One of the controversial topics in recent times is the payment of tax on cryptocurrency gains. In the USA, the IRS termed virtual currencies as property which means that holders will pay taxes like holders of fundamental properties or stocks.
The agency even sent a subpoena to many centralized cryptocurrency exchanges to give up the information of non-compliant taxpayers.
Even though many people in the cryptocurrency community frown against such taxes, the government is bent on ensuring compliance. Presently, non-compliance to the crypto tax payment requirement attracts legal action. So, it is not surprising that cryptocurrency investors seek a tax-free state to operate without limits.
Puerto Rico Becomes Tax Haven For Investors
As the United States clamped down on non-compliant citizens, the top affluent crypto investors moved to Puerto Rico to avoid taxes. The territory, though in the USA, is not charging federal income tax on crypto gains.
The cryptocurrency market is down in red zone | Source: Crypto Total Market Cap on TradingView.com
According to its local law Act 22, residents of Puerto Rico are exempted from paying taxes on capital gains, interests and dividends. So, people are free to keep all their profits to themselves at least for six months.
Many people were not aware of this provision until Frances Haugen let the cat out of the bag. The whistleblower moved to the territory a few months back and disclosed this great news to the community. The Act has been in play for a long time, but many people were unaware of it.
Following Haugen’s move, another media mogul, Logan Paul, moved to Puerto Rico and occupied a mansion on the island. When our sources asked him for a reason, he pointed out that the tax exemption is part of it.
Cryptocurrency Businesses Move To Puerto Rico
Apart from these individual players, some businesses have left their location to move to the island. For instance, Pantera Capital –a hedge fund – is now operating on the island.
Also, SuperRare, an NFT marketplace previously operating in Silicon Valley, has moved to the island as well. We also gathered that another hedge fund mogul John Paulson is now living in Puerto Rico.
Due to this, the Blockchain Trade Association in the Island plans for its first Blockchain week, which will come in December his year. This program aims to drive more people and businesses to move to the island. With all these moves, it’s not surprising that Puerto Rico’s economic growth is taking a new level.
However, there is ongoing competition between Puerto Rico and El Salvador as the latter has allowed crypto investors to trade without paying income tax and capital gains tax on Bitcoin.
Apart from these two places, crypto investors can enjoy the same freedom in places like the Cayman Islands, Malta, Switzerland, Nevis, and Portugal, where miners and traders don’t pay income tax.
Featured Image From Pexels and Chart From TradingView.com