Dramatic Tax Reduction Strategy - Puerto Rico Tax Incentives
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Puerto Rico offers some of the most attractive tax incentives in the world, making it a hotspot for entrepreneurs, investors, and high-net-worth individuals seeking to reduce their tax burden legally. Thanks to Acts 60, 20, and 22, U.S. citizens and businesses can take advantage of incredibly low tax rates while maintaining their American citizenship.
Key Tax Benefits in Puerto Rico
- 4% Corporate Tax Rate – Under Puerto Rico's Act 60 (formerly Act 20), qualifying businesses operating on the island can enjoy a flat 4% corporate tax rate on eligible export services, significantly lower than the U.S. federal corporate tax rate of 21%.
- 0% Capital Gains Tax – Individuals who establish bona fide residency in Puerto Rico can benefit from a 100% exemption on capital gains, dividends, and interest income under Act 22 (now part of Act 60). This means no federal or Puerto Rican tax on investment gains earned while a resident.
- No Federal Taxes – While Puerto Rico is a U.S. territory, residents do not pay U.S. federal income tax on Puerto Rico-sourced income. Instead, they only pay local Puerto Rico tax rates, which are significantly lower due to these incentives.
Who Can Benefit?
- Entrepreneurs & Business Owners – If you run a business that provides services outside Puerto Rico (such as consulting, marketing, software development, or finance), you can qualify for the 4% corporate tax rate.
- Investors & Traders – Those with substantial capital gains from stocks, crypto, or real estate can legally eliminate U.S. federal taxes on future investment earnings.
- Remote Workers & Digital Nomads – If your income comes from international sources, moving to Puerto Rico can help you retain more of your earnings.
Final Thoughts
Puerto Rico’s tax incentives present an exceptional opportunity to legally reduce taxation while enjoying the Caribbean lifestyle. However, proper planning and compliance with residency rules are crucial. Consulting with a CPA professional familiar with Puerto Rico’s tax laws is highly recommended before making a move.
To learn more from an American CPA Firm, visit the website below:
Dramatic Tax Reductions - Puerto Rico Tax Incentives - US CPA Firm for USA Residents
