Puerto Rico Tax Incentives for Startups and Freelancers(medium.com)
medium.com
Puerto Rico Tax Incentives for Startups and Freelancers
https://medium.com/@peignoir/puerto-rico-just-became-a-new-startup-and-freelancer-eldorado-8e579909581d
14 comments
I think the reason wasn't section 936. The reason was more the local government not putting to good use any of the benefits from either the bonds or local companies setting up.
Instead of using those funds to improve education, technical training, create buildings/projects that made sense in the distant future where funds/companies would not be so incentivized to stay here. They went and started building pointless infrastructure projects with arguably benefits or ROI almost always with some sort of controversy on the project builder/developer intentions.
Building statues, pointless sports venues, really expensive projects with zero to marginal benefits to society/Puerto Rico's economy long term.
Instead of using those funds to improve education, technical training, create buildings/projects that made sense in the distant future where funds/companies would not be so incentivized to stay here. They went and started building pointless infrastructure projects with arguably benefits or ROI almost always with some sort of controversy on the project builder/developer intentions.
Building statues, pointless sports venues, really expensive projects with zero to marginal benefits to society/Puerto Rico's economy long term.
Agree that they were not the most prudent financial managers, my point was as soon as they changed the tax code; there was a 10 year window to sunset it and almost all of the companies left which really decimated the economy where jobs just vanished as they were moved back onshore and satellite offices closed.
You're right, many companies left after they 936 decrees expired, but they weren't cancelled right away when the Congress changed the tax code and got rid of section 936. Same with Act 20 and 22, once they are signed, you're good to go for 20 years, even if the laws change in the future.
Wonderful to see people reinventing taxation from the first principles: "awesome country to live in, with great education and social security, but these are expensive countries, from a Tax perspective"
Do tax incentives really work over the long term? Some quick searching via Google seem to bring up some negative answers but my search term could be biased ("do tax incentives really work?") and only lead me to answers that backup my question. I'm just curious to know if Tax Incentives actually do work for any city or state. Weren't tax breaks (or the removal of) part of the problem that got P.R. into their current situation?
What is your definition of "really work"? Georgia started its tax incentives for Film/Television in 2005 and now it's the third largest film/tv industry in the nation behind California and NY. It's also propped up tourist economies as a secondary effect where people want to go to places where things were filmed. Georgia legislators would probably argue that the incentives there work.
[] http://www.adweek.com/tv-video/how-atlanta-became-the-worlds...
[] http://www.adweek.com/tv-video/how-atlanta-became-the-worlds...
Act 20 applies to any company/freelancer that exports services from PR,the condition to have lived outside of the island doesn't apply here. And the government just changed the job requirement, so you don't have to hire 5 people anymore, making it available to companies with fewer employees and freelancers.
This would mean that as a founder living in Puerto Rico for the past 7-8 years.
Could I apply for Act 20 and have my tax rate reduced to just 4% corp income tax as long as we export our services/products?
Hmm interesting.
Hmm interesting.
My only gripe when they originally enacted act 20 and 22. Was that it required the founder not to have lived in Puerto Rico in the past 15 years or long period of time before arriving here.
Unless they changed it this would forbid founders that are trying to make a company in Puerto Rico able to qualify.
Unless they changed it this would forbid founders that are trying to make a company in Puerto Rico able to qualify.
It seems the requirement has been relaxed a bit:
"Puerto Rico Senate Bill 864 increases the potential impact of Act 22 by expanding who qualifies for the tax break. Prior to this legislation, Act 22 was only applicable to new migrants to Puerto Rico who had not been residents for the 15 year period before the Act went into effect in January 2012. That period has now been reduced from 15 to 6 years."
https://www.forbes.com/sites/janetnovack/2015/01/27/puerto-r...
"Puerto Rico Senate Bill 864 increases the potential impact of Act 22 by expanding who qualifies for the tax break. Prior to this legislation, Act 22 was only applicable to new migrants to Puerto Rico who had not been residents for the 15 year period before the Act went into effect in January 2012. That period has now been reduced from 15 to 6 years."
https://www.forbes.com/sites/janetnovack/2015/01/27/puerto-r...
I only spent two year outside PR for my bachelors. Been back here for 8 years now. :(
Still feels odd trying to help create startups but excluding people that live here. I mean the original purpose was to bring new companies, "expats" to puerto rico which IMO is good at accomplishing.
Still feels odd trying to help create startups but excluding people that live here. I mean the original purpose was to bring new companies, "expats" to puerto rico which IMO is good at accomplishing.
Act 20 applies to any company or freelancer exporting services from Puerto Rico. Act 22 only applies to passive income, so it targets investors moving to the island.
When I see such a poorly formatted/edited article, it makes me question the integrity and quality of the thinker behind it. I know it's vain and maybe superficial, but if they can't be bothered to consistently format or proofread their work, then I wonder what else they couldn't be bothered to do.
Take a read of the most recent crisis: https://taxfoundation.org/tax-policy-helped-create-puerto-ri...
United States General Accounting Office Report to the Chairman, Committee on Finance, TAX POLICY Puerto Rico and the Section 936 Tax Credit http://www.gao.gov/assets/220/218131.pdf