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Puerto Rico Tax Breaks Face Federal Scrutiny
13 Dec, 2025
Summary
- A new GAO report questions millions in annual tax exemptions.
- Oversight is urged due to potential non-compliance by wealthy recipients.
- Incentives aim to boost the economy but face criticism for inequality.
Federal legislators are intensifying their scrutiny of Puerto Rico's lucrative tax incentive programs, following the release of a U.S. Government Accountability Office (GAO) report. This report questions the substantial annual tax exemptions, potentially amounting to hundreds of millions of dollars, and calls for enhanced IRS oversight.
The GAO's findings highlight concerns that some wealthy individuals benefiting from these incentives may not be fulfilling their federal tax obligations. The report, requested by House Natural Resources Committee Democrats, investigates whether these tax breaks create an unfair haven for the ultra-wealthy without benefiting the island's residents.
Established in 2012, the incentives, including Acts 20 and 22, offer significant tax exemptions to businesses and individual investors relocating to Puerto Rico. While proponents cite job creation and investment, critics point to rising housing costs and wealth inequality on the island, which has a poverty rate exceeding 40%.
