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Earners, Keepers

Two entrepreneurs pump up Puerto Rico's economy while taking advantage of its tax incentives.

When Mario Gaztambide and Roberto Garcia merged their medical supply companies last year, Garcia, 35, brought distribution relationships with over 200 laboratories, while Gaztambide, 31, provided an array of products through his Connecticut-based sourcing business. The combined company, Cultas Group, now generates over $2 million in annual revenue.

But the smartest move may have been to headquarter the merged company in Bayamon, Puerto Rico, where Garcia had been operating. Through the Puerto Rico Industrial Development Co., Cultas Group qualified for a 100 percent tax-exempt status for manufacturing on all corporate profits. In the cost-competitive hospital supply market, those tax incentives are a boon for their bottom line.

"When you consider that you have to pay taxes in Philadelphia or Atlanta at a corporate tax rate approaching 40 percent," he says, "being able to keep 100 percent of our profits is a big advantage."

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This article was originally published in the December 2005 print edition of Entrepreneur with the headline: Earners, Keepers.

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