Relocating to Puerto Rico for Tax Act 20 & 22?

Hmm, looks like Mrkpytn's manufacturing may well qualify with this amendment:

"Section 1.- Amendment are made to subsection (k) Article 3 of Act 20-2012 as follows:

Article 3: Definitions;

(k) Eligible services include the following:
(xvi) Hospital services and laboratories including medical tourism and telemedicine facilities;
(xxi) Companies dedicated to international trading (known as trading companies) – Trading companies will mean any entity that produces no less than 80% of gross income from the following:
(a) sales to any persons or entities that are outside of Puerto Rico, for use, consumption or disposition outside of Puerto Rico, of products which have been manufactured inside or outside of Puerto Rico and have been bought by the eligible business for resale;"

If I understand him correctly, paragraph (a) seems to describe him well, so long as he sells none of his products in Puerto Rico.

Thanks for the information. If I were to sell my products in Puerto Rico which is not necessary my guess is that it would be subject to the IVU tax.
  I could sell wholesale to designers and I believe it would be their responsibility.
Since I am not dependant on a Puerto Rican customer base and if it is too complicated I would not pursue that venue.
  I have another product line offshoot that could be of interest to Architectural firms but this would not involve a retail situation so I will look into the implications of product availability in Puerto Rico if it is cost effective.
With NYC and Miami so accessable doing a trade show in these types of places would be more time effective than a Puerto Rican trade show.
I would like to make my presence known in Puerto Rico and that could take place by word of mouth if it proves good enough to be talked about. Social network is an amazing means of promotion based on merit and not big advertising dollars. All this is a great adventure  and I look forward to sharing what it entails.

WarnerW wrote:

Hmm, looks like Mrkpytn's manufacturing may well qualify with this amendment:

"Section 1.- Amendment are made to subsection (k) Article 3 of Act 20-2012 as follows:

Article 3: Definitions;

(k) Eligible services include the following:
(xvi) Hospital services and laboratories including medical tourism and telemedicine facilities;
(xxi) Companies dedicated to international trading (known as trading companies) – Trading companies will mean any entity that produces no less than 80% of gross income from the following:
(a) sales to any persons or entities that are outside of Puerto Rico, for use, consumption or disposition outside of Puerto Rico, of products which have been manufactured inside or outside of Puerto Rico and have been bought by the eligible business for resale;"

If I understand him correctly, paragraph (a) seems to describe him well, so long as he sells none of his products in Puerto Rico.

So I can sell Alcapurrias to the states and qualify, Weepa. (kidding , too much work).

Yes Warner,

The purpose of Act 20 is to develop Puerto Rico as an international export services center. If you have a business with that in mind. You may qualify!!

Rey, it sounds easy but is not. You could quality if you make a unique type of Alcapurria lol. People go crazy for Puerto Rican stuff in the states.

KWRealEstate_Act2022 wrote:

Yes Warner,

The purpose of Act 20 is to develop Puerto Rico as an international export services center. If you have a business with that in mind. You may qualify!!

Right, but the operative word is (or at least was) "service".  An economy is made up of three sectors: agriculture, manufacturing and services.  Act 20 was designed to attract service industry to the island, but ones that would not displace domestic service providers.  Thus the requirement that the services be international.

What Mrkptyn is doing (again, if I understand it correctly) is not services, but manufacturing.  He is importing raw materials, assembling them into a finished product, and selling them.  That seems to me to be the very definition of "manufacturing".  Isn't that, after all, what automobile manufacturers do?

But now it seems that the PR government is so desperate to attract businesses that they have redefined "services" to include manufacturing -- so long as it is for the international market, and doesn't displace domestic manufacturing.  They also don't seem to care so much about the direct creation of jobs, relying instead on increased consumption of local goods and services to drive the local economy.

For what its worth, I think this is a good idea on their part.  However, I would note that the willingness of the PR Government to change the rules of the game is troublesome.  While I find this current promise attractive, can I trust the Government to keep it's promises?  Thousands of investors would tell me otherwise.

Hi, I don't qualify for acts 20 or 22 because my company is past series a and I cannot re-incorporate and I draw a regular salary. I was wondering if anybody had a tax attorney with whom I may speak because I will be drawing my revenue from the United States but living in Puerto Rico and I want to make sure that I'm not effectively doubling my tax rate. As I understand I will pay federal and then a small portion of Puerto Rico because I will receive a credit for paying federal but I want to doublecheck before I wrap up my affairs.

Hi Chritian,
I highly recommend Gerard ***. He specializes on Act 20 and 22. He is definitely up to date with these two laws.

Perfect, thank you!!!!

KWRealEstate_Act2022 wrote:

Rey, it sounds easy but is not. You could quality if you make a unique type of Alcapurria lol. People go crazy for Puerto Rican stuff in the states.

I could since what I do is web security and Penetration Testing, but I am too lazy at the moment to get back to work, so if I do 3-4 months worth of work a year I will do it as a regular local and pay the standard taxes. Not motivated to go back to work.

Rey let's talk I own a b2b platform and if I have your information that would be great for when our next round of testing comes up!

ChristianEKR wrote:

Rey let's talk I own a b2b platform and if I have your information that would be great for when our next round of testing comes up!

I send a private message.

