Puerto Rico’s Tax Incentives: Not Just For the RichWith the word spreading among the financial elite about the potential tax savings made by Puerto Rico’s Law 20/22, many millionaires and billionaires are pulling up stakes and replanting them in on the island. The new, business-friendly policies of the Puerto Rican government are making it very attractive to entrepreneurs and financiers, and the growth potential is increasing all the time.
However, as Caribbean Business reports, the tax incentives dictated by Law 20/22 are not only applicable to the uber-rich. Many people believe that the law contains some sort of net-worth requirement, but in fact the tax breaks are available to anyone who relocates to Puerto Rico and had not previously resided there in the past 15 years. Any individual looking to move to Puerto Rico may file the paperwork to get a Law 22 tax decree from the Economic Development & Commerce Department. The paperwork usually takes 30 to 45 days to be processed costs about $1000. The process for a Law 20 tax decree for businesses can take slightly longer, according to Fernando Goyco, a tax attorney and partner of Adsuar Muñiz Goyco Seda & Pérez-Ochoa PSC, a firm dealing with 34 clients seeking tax-exempt status.
Law 20 was designed to attract businesses to Puerto Rico. It grants corporations that relocate an income-tax rate of 4% with no tax on dividends paid to residents of Puerto Rico and no withholding tax on dividends paid to nonresident owners. Law 22 was designed to attract new residents to the territory by offering tax exemptions on passive income such dividends, interest and capital gains.
Businesses and individuals of all sizes can take advantage of the tax advantages that Puerto Rico offers through Law 20/22 and the idea is beginning to pick up some major traction. Financial experts are predicting that the law will generate upwards of $10 billion in new investment in the territory by 2017.
“Before, there was no movement, but when Bloomberg published a story last year on the tax breaks, the interest in Laws 20 and 22 really exploded,” Goyco said. “Every week, I get about four or five calls from people interested in learning more about Law 20 or 22.”
Read more at Caribbean Business.