Crypto Tax Evaders Welcomed Along with Everyone Else by the Financially Devastated Puerto Rico
Puerto Rico is seeing an influx of crypto investors who see its tax policies as an ideal place to avoid the U.S. tax man, and the territory’s Governor Ricardo Rossello is just fine with that.
Puerto Rico was devastated by Hurricane Maria last year, and it is still recovering from the storm that wiped out power for almost all its residents and visitors.
That’s not stopped it from being attractive for a certain group of people who see it as a tax haven of sorts. This group includes cryptocurrency investors who are flocking to the island to escape the U.S. tax man.
The subject was addressed by Puerto Rico’s governor Ricardo Rossello this week when he sat down with CNBC to discuss the island’s dire financial situation. The discussion veered to cryptos, and people wanting to take advantage of the island’s tax efficiencies.
Crypto investors to the rescue?
Last fall, Hurricane Maria came ashore and wiped out virtually everything in its path. This included the island’s electric grid. Now months after storm hit and devastated the island, roughly 20% of residents are still without power.
It seems crypto traders could care less, as they are choosing to make the island their home just to get out of paying the capital gains taxes on their crypto windfalls as required by the Internal Revenue Service. The IRS treats cryptocurrencies as property, which means they are subject to the capital gains tax.
We’ve told you about how the taxing authority has beefed up its efforts to hunt down and nail crypto tax cheats. A court matter involving Coinbase found that of its nearly six million customers who’d completed six billion transactions, only 800 to 900 taxpayers a year had electronically filed returns with a property description related to Bitcoin between 2013 through 2015.
Puerto Rico is attractive for crypto enthusiasts thanks to an exemption within the Internal Revenue Code, called Act 22, which allows non-residents of Puerto Rico to pay no taxes on their long-term capital gains, according to CNBC.
So strong has the influx of crypto enthusiasts to Puerto Rico been that a conference is being held to let the world know. The conference’s organizers are touting the island as the friendliest locale in the U.S. for entrepreneurs, investors and service providers in the crypto-currency and Blockchain arena.
In a fitting manner, the conference is called “Puerto Crypto,” and it takes place from March 14 through March 16.
Rolling out the welcoming mat
Rossello acknowledged the long road ahead in recovering from the hurricane. However, he said strides are being made, noting that most power has been restored. During the interview, Rossello made it clear that the island welcomed everyone.
“Whoever wants to come to Puerto Rico and enjoy the benefits of Puerto Rico, come to Puerto Rico.”
Rossello being open to crypto traders making his unincorporated U.S. territory their homes raises an important observation. Faced with the monumental devastation from the hurricane, coupled with its already poor financial situation, it’s no surprise that it would be open to whoever wanting to move there doing so.
Many may be curious to know whether Puerto Rico’s new residents really live there, or if this is just another stunt to avoid paying taxes on their crypto gains.
Rossello seems unphased.
While he’s intrigued with how Blockchain can help the island’s government, Rossello is not a fan of cryptocurrencies.
“Blockchain is a phenomenal technology; a game changer. Cryptocurrency is sort of an application of that. I am concerned with some of the reports on how it is being used.”
He added that there is still a lot of work to be done in the space and clarity is needed to make sure [cryptos] aren’t being used for money laundering, or other crimes.
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