Important Highlights

• The government of Puerto Rico recently enacted the Act to Promote the Relocation of Individual Investors (Act 22 of 2012), the purpose is to attract new high net worth residents to Puerto Rico.
•  0% tax rate on interest and dividend income for New Residents.
•  0% tax rate on all short- and long-term capital gains accrued after becoming a New Resident.
•  0% federal taxes on Puerto Rico source income.
• Rates are guaranteed till 2036 through tax incentives decree.

Important Highlights

•  4% Corporate Tax Rate - Puerto Rican businesses providing services for exportation will enjoy a 4% flat income tax rate on income related to such services.
• 100% Tax-Exempt Dividends - Distributions from earnings and profits derived from the export services income of eligible businesses are 100%tax exempt from Puerto Rico taxes
• .  6% Dividend Tax Rate for Puerto Rico shareholders
•  0% Dividend Tax Rate for Non-Puerto Rico shareholders
• 100% Municipal Tax Exemption
• 100% Property Tax Exemption
•  Tax Exemption Decrees for up to 45 years - First term of 20 years, renewable for 10 additional years, up to 45 years.
•  Eligible Export Services Include public relations and advertising, professional services, such as legal, tax and accounting, research and development, development of computer programs, investment banking, and other financial services.

ALWAYS CONSULT YOUR FINANCIAL ADVISOR AND / OR CERTIFIED PUBLIC ACCOUNTANT

Entering into a new phase of its transformation, Puerto Rico in 2020 introduced Act 60 of July 1, 2019. Act 60 serves to advance the initiatives undertaken by the previously popular and widely adopted Act 22 for investors and Act 20 for service companies, as well as all other tax incentives such acts 73 and 273. Furthermore, 95% of Puerto Rico is designated as a Qualified Opportunity Zone and whose provisions are overseen by those of Act 60.

• The Office of Incentives for Businesses in Puerto Rico (OIBPR) is tasked with administration of all tax incentive applications under Act 60.
• Newly eligible for tax-advantages under Act 60 are: those businesses dealing in blockchain technology, combined heat and power activities, and recorded live events.
• Act 60 takes all of the previous tax incentive acts under one new Act, and separates the incentives by industry into different chapters, including for: Individuals, Exportation (Services and Goods), Financial and Insurance Services, Hospitality, Manufacturing, Infrastructure, Agriculture, “Creative Industries” like arts and entertainment, Entrepreneurship, Logistics, and others

A Single Business Portal was created to offer quicker processing of permit and tax incentive applications ( https://ogpe.pr.gov/freedom/  ). All tax decrees will now have one 15-year term and are subject to renegotiation with OIBPR in order to extend for an additional fifteen years.

Puerto Rico was announced as Federal Opportunity Zone by Governor Rosello on April 18, 2018  

What is a designated Opportunity Zone?

An Opportunity Zone (OZ) is a community or region that has meet the specific criteria as an economically-distressed zone and has been designated elegible for preferential tax treatment. These opportunity zones localities have been submitted for nomination by the state, and such has been certified by the Secretary of the U.S. Tresury.

Opportunity Zones where added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017, and are an economic development incentive with the purpose of investment, business and job creation in distressed communities. Qualifiying investments in OZ must be acquired after December 31, 2017.

What does this mean to Puerto Rico? 

The Governor of Puerto Rico expects that these incentives to inject million $ in new investments into the island's economy.

Puerto Rico Beach Properties hopes for a significant increase in small and medium size business creation and the creation of employment to support these new enterprises and investments. The creations of these new enterprises, will have a trickle effect in the overall island's economy, culminating in a significant reduction of Federal Government economic social engineering programs. 

What does this mean to investors?

• While contributing to the quality of life of others, investors are permited to minimize and defer capital gain taxes while generating an ROI as high as 20%.
• Reinvesting the gains, versus the entire proceeds from the sale of an asset, investors benefit from tax incentives.
• Real estate, stocks and bonds, and other investment instruments where the investor has gains from the sale of a capital asset, can be rolled into an Opportunity Zone investment.

Examples of Opportunity Zone investments include: 

• OZ Real Estate: The acquisition of real estate, and renovating this real estate. depending on the hold period the investor can get up to 100% deduction on capital gains when the asset is sold.
• OZ Stock: Investing in stock of a domestic corporation that is a qualified opportunity zone business.
• OZ Partnership: Investing in a domestic partnership that is a qualified opportunity zone business.

The Bonus of Investing in Puerto Rico:

• Awesome weather, Puerto Rico has been a perenial vacation destination.
• No passport required.
• Nearby, a short hop. New York to San Juan is easier than, New York to Los Angeles.
• Our people, a well educated work force.
• Beach or Mountains, you choose.
• Act 20 / 22 benefits
• Puerto Rico is a Commonwealth of the US.
• Goods and services similar to the United States
• Our own special and unique culture, a blend of Latin America with the US.

DISCLAIMER: Puerto Rico Beach Properties is not a finantial advisor, legal counsel or CPA. The above is a consolidation of information publicly obtained for informative purposes. We recommend the investor to contact the proper professional for specific and detailed advice.

RELATED LINKS: 

Puerto Rico Beach Properties is not affiliated to any of the following agencies, news sources or service providers. This is just a short list of resourses we found valuable to the investor. 

NAR

https://www.nar.realtor/qualified-opportunity-zones

IRS FAQ

https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

US DEPARTMENT OF TREASURY / OPPORTUNITY ZONE RESOURCES

https://home.treasury.gov/news/press-releases/sm0341

THE HILL

https://thehill.com/opinion/finance/373149-puerto-rico-is-primed-to-get-tens-of-millions-in-statewide-investments

CARIBBEAN BUSINESS

https://caribbeanbusiness.com/puerto-rico-designated-an-opportunity-zone-under-us-tax-reform/

https://caribbeanbusiness.com/sba-opportunity-zones-will-lead-to-much-needed-jobs/

EB-5  (EMPLOYMENT BASED PROGRAM)

The United States Goverment offers opportunity for overseas investors and their families to become Green Card holders and eventual U.S. citizens in return for investment in the Commonwealth of Puerto Rico.

IN A FEW WORDS

The U.S. Congress has created the fifth-employment based (EB-5) immigrant visa category for qualified foreign investors, who are willing to invest in a enterprises that will benefit the U.S. economy and create or save at least 10 full-time employments.

In Puerto Rico as a Target Employment Area, the minimum requirement is $500,000 in investment by the foreign investor.

Immigrants who invest in Puerto Rico can include their spouses and unmarried children under the age of 21 under the same EB-5 US $500,000 investment.

For detailed information, visit the official website at www.uscis.gov.

Always consult your immigration attorney or one of the 4 EB-5 centers in Puerto Rico for applicable procedures and other specifics.