Act 22, also known as the Individual Investors Act of Puerto Rico, is a law that was enacted in 2012 with the goal of attracting individual investors to the island. The law provides a number of tax incentives to encourage individuals to invest in Puerto Rico, with the ultimate goal of stimulating economic growth and creating jobs.

One of the key provisions of Act 22 is the exemption from Puerto Rico income taxes on all passive income generated by eligible investors who become residents of the island. This includes interest, dividends, capital gains, and royalties, among other types of income. The exemption is granted for a period of 15 years, providing a significant tax benefit to investors who qualify.

In order to be eligible for the tax exemption under Act 22, individuals must establish residency in Puerto Rico and meet certain requirements. These requirements include spending at least 183 days per year on the island, obtaining a driver’s license and registering to vote in Puerto Rico, and purchasing or renting a home on the island. Additionally, individuals must not have been residents of Puerto Rico for at least six years prior to applying for the exemption.

Act 22 has been successful in attracting a number of wealthy individuals to Puerto Rico, particularly those from the mainland United States who are looking to reduce their tax burden. The law has been particularly popular among cryptocurrency investors, as Puerto Rico does not tax capital gains on investments in digital assets.

In addition to the tax benefits offered under Act 22, Puerto Rico also provides a number of other incentives to individual investors. These include a low cost of living, beautiful natural scenery, and a warm climate year-round. The island also offers a number of high-quality healthcare facilities and educational institutions, making it an attractive location for individuals looking to relocate.

While Act 22 has been successful in attracting investors to Puerto Rico, it has also faced criticism from some who argue that the tax incentives disproportionately benefit the wealthy and do not provide enough benefit to the local economy. Critics have also raised concerns about the potential for tax evasion and abuse of the incentives provided under the law.

Overall, Act 22 has had a significant impact on the economy of Puerto Rico, attracting investment and creating jobs on the island. While the law has its critics, it has been successful in achieving its goal of encouraging individuals to invest in Puerto Rico and stimulating economic growth. As the island continues to recover from the devastation caused by Hurricane Maria in 2017, Act 22 remains an important tool for attracting much-needed investment to Puerto Rico.