Puerto Rico
Caribbean • UTC-4 • America/Puerto_RicoPuerto Rican Tax System
Puerto Rico's tax system offers unique incentives under Act 60, including a flat tax rate for qualifying residents and competitive corporate tax rates. The system is territorial, focusing on Puerto Rico-sourced income.
Income Tax
4%–33%
Flat rate for Act 60 residents
Corporate Tax
20%
Standard corporate tax rate
VAT / GST
11.5%
Sales and use tax rate
Nomad Visa
Not Available
No dedicated program
Tax System Overview
Puerto Rico operates a territorial tax system, taxing residents on Puerto Rico-sourced income. Act 60 provides significant tax incentives for qualifying individuals and businesses.
System Type
Territorial tax system
Resident Taxation
Residents taxed on Puerto Rico-sourced income only.
Non-Resident Taxation
Non-residents taxed on Puerto Rico-sourced income.
Tax Year
January 1 – December 31
Income Tax Bands
Puerto Rico's income tax bands based on annual taxable income in USD (2025).
Tax Treaty
Tax treaties prevent double taxation and reduce withholding taxes on cross-border income.
United States of America
Treaty ActivePuerto Rico follows U.S. tax treaties, which prevent double taxation and reduce withholding taxes on dividends, interest, and royalties.
Key Benefits
Prevents double taxation on income earned in both jurisdictions.- Reduced withholding tax on dividends, interest, and royalties.
Totalization Agreement
Totalization agreements prevent double social security contributions for workers moving between countries.
United States of America
Agreement ActivePuerto Rico follows U.S. social security agreements, preventing double contributions and ensuring benefits.
Coverage Areas
Facts
- Prevents double taxation of social security contributions for U.S.–Puerto Rico workers.
- Allows workers to combine contribution periods for benefits.
Other Countries with Agreements
Business & Freelancing
Corporate Tax Rate
20% standard rate with potential reductions under Act 60
VAT Registration
Mandatory for businesses with annual sales exceeding $100,000.
Freelancer Rules
Freelancers must report Puerto Rico-sourced income and may qualify for Act 60 incentives.
Crypto Policy
Cryptocurrency gains are subject to capital gains tax unless exempt under Act 60.
Frequently Asked Questions
Digital Nomad & Benefits
Visa Details
Tax Perks
- Flat 4% tax rate on Puerto Rico-sourced income for Act 60 residents
- No federal income tax on Puerto Rico-sourced income
Filing Roadmap
Establish Residency
Ensure you meet the bona fide residency requirements by spending at least 183 days in Puerto Rico.
Register for Act 60
Apply for Act 60 incentives through the Puerto Rico Department of Economic Development and Commerce.
Gather Income Documentation
Collect all necessary documents, including proof of Puerto Rico-sourced income and any applicable deductions.
File Your Tax Return
Submit your tax return by April 15 using the Puerto Rico tax system, ensuring all Act 60 benefits are claimed.