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- Despite the fact that many in the bitcoin community are opposed to such levies, the Puerto Rico government is committed to enforcing compliance
- The payment of tax on bitcoin earnings has become one of the most contentious issues in recent years
- Despite being in the United States, the territory does not charge federal income tax on cryptocurrency earnings
The payment of tax on bitcoin earnings has become one of the most contentious issues in recent years. The IRS has classified virtual currencies as property in the United States, which implies that holders will be subject to taxation like owners of real estate or stocks are. The IRS even issued a subpoena on a number of centralized cryptocurrency exchanges, demanding that they hand over information on non-compliant taxpayers.
Even though many in the bitcoin community are opposed to such levies, the government is committed to enforcing compliance. Non-compliance with the crypto tax payment obligation now results in legal action. As a result, it’s unsurprising that bitcoin investors desire a tax-free jurisdiction to operate without restrictions. The top affluent crypto investors relocated to Puerto Rico to evade taxes as the US pressed down on non-compliant nationals.
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Despite being in the United States, the territory does not charge federal income tax on cryptocurrency earnings. Residents of Puerto Rico are excluded from paying taxes on capital gains, interest, and dividends under local statute Act 22. As a result, people are free to keep all of their gains for at least six months. Until Frances Haugen let the cat out of the bag, many people were unaware of this provision. The whistleblower relocated to the territory a few months ago and informed the community of the good news. The Act has been in effect for quite some time, yet many individuals were ignorant of its existence.
Following Haugen’s relocation, Logan Paul, another media billionaire, relocated to Puerto Rico and purchased a villa there. When our sources pressed him for an explanation, he stated that the tax exemption was a factor. In addition to these individual individuals, various corporations have relocated to the island. Pantera Capital, a hedge fund, is currently operating on the island, for example.
SuperRare, an NFT marketplace that was originally based in Silicon Valley, has also relocated to the island. According to our sources another hedge fund tycoon, John Paulson, is currently residing in Puerto Rico. As a result, the Island’s Blockchain Trade Association is planning its first Blockchain week, which will take place in December of this year. This initiative tries to attract more people and companies to the island. With all of these changes, it’s no surprise that Puerto Rico’s economy is accelerating.
However, there is still rivalry between Puerto Rico and El Salvador, since the latter has permitted cryptocurrency traders to trade without paying income or capital gains taxes on Bitcoin. Apart from these two jurisdictions, crypto investors can benefit from tax-free jurisdictions like the Cayman Islands, Malta, Switzerland, Nevis, and Portugal, where miners and traders are exempt from paying income tax.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
