When one thinks of Puerto Rico, images of sipping cocktails on a beautiful beach may come to mind. For some, this is what the island indicates, but the stark reality is that this US commonwealth is in a rather dire financial situation and is looking for ways to improve it's situation. This is why the government is making it easier to create a Puerto Rico tax shelter, which can save significant amounts of money for individuals while bringing an influx of money into the economy.
With high unemployment and a per-capita income much lower than even the poorest US states, the economy of Puerto Rico is struggling mightily. Previous attempts at tax breaks on manufacturing have not been as successful as hoped and something else needed to be done.
Americans already enjoy one distinct benefit of residing in this commonwealth. Except for federal employees, residents do not need to pay federal income tax and are bound by separate regulations on tax compared to other parts of the country.
Now the idea is to have Puerto Rico be a tax haven in a similar vein to the Singapores and Switzerlands of the world, but with a couple of advantages. In trying to draw wealthy Americans, the island boasts a much more convenient location and does not require complicated citizenship processes in order to relocate.
The focus has now been shifted from providing incentives based on manufacturing to those of the service industry, particularly in regards to financial and legal services. Taxes have been slashed greatly on capital gains as well as dividends and interest as motivation for relocation for the targeted population.
Recently there has been an increase in promoting these tax advantages to increase awareness among affluent people in the US and elsewhere. There is a feeling that the time is right for this in that a growing number of the rich are seeking to escape escalating tax rates and are considering all available options.
A number of very wealthy people have already relocated to the island with others in the process of applying at this time. In addition, several relatively small financial companies have decided to move their operations as well.
In many cases it is not as simple or easy a decision as it may sound. In order to be considered a legal resident, one must reside there for a minimum of 183 days per year. For some this is not a problem at all, but for others it presents the challenge of being far away from the workplace for half of the year. Also, while the tax incentives are completely legal, it is important for many to avoid the perception that they are not being patriotic or are trying to play by different rules.
Many governments are facing uncertainty in regards to the economy and are searching for innovative methods of bringing money into the coffers. Competition is fierce and each location must take advantage of the resources that it has. Enticing those with large amounts of wealth to create a Puerto Rico tax shelter is one example of such an idea.
With high unemployment and a per-capita income much lower than even the poorest US states, the economy of Puerto Rico is struggling mightily. Previous attempts at tax breaks on manufacturing have not been as successful as hoped and something else needed to be done.
Americans already enjoy one distinct benefit of residing in this commonwealth. Except for federal employees, residents do not need to pay federal income tax and are bound by separate regulations on tax compared to other parts of the country.
Now the idea is to have Puerto Rico be a tax haven in a similar vein to the Singapores and Switzerlands of the world, but with a couple of advantages. In trying to draw wealthy Americans, the island boasts a much more convenient location and does not require complicated citizenship processes in order to relocate.
The focus has now been shifted from providing incentives based on manufacturing to those of the service industry, particularly in regards to financial and legal services. Taxes have been slashed greatly on capital gains as well as dividends and interest as motivation for relocation for the targeted population.
Recently there has been an increase in promoting these tax advantages to increase awareness among affluent people in the US and elsewhere. There is a feeling that the time is right for this in that a growing number of the rich are seeking to escape escalating tax rates and are considering all available options.
A number of very wealthy people have already relocated to the island with others in the process of applying at this time. In addition, several relatively small financial companies have decided to move their operations as well.
In many cases it is not as simple or easy a decision as it may sound. In order to be considered a legal resident, one must reside there for a minimum of 183 days per year. For some this is not a problem at all, but for others it presents the challenge of being far away from the workplace for half of the year. Also, while the tax incentives are completely legal, it is important for many to avoid the perception that they are not being patriotic or are trying to play by different rules.
Many governments are facing uncertainty in regards to the economy and are searching for innovative methods of bringing money into the coffers. Competition is fierce and each location must take advantage of the resources that it has. Enticing those with large amounts of wealth to create a Puerto Rico tax shelter is one example of such an idea.
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