[ Offshore Tax ] Which tax rules changed in Puerto Rico?
At the beginning of 2012, the Government of Puerto Rico implemented two acts that were part of a set of economic incentives intended to improve the conditions of this Caribbean islandβs economy.
Act 20 and Act 22, also known as the Export Services Act and the Individual Investors Act, respectively, were put in place to facilitate Puerto Ricoβs economic development by attracting high-net-worth individuals and businesses to the island through the multitude of tax benefits that these acts offered.
Act 20 program was designed to enable eligible businesses to use various tax exemptions as long as the business is based in Puerto Rico and has its clients located outside of Puerto Rico.
Exempt businesses benefit from a mere 4% corporate tax rate, a 100% tax exemption on dividend distributions, and other tax advantages that will be discussed below.
On the other hand, Act 22 aims to promote investment in Puerto Rico by offering investors who are bona fide residents extremely profitable tax incentives. The income that these investors accrue on dividends, interests, all capital gains, and even all crypto assets, after meeting all the requirements of residency, is exempt from taxation.
Act 20 and Act 22 were integrated into the Puerto Rico Incentives Code 60, or Act 60, as two separate chapters on January 1, 2020.
This change came with a few adjustments to the qualification requirements of each program.
These highly attractive tax incentives have been possible due to Puerto Ricoβs unique relationship with the United States.
Being an unincorporated U.S. territory with a commonwealth status, the Puerto Rican government has the advantage of creating its own tax laws that are distinct from the U.S. federal or state laws. This independence has allowed Puerto Rico to stimulate economic growth through the Act 60 program.
TIMESTAMPS:
0:00 INTRO
0:20 Big changes on tax rules in Puerto Rico
1:00 Small businesses taxes in Puerto Rico
2:00 Residency in Puerto Rico
3:02 OUTRO
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