I'm visiting PR beginning next Wed afternoon. I would like to meet some expats if possible and learn more about PR. I'm also looking for an attorney and tax advisor. PM any contact information if you have recommendations. Thank you!

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sandrarduncan wrote:

***

ACT 20/22 is for people with means and was specifically designed to provide tax breaks and attract rich people. The government is trying to attract people of means, that is the whole point. Also those taking advantage of the law, have no moral obligation to help neither the island nor the people, their obligation is to help themselves. You are imposing your views on their actions and your response. We are here to help people regardless of wealth with answers to their questions, we also provide advice when we can to benefit them, regardless of the effect it has on the poor, this is not a political site.

Sorry, i am tired of the Non sense on the island and how it effects the hard working people here. This isnt a point of view , its a fact. I am not puerto Rican.  However i do stick up for whats right, regardless if i will benefit from it.   It wrong to take advantage and that is why we have never have.

sandrarduncan wrote:

Sorry, i am tired of the Non sense on the island and how it effects the hard working people here. This isnt a point of view , its a fact. I am not puerto Rican.  However i do stick up for whats right, regardless if i will benefit from it.   It wrong to take advantage and that is why we have never have.

Did you registered to vote in PR?

Of course. I have been here for 4 plus years Alexandra needs ro be the governor here

***

Seems people have forgotten the rules of the forum. A lot of this is political crap that should not be here.

A person asks a question, you answer the question or you pass on answering the question. But to attack them for their point of view, for wanting to take advantage of a program put in place by the legislature and signed by the governor into law is a disservice to the member and a violation of the rules.

We are here to honestly answer questions of the members, not to impose our points of views in “What is right”, what is right to you may not be right to others.
These items have been reported along with a request to take action.

Im going to share my wisdom on other website forums where honest discussions are allowed.  What good is a forum where the moderators run off their posters/customers?!?!   

Act 20 and 22 are government programs that are supported for or against various political parties.  They cannot be discussed without also discussing political agendas.  Good grief.

Asking if people registered to vote is a political question, asked by a mod, yet that is allowed.

Honest debate shouldnt be censored.  Spamming and advertising should be censored.

Act22 wrote:

Im going to share my wisdom on other website forums where honest discussions are allowed.  What good is a forum where the moderators run off their posters/customers?!?!   

Act 20 and 22 are government programs that are supported for or against various political parties.  They cannot be discussed without also discussing political agendas.  Good grief.

Asking if people registered to vote is a political question, asked by a mod, yet that is allowed.

Honest debate shouldnt be censored.  Spamming and advertising should be censored.

Act 20 / 22, 60 / 74 are government programs in Puerto Rico. Discussing the advances and disadvantages is perfectly ok. But when a member starts complaining that such programs exist and how rich people are squeezing the island, we are past the discussion which is meant to provide information that helps the people make a decision if the program will work for them or not.

We are here to help Expats and US citizens with information on how to move to the island and help them integrate. Activism and causes have nothing to do with that mission.

If you have a problem with how I monitor the site, you are welcome to complain to the owners of the site. At the top right of every post there is a “Report” button where you can complain about my posts or any other posts. You can also if you like drop out of the group if you are offended in any way. You decide.

BTW, this is not a democracy, this is a company who publishes a site, they make the rules and they decide what they like or not. Not sure why you think it is a democracy or why you think it should be one.

Hi there. I'm considering moving to PR to take advantage of the Act 20 benefits. One issue I'm facing is that I currently have merchant accounts in the US to do credit card processing. I have good relationships that I've built with them throughout the years.

Many of them do not support PR entities however. Has anyone dealt with this? Is there a workaround where I can still use my US merchant accounts?

Welcome to the forum. 

I'm not certain I understand your business model, but I don't know that is especially relevant.

Two points:

First, Act 20/22 have been combined into Act 60, and in that process some provisions of each were dropped.  Make sure you are up to date on Act 60.

Second, it seems that your question really is about operating as a company incorporated in Puerto Rico.  It is possible to register obtain a license to operate a mainland-based company on the island.  I looked into it a few years ago.  As I recall, the process was not terribly onerous, at least not by island standards, nor was the fee excessive. 

Of course, Act 60 may require you to establish a Puerto Rico-based business rather than operate as a "foreign" corporation.  In that case you might want to establish a Puerto Rico business that works with your mainland corporation, which services your clients.  A bit clunky, but manageable. 

My guess is any competent lawyer specializing in corporate law could help you with the process.  Try searching Martindale for "incorporation in Puerto Rico".

dfeld31 wrote:

Hi there. I'm considering moving to PR to take advantage of the Act 20 benefits. One issue I'm facing is that I currently have merchant accounts in the US to do credit card processing. I have good relationships that I've built with them throughout the years.

Many of them do not support PR entities however. Has anyone dealt with this? Is there a workaround where I can still use my US merchant accounts?

I could be wrong but you are likely to need both credit card processing systems.

If your business line is not services act 20/22 act 60/74  will not work for you.

The above acts require that you do almost all your business with non PR customers

Do you think that PR finally will become a state if Biden wins and Act 20 / 22 will be cancelled due to this? There is a big push for PR and Washington DC to become state members.
If Trump wins it will not happen.