Puerto Rico To Become Epic Tax Haven For U.S. Citizens?: 'The Idea Is To Turn It Into An Alternative To Singapore'Chris | InformationLiberation
Mar. 13, 2013
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Puerto Rico is working to become one of the most serious threats to the U.S.'s taxation empire in the entire world, all because U.S. citizens per an old taxation agreement become exempt from U.S. income taxes if they become residents of the territory. Under Puerto Rico's remarkable new tax regime, U.S. citizens who become residents of Puerto Rico can potentially find themselves paying zero capital gains taxes, zero dividend taxes, zero property taxes on their new corporate residence, and a minimal 4% flat business tax on income from their business, the only catch being you have to open your business in the commonwealth and not service Puerto Ricans.
The setup is perfect for hedge fund managers, as well as software businesses and internet entrepreneurs.
The Puerto Rican government, which has slowly been abandoning its socialists ways which led it to bankruptcy, is actively perusing free-market reforms and is reportedly seeking to become "an alternative to Singapore."
Singapore is one of the most free-market tax havens in the world, but citizens of the country are not allowed to have dual citizenship, if they're U.S. citizens living there they must pay U.S. income taxes in full, and if they choose to renounce their U.S. citizenship to live there full-time they get looted like Facebook's Eduardo Saverin by the U.S.'s draconian exit tax. Puerto Rico on the other hand is completely open to U.S. citizens, and actually can exempt them from U.S. income taxes if they become residents. That means there is no need for U.S. citizens looking to lower their tax bill to give up their U.S. citizenship in order to escape the U.S.'s previously inescapable global income tax, nor to avoid the U.S.'s exit tax.
If Facebook was founded in Puerto Rico under the new laws just enacted, they'd have been able to pay almost nothing in taxes rather than having to pay an effective tax rate of 89% as they were forced to in 2012. The implications are huge, that's why the U.S. government is reportedly already looking at "bullying" the nation into backtracking on their plans according to this propaganda piece run on CNN/Fortune, they list a plurality of ways the U.S. could bully the territory into compliance, from threatening to withhold 22$ billion a year in aid, to making the territory the 51st state thereby forcing it to adopt the U.S.'s tax code.
If Puerto Ricans know what's best for them, they should reject the U.S. empire's takeover attempt and go full-bore in the direction of free market capitalism, hitching yourself to a bankrupt empire in decline is not a recipe for success.
Regardless, governments tend to be slow to react, chances are Puerto Rico could become an epic tax haven in the years to come, so pack up your surfboard and get moving!
Here's an excellent interview on Bloomberg from Puerto Rican developer and Caribbean Property Group Cofounder, Barry Breeman discussing this epic development:
See: Remarkable New Puerto Rican Law Exempts U.S. Citizens From Multitude Of Taxes
P.S.: As I discussed in my previous article on this development, I've still yet to determine whether or not you have to pay "local" income taxes under this new setup in Puerto Rico, the local income taxes are as high as 33% on incomes above $60,000 (scheduled to fall to 30% in 2016), some reports imply you do not have to pay them, the government doesn't even mention them in their report though, yet they do mention you're exempt from "federal" income taxes, so that makes me very suspicious. Those paying 39.6% in federal income taxes (plus state taxes up to 13.3%) to the U.S. would benefit from this new tax regime regardless, for those on the margins paying lower rates it's not as clear.
UPDATE: You DO have to pay local income taxes. If you open a business you have to pay yourself a reasonable salary subject to yearly review, though you can also pay yourself in addition through a corporate dividend. Also your business must employ at least three people. The laws appear to benefit those who profit through capital gains the most.
Chris runs the website InformationLiberation.com, you can read more of his writings here. Follow infolib on twitter here.