Investors consistently seek ways to evade the taxes and keep their riches to themselves. In the past, the US has worked diligently to prevent this. As long as you’re a citizen of the United States, you need to pay your cut no matter where you live or where your business operates. But wait, could there be an exception? Crypto investors are flocking to Puerto Rico for tax purposes. Keep reading to find out why.
Residents of Puerto Rico do not pay tax on their capital gains. However, under Act 20, any qualifying business that moves to the territory will pay only 4% in corporate income tax. Act 20 gives a 100% tax exemption for the capital gains and passive income of any qualifying resident.
Similarly, there are no federal personal income taxes, no capital gains tax, or decent business taxes for Americans in Puerto Rico. Therefore, PR operates on its own parallel tax system and is the perfect place for investors to continue to grow their riches, The New York Times reports.
Is Puerto Rico “Crypto Haven”?
For more than a year now, cryptocurrency investors have been looking for a place tos create their “Crypto Haven” and they have found one in Puerto Rico. After the devastating hurricanes Irma and María decimated the country’s infrastructure, these investors may be the best hope to make Puerto Rico the paradise it used to be.
The crypto investors aim to build a new city where money is virtual and contracts are stored on blockchain. Moreover, this plan for PR aims to show everyone what the crypto future could look like. This new city will be called “Sol” and has already broken ground.
The local government is happy to offer the old San Juan so that the people settle there. Though, the debate about the exact form that the new city in Puerto Rico will take continues.
The Voice of the Visionaries
This project is headed by Brock Pierce. Pierce is a director of the Bitcoin Foundation and co-founder of the start-up block.one.
“I’m worried people are going to misinterpret our actions,” Mr. Pierce said. He worries about the assumption “that we’re just coming to Puerto Rico to dodge taxes.”
“While [the hurricane] was really bad for the people of Puerto Rico, in the long term it’s a godsend if people look past that. You’ve never seen an industry catalyze a place like you’re going to see here,” said Halsey Minor. Minor is the founder of CNET and owner of a new blockchain company called Videocoin.
What Do the Puerto Rican Locals Think?
Not everyone is happy with the idea of transforming Puerto Rico into a paradise for cryptocurrencies. Furthermore, some people (including members of Puerto Rico’s government) worry that their island will be used as an experiment. They consider the initiative as an act of ‘cryptocolonialism.’ It seems Puerto Rico has always fallen victim to those who want to take advantage of tax benefits. But at least, there doesn’t seem to be any account freezing.
“We’re the test case for anyone who wants to experiment. Outsiders get tax exemptions, and locals can’t get permits,” said local, Andria Satz. “We’re the tax playground for the rich.”
Clearly, there are polarized views on this new crypto city. Though, successful or not, it will be a significant point in history for crypto communities and the world as a whole.