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Puerto Rico Tax Incentives

Never before has it been more financially beneficial to take up residence in Puerto Rico. Puerto Rico shares a common currency, common military defense, and citizenship with the United States. Additionally, all federal laws apply to Puerto Rico and passports are not required to travel to and from the U.S. mainland. Because Puerto Rico enjoys fiscal independence and autonomy, it is able to offer attractive tax incentives that encourage businesses and high net worth individuals to establish residence on the island.

Export Services Act – Act 20

The tax incentives available through Act 20 encourage companies to establish and expand export services off the island. Nearly all service industries can benefit, including research and development, advertising and public relations, consulting, investment banking and other financial services, engineering services and more. Corporations can enjoy a tax rate of as low as 3 percent. Additionally, they can enjoy a 100 percent tax exemption on dividends or profit distributions and exemptions on property taxes. Rates are guaranteed for 20 years and are renewable for an additional 10 years.

Individual Investors Act – Act 22

New residents of Puerto Rico (as of January 12, 2012) have total tax exemption from Puerto Rico and federal income taxes on all passive income accrued after becoming a bona fide resident. Only those new residents, who were not residents in the six years preceding the act, are eligible for these incentives. Those qualified benefit from 100 percent income tax exemption on all dividends, interest and capital gains.

Additional Incentives

Puerto Rico has many other tax incentives for business endeavors. Industries related to manufacturing, agriculture, creative services, financial services, hospitality and education can also take advantage of other financial incentives available in Puerto Rico.