- Bitcoin billionaires are migrating en masse to Puerto Rico for the array of tax benefits that the region offers.
- Although the numbers are on the rise, the economic benefits for Puerto Rico remain divided.
- Locals are dealing with the rising cost of living as a result of the influx of rich foreigners.
A recent CNBC TV interview revealed that crypto billionaires are packing up and moving to Puerto Rico.
Puerto Rico A Crypto Tax Haven
When asked why Bitcoin millionaires were making this move, CNBC reporter, MacKenzie Sigalos, noted that aside from the impressive scenery, the American territory has implemented policies that make it a tax haven for the wealthy. The attractions include massive tax cuts and zero capital gains tax.
“It’s a couple of things: year-round tropical weather, beachfront property, and crucially, the island has become a tax haven for the wealthy,” said Sigalos. “We are talking no capital gains tax and, for those running their own company, the corporate tax rate drops from 21% to 4% if they export their services. And because it is in American territory, you don’t have to give up your US passport for these perks. The only catch, you gotta spend at least half the year on the island.”
Sigalos noted that last year alone, “applications for these tax breaks have tripled.” According to the reporter, more than 1,200 people have applied for the capital gains tax break. Many crypto investors are, of course, excited by this idea, as it helps them hold on to all their profits.
However, the economic impact of the influx in pulling Puerto Rico out of debt is unclear. This sentiment remains despite over 40,000 jobs created from 2015 to 2019 by the beneficiaries of these tax breaks.
Puerto Rico is not the only island country to see an influx of crypto billionaires and companies. About four months ago, FTX, one of the largest crypto exchanges, announced that they would be moving their headquarters from Hong Kong to the Bahamas as they praised the destination for its clear policies on cryptocurrencies.
Locals At The Short End Of The Stick
Asides from these benefits, there are concerns that the policy does not cater to homegrown companies and individuals. It is a move that has left many natives unhappy with the policy.
The downsides do not end there as the influx of these Bitcoin billionaires and crypto startups has led to a spike in the cost of living and rent. Though these new occupants may be able to deal with these costs, it is important to note that many of the locals would find life more difficult.
It does not seem like the migration is going to slow down anytime soon. Crypto entrepreneur David Johnston noted that his place was with his friends, adding, “I don’t have a single one left in New York, and the pandemic may have sped everything up, but every single one of them has moved to Puerto Rico.”