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Fri Dec 20, 2019, 09:22 PM

Congressional Democrats take aim at Puerto Rico's role as tax haven for the wealthy

By Jim Wyss

SAN JUAN, PUERTO RICO -- Congressional Democrats on Friday took aim at Puerto Rico’s role as a tax haven, asking the U.S. Treasury to investigate if the struggling island is helping the wealthy dodge federal and state taxes with little apparent benefit to the local economy.

In a letter to Treasury Secretary Steven Mnuchin, four representatives asked for information regarding two Puerto Rican tax incentives, Acts 20 and 22, that were passed in 2012 with the goal of luring wealthy individuals and service-providing companies to the island.

Beneficiaries of the measures pay virtually no local income tax if they reside in Puerto Rico at least half the year; in addition, most Puerto Rican residents are exempt from federal income tax.

The laws have “enabled high-income individuals and profitable service businesses to avoid any Federal or territorial taxation on some income and to owe extremely low rates of tax on other income,” the lawmakers wrote. “By ‘residing’ on the island for 183 days per year, these individuals now avoid both Federal and local taxes. This results in tax benefits that individuals and businesses could not obtain anywhere else in the world. In other words, Puerto Rico has become a tax haven from the Federal government.”

Read more: https://www.miamiherald.com/news/business/international-business/article238590978.html

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