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Act 20

Who it applies to:

  • Companies
  • Export services that are rendered from Puerto Rico to elsewhere in the world


Tax benefits:

  • 4% corporate tax / fixed income tax rate
  • 100% tax exemption on dividends for non-Puerto Rico shareholders
  • 60% exemption on municipal taxes.
  • 100% exemption on property taxes for the first 5 years, and 90% exemption thereafter.


Requirements:

  • Services must be performed from Puerto Rico (learn more about residency requirements for Act 20)
  • Must employ 5 people within 2 years
  • Open a bank account in PR


Act 22

Who it applies to:

  • Individual Investors
  • Those moving to Puerto Rico and were not residents for the 6 years leading up to January 2012.
  • Often includes owners of Act 20 companies


Tax benefits:

  • 100% tax exemption on Puerto Rico-sourced dividends
  • 100% tax exemption on Puerto Rico-sourced interest
  • 100% tax exception from Puerto Rico income taxes on all short-term and long-term capital gains accrued (after establishing residency)


Requirements:

  • Become a bona fide resident of Puerto Rico
  • Buy property within 2 years
  • Open a bank account in PR


Act 273


Under Act 273 the following IFE activities are permitted:

  • Accept demand deposits from non-residents of Puerto Rico for commercial purposes or otherwise borrow from other IFEs and non-residents under the Regulations of the Commissioner
  • Accept adequately collateralized deposits or otherwise borrow money properly secured by the Government Development Bank of Puerto Rico (GDB) and the Economic Development Bank of Puerto Rico (EDB)
  • Place deposits in any bank or any IFE
  • Provide loans to any non-resident individuals or entities
  • Issue or refinance letters of credit for any non-residents and for P.R. residents for financing exports
  • Invest in securities of the government of P.R.
  • Engage in foreign currency trade
  • Trade securities outside of P.R. issued by non-residents


Tax Incentives

IFE incentives:

  • 4% Income Tax on Permitted IFE Activities:
  • 0% Property Tax on Real, personal, tangible, and intangible property


IFE Shareholder incentives:

  • 6% Income Tax on Distributions for P.R. residents
  • 0% income Tax on Distributions for non-residents

Living with intention...

#LIVINGPUERTORICO

Not only does PR have some great IRS tax incentives, they also have a plethora of grants available to business' who offer there services to or in Puerto Rico. It pays to do business in Puerto Rico!