PR’s status as a territory is key to attract corporate investment and revive the economy

While the local population continues to dwindle, Rosselló’s government is courting new “stakeholders” to come to Puerto Rico under Act 20/22, a pivotal piece of legislation that allows wealthy transplants to use the territory as a tax haven. Passed in 2012, Act 20/22 was established to bring capital investment to the island amid fiscal crisis. The law originally carried certain restrictions requiring direct capital investment and job creation. Under the current administration, however, these rules have been lifted. Now, any individual who spends half the year on the island can receive exemptions from federal and local taxes, capital gains tax, and taxes on passive income until the year 2035, regardless of whether they generate employment or invest in the local economy. Originally designed to attract wealthy financiers, the law has ended up luring tech entrepreneurs, cryptocurrency devotees, digital nomads, and tax dodgers who choose their countries of residence based on economic incentives, regulatory freedom, and “value opportunities”—rather than on cultural or political ties. Puerto Rico’s status as an unincorporated US territory suits these untethered entrepreneurs. As neither a nation nor a US state, it allows arrivals to retain their US citizenship while benefiting from the legal ambiguities of territorial status.