Act No. 22-2012, as amended, (“Act 22”) was created by the Puerto Rico government to attract new residents by eliminating all Puerto Rico income taxes on passive income that was earned after an individual became a resident of Puerto Rico. The government believed that the new law would increase investment in real estate, consumption products and services. In short, they are looking to boost the economy of Puerto Rico by providing the following benefits with resident investors:
- 100% tax exemption on all dividends
- 100% tax exemption on all interest income
- 100% tax exemption on all capital gains
- 4% corporate tax rate
Resident Investors were required to make annual charitable donation in the amount of $5,000 payable to a government-approved charity of the grantees’ choice. The incentives and requirements created in Act 22 have since been folded into Act 60. Under Act 60, the Resident Investor must not have been a resident of Puerto Rico for the past ten years and must now make a $10,000 donation payable to a government-approved charity of the grantees’ choice.
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