Tax Solutions in Puerto Rico
Puerto Rico is a constituent entity of the United States that enjoys special privileges relative to other possessions. It exercises its sovereignty independently within the United States, operates within US banking systems, uses the USD as its currency, speaks English as its language, and has a wealthy labor force. Yet, Puerto Rico is treated as overseas for tax purposes, which means it does not observe tax laws established by the US. Puerto Rico creates its own unique tax conditions for itself, making this city-state the ideal place to live and work.
Incorporated into IRC 933, 7701(a)(4), 7701(a)(5), 7701(a)(30), 881(b)(2), 882, 1442(c)(2), and a number of other tax code changes made in 2008 were later consolidated, expanded to become, and then replaced by Act No. 60-2019, also known as the Tax Incentive Act ( Act 60 ).
The combination of long-standing federal tax legislation contained in the Internal Revenue Code ( IRC ), including IRC 7701(a)(4), IRC 7701(a)(5), IRC 7701(a)(30), IRC 881(b)(2), IRC 882, IRC 1442(c)(2), and various other pieces of tax incentive legislation that began in 2008 and was integrated into and superseded by Act No.
Act 60, known as Tax Incentive Code (60-2019), Puerto Rico has sought to establish itself as a business and manufacturing center. In general, the United States does not tax foreign-source income retained by a foreign corporation operating under Act 60.
As a result, the more appropriate corporate tax rate of 4% would apply.
Section 2032.01 of Act 60, which prohibits the corporation from taking into account Puerto Rico for the year in which it issues a dividend, sets the conditions under which Puerto Rico residents can receive dividends from (their) corporations. Specifically, Puerto Rico income tax is limited to the 100% corporate rate, which in this instance equates to a 4% rate.Therefore, corporate entities may be able to operate on a very low tax basis (4%) although resident shareholders may withdraw dividends income tax-free.
Puerto Rican citizenship is NOT required to ensure you receive the benefits of Act 60.
Using innovative tax plans will be able to substantially increase profits
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