Puerto Rico Tax Advantages

Two More Reasons to Make the Move

With so much more than pristine beaches and Old World charm, Puerto Rico now offers enticing tax advantages for companies and individuals alike. Whether you’re looking to improve your business or your way of life, it’s time to understand the tax advantages of Puerto Rico!

Act 22- The Individual Investors Act

Hoping to attract new residents to Puerto Rico, Act 22 provides tax exemptions for those who have not been residents of Puerto Rico during the past 15 years. Encouraging new residents to make Puerto Rico home, Act 22 exempts passive income - including interest, dividends and capital gains - from Puerto Rico income tax, which makes NOW the perfect time to invest.

Here’s how it works: All individual investors who become Puerto Rico residents on or before December 31, 2035 qualify. Although it is presumed that anyone living in Puerto Rico for more than 183 days is, in fact, a resident, there are circumstances in which this is not the case. Factors affecting residency can include a home’s location and/or one’s family, savings, school, driver’s license, medical insurance and voting registration.

Act 22 Application

To qualify for Act 22, a tax exemption decree must be obtained from the Secretary of Economic Development and Commerce. Such a decree is, in effect, a contract between the resident investor and the government of Puerto Rico and can be revoked by the Secretary in the following circumstances:

  • Failure to comply with Act 22 regulations, obligations or terms.
  • Failure to comply with tax responsibilities under the Puerto Rico Internal Revenue Code and/or other Puerto Rico laws.
  • Fraudulent representation of circumstances and/or facts.

 

Act 20- Export Services Act

A second big Puerto Rico tax advantage is Act 20, also known as the Export Services Act. In its very essence, Act 20 allows a broad spectrum of new service industries the same benefits that have earned Puerto Rico the title of one of the world’s manufacturing leaders.

In efforts to establish Puerto Rico as a center for international business, Act 20 provides tax exemptions and credits to businesses who provide a vast array of qualifying services to outside markets.

Qualifying services are those that do not have a nexus with Puerto Rico. Promoter Services, when related to the establishment of a new business as defined in Act 20, are eligible.

Act 20 Application

To qualify for Act 20 and receive a tax exemption decree, service providers must submit an application with the Office of Industrial Tax Exemption of Puerto Rico. Terms of the tax exemption decree run 20 years, with a possible 10-year extension.

After obtaining the decree, businesses operating in Puerto Rico under Act 20 are not subject to taxes, such as a dividend, tollgate or other similar taxes, on income from eligible activities in Puerto Rico. Income earned by business owners who leave Puerto Rico and return to their country of origin are subject to their native tax laws when applicable.

Seamless Transactions with Gloria Prado Realty

If you’re ready to take advantage of the generous tax laws and invest in beautiful Puerto Rico, it’s time to let Gloria Prado Realty show you how.

With over 28 years of professional experience, I know Puerto Rico, and I know you’re looking for an educated, efficient and economically savvy Real Estate transaction. Whether you’re a first-time or experienced buyer, I have the technology, products and services to find the Puerto Rico Real Estate of your dreams. Buying and selling Real Estate in Puerto Rico has never been easier. For those wanting more legal and/or financial advice, I will gladly recommend a local lawyer and/or CPA.

So give me a call today at 787-378-4880, or email me at gloriapradorealty@gmail.com. I will have you in your perfect investment property in Puerto Rico seamlessly!