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.