RIVERO CONSULTING

PR Tax Incentives for Individual Investors

Act 20 - Export Services

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 The Export Services Act of 2012 or Act 20 was established and intended  to promote the exportation of services, by providing the appropriate  environment and opportunities to make Puerto Rico a center for  international services. 


 Act 20 offers a four (4)% corporate tax rate for Puerto Rico businesses  providing services for exportation, 100% tax-exempt dividends from  earnings and profits derived from the export services income of eligible  businesses, and a 60% exemption on municipal taxes. 


 

Act 20 offers:

  • 4% corporate tax rate
  • 100% tax-exempt dividends
  • 60% exemption on municipal taxes
  • 20-year decree guaranteeing these rates
  • No federal taxes on Puerto Rico source income

Act 22 - Individuals Investors

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 The Individuals Investors Tax Act of 2012 or Act 22 was established to  promote the relocation of individual investors to Puerto Rico, in order  to attract new residents to the Island by providing a total exemption  from Puerto Rico income taxes on all passive income realized or accrued  after such individuals become bona fide residents. 


 The incentives under Act 22 of 2012, which will expire on December 31,  2035, include 100% tax-exemption on dividends and interests and a 100%  tax exemption on short-and long-term capital gains, after becoming  residents. To become a new bona fide resident of Puerto Rico, an  individual must have physical presence in the Island for at least 183  days of the year and must not have been a resident in Puerto Rico for  the 15 years prior to the Act’s effective date. 


 

Act 22 offers:

  • 0% tax on dividend and interest income for new Puerto Rico residents
  • 0% tax on short-and-long term capital gains for new Puerto Rico residents
  • 0% federal taxes on Puerto Rico source income