Attracting investors and new residents to the Island!

Puerto Rico Act 20 and Act 22

 

Puerto Rico Law 22: Individual Investors Act

Important Highlights   

•The government of Puerto Rico recently enacted the Act to Promote the Relocation of Individual Investors (Act 22 of 2012), the purpose is to attract new high net worth residents to Puerto Rico.

•  0% tax rate on interest and dividend income for New Residents 

•  0% tax rate on all short- and long-term capital gains accrued after becoming a New Resident 

•  0% federal taxes on Puerto Rico source income 

•  Rates are guaranteed till 2036 through tax incentives decree. 

Puerto Rico Law 20: Export Services Act 

Important Highlights   

•  4% Corporate Tax Rate - Puerto Rican businesses providing services for exportation will enjoy a 4% flat income tax rate on   income related to such services

•  100% Tax-Exempt Dividends - Distributions from earnings and profits derived from the export services income of eligible businesses are 100%tax exempt from Puerto Rico taxes.

•  6% Dividend Tax Rate for Puerto Rico shareholders

•  0% Dividend Tax Rate for Non-Puerto Rico shareholders

•  100% Municipal Tax Exemption 

•  100% Property Tax Exemption

•  Tax Exemption Decrees for up to 45 years - First term of 20 years, renewable for 10 additional years, up to 45 years.

•  Elegible Export Services Include: public relations and advertising, professional services, such as legal, tax and accounting, research and development, development of computer programs, investment banking and other financial services.

ALWAYS CONSULT YOUR FINACIAL ADVISOR AND / OR CERTIFIED PUBLIC ACCOUNTANT

Visit the following links for interesting news reganding these 2 important tax incentives:

Puerto Rico's Act 20 and 22 Just Made Offshore Tax Havens Obsolete!
Puerto Rico New Age Tax Haven
Bloomberg News PR Act 20 & Act 22
Invest In Puerto Rico Law 22 / Investor Relocalization Act
Caribbean Business - News Act 22
Caribbean Business - Law 22 attracting millionaire investors to Puerto Rico
Attracting the wealthy to the island
gobierno.pr
Puerto Rican Law Makes The Wealthy Move From The States
Sun, Sand and Zero Taxes
Expats Tax Haven Deal For Americans

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Treasure Island: Puerto Rico Bids To Become New Age Tax Haven Lauren by Lauren Debter/ Forbes Staff.

New Age Tax Heaven

 

Welcome to Puerto Rico--island of tropical breezes, and (for new arrivals only) a 0% tax rate on certain dividends, interest and capital gains.

Puerto Rico is about the same size as Connecticut but with more palm trees, twice the unemployment rate, a third the median household income and a tiny fraction of the hedge funds--a deficiency the financially teetering territory aims to correct by turning itself into a refuge for tax-oppressed millionaires and billionaires.

Yes, this is legal. While the U.S. asserts a sweeping right to tax citizens' income wherever they live and wherever it's earned, Section 933 of the tax code exempts residents of Puerto Rico from paying U.S. income tax on their Puerto Rico-sourced income. Instead, the Commonwealth of Puerto Rico has the exclusive right to tax local income as it sees fit.

"The way the U.S. tax code is written, I could be on Mars and be taxed on intergalactic income but not if I'm sitting on this island in the Caribbean. It's kind of in a twilight zone," marvels Irvine, Calif. money manager Mohnish Pabrai.

To exploit this special status and help rescue its economy, Puerto Rico's Legislative Assembly adopted two laws in 2012 and expanded them last year. Act 20 entices hedge funds, family offices, professional service firms and even software developers to locate there by taxing their corporate profits from exported services at a flat 4% rate and allowing those profits to be paid out to the owners free of Puerto Rico income tax. So far the government has okayed 346 export companies, with 400 approvals expected this year.

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