An individual who has not been a resident in Puerto Rico for the past 15 years and is able to become a resident by December 2035 can avoid income tax and capital gains tax, according to Forbes. The requisite paperwork must be submitted to the authorities.
Anyone wishing to avoid property and other taxes should have stayed a minimum of 183 days a year in the country after receiving his resident status. Once the government sanctions his application and the person becomes a Puerto Rican resident, he earns the advantage of zero tax on any interest and dividends from his company profits, provided the asset's location is in Puerto Rico, notes Forbes.
In addition to the above, after becoming a resident, the individual is exempt from paying long-term capital gains tax on asset appreciation, according to Forbes. However, if the resident wishes to sell a property within 10 years of becoming a resident, he is liable to pay a 5 percent tax on asset appreciation, states Forbes.
There is always a possibility that the Internal Revenue Service can catch and force the individual to repay the taxes or interest if it finds he is a non-Puerto Rican resident, notes Forbes.