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.
There are many incentives that the U.S. territory of Puerto Rico is aggressively promoting, to attract new businesses and high net worth individuals to the island. On one hand, as a territory of the United States, Puerto Rico shares citizenship, currency, and legal frame with the U.S. mainland. On the other hand, its sovereignty as a territory allows Puerto Rico to offer tax incentives that cannot be matched by any foreign country or state.
The two most popular tax incentive programs offered by the Puerto Rican government were Act 20 and Act 22, which for several years were a huge draw for the island because of the many exemptions offered.
Starting on January 1, 2020, Act 60, replaced Act 20 and Act 22. This means that they are no longer in effect, therefore all new applicants must instead comply with the requirements of Act 60.
To qualify for Puerto Rico’s Act 60 tax holidays, you must be a resident of Puerto Rico for at least 183 days during the taxable year and must not have been a resident of Puerto Rico for the 10 years prior to the Act’s effective date.
By becoming a bona fide resident of Puerto Rico, you will no longer be subject to U.S. federal income taxes on your Puerto Rico source income as you are now subject to Puerto Rican income tax laws. This, of course, is the program’s main draw.
The Office of Incentives for Business in Puerto Rico (OIBPR) is responsible for the administration of all tax incentive applications under Act 60. Every tax incentive granted constitutes a contract with the government of Puerto Rico that is legally guaranteed and protected by Unites States laws and will not be affected by any future legislation.
Act 60 consolidates all of the previous tax incentives laws under one new Act, and benefits are divided into “chapters,” each one addressing a specific sector such as: Financial and Insurance Services, Manufacturing, Farming, Entrepreneurship, Logistics, Individuals, Export (Services and Goods), Hospitality, Arts & Entertainment and others.
For these and many other reasons, moving to Puerto Rico and making the “Island of the Enchantment” your new home might be the best decision you will ever make.