Huge Tax Incentives for New Residents

In January 2012, Act 20 and Act 22 made it financially beneficial for individuals to live and own a business in Puerto Rico. Part of 2008’s Economic Incentives Act for the Development of Puerto Rico, these acts offer huge tax incentives for individual investors and service-based businesses in the Commonwealth. The goal is to attract wealthy new residents and grow the economy through new businesses. Find out more about how these tax incentives can make living in Puerto Rico a coup for your bank account.

 

Act 20 for Businesses

Act 20 helps to establish Puerto Rico as an international export services center. Designed to encourage export- and service-based businesses to conduct business from within Puerto Rico’s borders, it offers several tax benefits for service-based companies. Some of the benefits include:

 

  • Tax rates as low as 3 and 4 percent
  • 100 percent exemption on dividents or profit distributions and on property taxes
  • 20-year decree, renewable for an additional 10 years

 

Eligible businesses include professional services such as legal, accounting, architectural and engineering; research and development; advertising and public relations; consulting; and financial services.

 

Act 22 for Investors (Individual Investor’s Act)

Individual investors can also benefit from Puerto Rico’s progressive tax incentives. Act 22 provides total tax exemption for all passive income in Puerto Rico. The benefits include:

 

  • 100 percent tax exemption from Puerto Rico income taxes on all dividends and interest
  • 100 percent tax exemption from Puerto Rico income taxes on all short- and long-term capital gains after the individual becomes a bona-fide resident of Puerto Rico
  • Preferential tax rates for capital gains accrued before the individual became a bona-fide resident

 

Additional Tax Incentives

Tax incentives are available for a variety of other individuals and businesses. Be sure to contact Mariángel or your financial advisor for more information about how manufacturing, international insurers, creative services, education and hospitality businesses can also take advantage of these incentives.