Tax

San Juan: Cheapest Business Site

In North America, Atlanta and Tampa are the least expensive big cities in which to set up shop. The dearest? San Jose and New York.
Stephen TaubMarch 9, 2004

Thanks to low labor and tax costs, San Juan is the least expensive place to do business among 24 U.S. and U.S.-affiliated cities with populations over 1.5 million, according to a new study by KPMG LLP.

Further, the Puerto Rican city was also the cheapest among 20 small and midsized cities studies as well as among 54 cities in 10 other countries, including all Group of Seven industrial nations.

San Juan’s labor costs are roughly 25 percent below the U.S. average, according to the study. Further, businesses located in Puerto Rico are exempt from U.S. federal income tax. Such savings are partly offset by transportation costs of about 70 percent above the U.S. average.

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In North America, the least costly big cities are Atlanta and Tampa, Florida. Other large U.S cities with below-average business costs were Phoenix, Indianapolis, and Columbus, Ohio.

San Jose, California, and New York, on the other hand, were the dearest places to do business among big U.S. cities. The high costs reflect New York’s position as the most populous U.S. city and the high labor costs of San Jose’s technology-based economy, according to the study.

KPMG’s biannual Competitive Alternatives study measured the combined impact of 27 location-sensitive business-operating expenses, including labor, tax, and utility costs. KPMG researchers compared the cities on the basis of the approximate after-tax cost of startup and operation for 12 specific types of businesses over a 10-year span.

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