour days.
Employees between the ages of 14 and 18 may be employed only with a special permit that allows for a 40-hour workweek. If the worker is enrolled in school, the total number of school and work hours per day cannot exceed eight. Between the hours of 8:00 a.m. and 6:00 a.m., workers between the ages of 14 and 16 may work. between 6 a.m. and 6 p.m., while workers aged 16 to 18 years may work between 6 a.m. and 6 p.m. and ten o'clock p.m.
Employees who work more than 40 hours per week must be compensated for overtime. Each hour worked beyond the standard 40-hour workweek must be compensated at 1.5 times the employee's regular hourly wage.
Employers and employees can agree on a different work schedule in which the employee works no more than ten hours per day and no more than forty hours per week. In this case, overtime is compensated only for work exceeding ten hours per day. A written agreement must be entered into.
For businesses subject to the Federal Fair Labor Standards Act, the minimum wage is $7.25 per hour (FLSA). For individuals not protected by the act, the minimum wage is $6.55 or 70% of the federal minimum wage, whichever is greater.
Employees under the age of 20 may be paid a "training" pay of $4.25 for the first 90 days of employment, but must be paid the federal minimum of $7.25 immediately after the conclusion of the 90-day period.
Puerto Rico offers health insurance. There is also the option of purchasing private insurance on your own.
Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits
A domestic corporation's global revenue is taxed in Puerto Rico. A foreign company engaged in trade or commerce in Puerto Rico is taxed on income from Puerto Rican sources that is effectively linked income at the normal corporate tax rates. A non-resident foreign company is subject to a withholding tax (WHT) rate of 29 percent on Puerto Rican-source gross revenue that is not effectively linked with a Puerto Rican trade or activity.
The current CIT rate is made up of a regular tax of 18.5 percent plus a progressive surtax (calculated on surtax net income).
The surtax net income' is essentially the net taxable income subject to normal tax minus a surtax deduction of 25,000 US dollars (USD). The following are the graded surtax rates:
Surtax net income of up to USD 75,000 is taxed at 5%.
USD 3,750 + 15% surtax on net income ranging from USD 75,001 to USD 125,000.
From USD 125,001 to USD 175,000, net income is subject to a surtax of 16%.
USD 19,250 + 17% surtax on net income ranging from USD 175,001 to USD 225,000.
From USD 225,001 to USD 275,000, net income is USD 27,750 + 18% surtax.
USD 36,750 + 19% of surtax net income in excess of USD 275,000 results in a maximum nominal tax rate of almost 37.5 percent.
For controlled groups and associated businesses, the relevant surtax rate is determined on a consolidated basis, which means that the net taxable income of all entities subject to tax in Puerto Rico within such groups must be aggregated to determine the applicable surtax rate.
Puerto Rican citizens are taxed in Puerto Rico on their global income, regardless of where it is earned. Non-resident Puerto Ricans are solely taxed in Puerto Rico on income earned in the territory. Income for services rendered is directed to Puerto Rico depending on the location of the services. In most cases, such revenue is apportioned to Puerto Rico depending on workdays.
Puerto Rico has a de minimis regulation in place to prevent extremely tiny sums of revenue from personal services from being sourced to the territory. Income from personal services done in Puerto Rico will not be included if it is USD 3,000 or less and the individual was present in Puerto Rico for 90 days or less during the calendar year (such personal services must have been provided to an employer who is not engaged in trader or business in PR).
For an income not over USD 9,000, the tax rate is 0.
For an income over 9,000, but not over 25,000, the tax rate is 7% of the excess over USD 9,000.
For an income over USD 25,000, but not over USD 41,500, the tax rate is USD 1,120 plus 14% of the excess over USD 25,000.
For an income over USD 41,500, but not over USD 61,500, the tax rate is USD 3,430 plus 25% of the excess over USD 41,500.
For an income over USD 61,500, the tax rate is USD 8,430 plus 33% of the excess over USD 61,500.
The state sales and use tax is 10.5 percent, with an extra 1 percent applied at the municipal level, for a total tax of 11.5 percent.
Foreigners who want to work in Puerto Rico must meet the island's immigration criteria. Citizens of around 40 countries must obtain an authorized ESTA to enter the United States for short periods, according to US visa legislation.
The ESTA was launched in 2009 for all nations covered by the visa waiver program in the United States. It is a travel permission system that permits persons who register multiple entries to travel to Puerto Rico, the mainland of the United States, and all incorporated territories of the United States, including the District of Columbia and the US Virgin Islands, throughout the validity period.
An ESTA for Puerto Rico, if authorized, enables a stay of 90 days within a 180-day period for each entrance to US territory and is valid for a total of two years from the date of issuance. A Puerto Rico ESTA is typically handled within a few business days and, if granted, is electronically connected to the traveler's passport, eliminating the need to produce extra paperwork upon arrival at US border control.
To travel Puerto Rico for other reasons or for longer lengths of time, visa waiver nationals must apply for a Puerto Rican embassy visa through a US diplomatic government office and get a visa authorizing the desired job.
Regardless of the expected time of stay or the purpose of travel, over 190 nationalities must apply for a visa from an embassy.
Employment contracts in Puerto Rico may be either verbal or written, and they must be understood by both parties in any language. If an employee signs an agreement, it is assumed that he or she understands the terms of the agreement.
Contracts might be for a set period of time or for an unlimited period of time. If no expiration date is specified in the contract, the agreement will be regarded for an infinite time. Fixed-term contracts cannot be more than three years in length, either in their original term or in the sum of their renewals.
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