Remarkable New Puerto Rican Law Exempts U.S. Citizens From Multitude Of TaxesChris | InformationLiberation
Mar. 12, 2013
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A remarkable new law passed last year in Puerto Rico reportedly exempts U.S. citizens who choose to become residents of the territory from a multitude of taxes. Bloomberg reports John Paulson, the hedge fund manager who made $3.7 billion shorting sub prime mortgages in 2007 before their crash, is possibly looking at moving there, and many wealthy individuals involved in internet, software, and financial companies are looking at taking advantage of the new law.
John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.Here's further analysis on the act from Price Waterhouse Cooper, AMG PR Law, and Puerto Rico's Department of Economic Development and Commerce.
This act is quite remarkable, for Hedge Fund managers who make most of their money through "carried interest," which is taxed as capital gains, the savings could be massive. It appears from my reading of their government's report on the acts, they seem to suggest you can open your business in Puerto Rico and become a resident, potentially be exempted from U.S. income taxes per an old tax agreement despite being a U.S. citizen, and so long as you only service non-Puerto Ricans you could only pay 4% corporate income tax on your earnings, nothing on your non-U.S. based investments, and even zero property tax on your new Puerto Rican corporate headquarters. Admittedly, they're probably excluding some taxes, I know for a fact you're still liable to pay social security taxes, and I suspect they're not including "local" Puerto Rican income taxes which range from 7 to 33 percent on incomes over $60,000. Regardless, even if you do have to pay U.S. income taxes, or instead "local" Puerto Rican income taxes, the savings from the other tax exemptions could still be significant.
As someone looking to leave the U.S. but reluctant to cut all ties and renounce citizenship, Puerto Rico is looking quite attractive.
Chris runs the website InformationLiberation.com, you can read more of his writings here. Follow infolib on twitter here.