Exemptions Archives - MasterCompliance

How to Qualify for Puerto Rico’s Act 22

Posted on June 28, 2021 by admin

Also, Act 22, known as “The Individual Investors Act” targets high net worth investors with the promise of 0% tax on interest, dividends, and capital gains obtained while residing in Puerto Rico as a bona fide resident. This act, along with a few others, were the response to Puerto Rico’s ballooning national debt that started accumulating when the US government cut federal subsidies to the island in 1996. Beginning in 2012, Puerto Rico used its special status within the United States to create unique tax incentives that would lure successful employers down to the island to bring capital and create jobs. The tax benefits Puerto Rico’s Act 22 offers are as follows:

100% tax exemption from Puerto Rico income taxes on all dividend and interest income; and
All capital gains accrued after becoming a New Resident will be 100% exempt from Puerto Rico taxes.

In this blog we will highlight some of the major steps you need to take to qualify for Puerto Rico’s Act 22.

Act 22: Puerto Rico Tax Incentives

Posted on June 16, 2021 by admin

In January of 2012, Puerto Rico passed legislation making it a tax haven for U.S. citizens that become residents of Puerto Rico. The tax laws, known as Act 20, the Export Services Act, and Act 22, the Individual Investors Act, shields new residents residing in Puerto Rico for at least half of the year from paying most federal income taxes. The U.S. Tax Code generously exempts Puerto Rico sourced income from federal tax and, under the law, residents pay minimal or possibly no taxes on interests and dividends, as well as capital gains. Additionally, property taxes are significantly lower than property taxes in the mainland U.S. Thus, making Puerto Rico a mecca for exportation of international services worldwide.

These tax laws were the response to Puerto Rico’s ballooning national debt that started accumulating when the US government cut federal subsidies to the island in 1996. Beginning in 2012, Puerto Rico used its special status within the United States to create unique tax incentives that would lure successful employers down to the island to bring capital and create jobs.

Once granted, the benefits under Act 22 will be secured during the entire term of the act, regardless of changes in the Puerto Rico tax laws applicable. The act shall have a term of 15 years, until December 31, 2030, and renewable for 15 years.

Act 20: Puerto Rico Tax Incentives

Posted on May 19, 2021June 9, 2021 by admin

In January of 2012, Puerto Rico passed legislation making it a tax haven for U.S. citizens that become residents of Puerto Rico. The tax laws, known as Act 20, the Export Services Act, and Act 22, the Individual Investors Act, shields new residents residing in Puerto Rico for at least half of the year from paying most federal income taxes. The U.S. Tax Code generously exempts Puerto Rico sourced income from federal tax, and, under the law, residents pay minimal or possibly no taxes on interests and dividends, as well as capital gains. Additionally, property taxes are significantly lower than property taxes in the mainland U.S. Thus, making Puerto Rico a hot spot for exportation of international services worldwide.

Once granted, the benefits under Act 20 and 22 will be secured during the entire term of the act, regardless of changes in the Puerto Rico tax laws applicable. The act shall have a term of 15 years (from 2012) with possible 15-year extension in the case of Act 20 and until December 31, 2030 in the case of Act 22.

Exclusions from Registration as an Agent

Posted on April 30, 2021April 30, 2021 by admin

Agents are individuals in a sales capacity who represent broker-dealers or issuers of securities. As agents, they act, usually on commission basis, on behalf of others. Agents are often referred to as registered representatives, whether sell registered securities or securities exempt from registration. The use of the term individual here is important. Only an individual, or a natural person, can be an agent. A corporation such as a brokerage firm is not a natural person, it is a legal entity. The brokerage firm is the legal person, or legal entity, the agent, a natural person, represents in securities transactions. Also, there are exclusions from registration as an agent, which are listed below.

Federal Exemptions from Investment Advisor Registration

Posted on March 5, 2021March 19, 2021 by admin

Previously on the MasterCompliance blog, we covered When Do You Have to Register as an Investment Advisor and Exclusions from the Definition Investment Advisor. This Blog will discuss when a person does meet the definition of an investment advisor under the Investment Act of 1940, but is exempt from registration.

Footnote 74 Under SEC’s Customer Protection Rule

Posted on December 24, 2020February 8, 2021 by SCM Communications

The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, Inc. (FINRA) recently issued Frequently Asked Questions (FAQs) concerning the exemption provisions of SEC Rule 15c3-3, the Customer Protection Rule. Prior to this guidance, even if they did not meet all requirements for (k)(2)(i) or (k)(2)(ii) on the FOCUS Report, firms were choosing to file for a (k)(2)(i) if they did not have custody. To address this issue, the SEC released footnote 74 to allow these “Non-Covered Firms” to properly file for exemption under Rule 15c3-3.