Puerto Rico’s Laws: Act 20 and 22 – Things to Know

You may have heard that Puerto Rico has approved laws, Act 20 and 22, which affect the future of small business ownership in the island. These two acts are designed to help stimulate economic growth by providing investors with benefits such as tax exemptions and reduced regulations on businesses. While not all details have been released yet for these new laws, we can tell you that they represent a shift in how Puerto Rico is trying to attract investment dollars to their economy.

General information on Act 20 and 22

Act 20 is designed to incentivize individuals to invest in Puerto Rico by providing new benefits like a full tax exemption for ten years and reduced regulations. Act 22 provides similar incentives, but targets corporations instead of individual investors. Corporations who take advantage of act 22 will be able to incur 100% foreign taxes on income they earn from patents, licenses, and other intellectual property.

This legislation is part of an effort by the government to attract investment dollars without sacrificing its independence from the United States or their sovereignty over any land they wish to offer as incentives for investors. Investors in Puerto Rico can enjoy all these benefits while still being a U.S citizen, making it easier than ever before to make the island their new home.

The government of Puerto Rico is not just looking for financial investment; they are also interested in talent and human capital from outside sources to help spur on development for all sectors of society.

Pros of Act 20 and 22

Puerto Rico’s laws have a lot of advantages, one being that it will be easier for people outside the U.S. to move or relocate their business to Puerto Rico and take advantage of the incentives so they can still maintain ties with family on mainland America without worrying about dual taxation status. Act 20 22 in Puerto Rico also allow people, with a net worth of $500,000 or more, to move their personal income from the mainland United States without paying any federal taxes.

Hope this article has given you a better understanding of the differences between Act 20 and 22, as well as what these laws entail. But, if you still have questions or want to learn more about how Puerto Rico’s Laws might affect your business, get in touch with an expert.