As a Commonwealth of the United States, Puerto Rico is part of the US customs territory and follows US customs duty and import tariff laws. Duty drawback and foreign trade zones (FTZs) may present customs duty and excise tax savings opportunities for pharmaceutical and life sciences (PLS) companies that import raw pharmaceutical materials into Puerto Rico and export finished pharmaceutical goods out of Puerto Rico.
Changes to the duty drawback rules expand the type of goods that qualify for refund under duty drawback and allow for a five-year lookback for refunds for companies importing and exporting similar products. PLS companies may be able to combine the benefits of duty drawback with similar benefits of FTZs, which are popular with pharmaceutical manufacturers operating in Puerto Rico.
PLS companies may be able to combine the benefits of duty drawback and FTZs for their US (including Puerto Rico) operations to obtain substantial savings of customs and trade-related costs.
Health Industry & Pharma Life Science Tax Leader, PwC US