Dear Offshore: Puerto Rico increases annual fees for cryptographic companies from $300 to $5000

   The Governor of Puerto Rico, Wanda Vazquez, signed a law increasing the annual fee for cryptographic entrepreneurs from $300 to $5000.

Local tax advisors believe that this high levy could make Puerto Rico less attractive to cryptographic firms and investors, as the jurisdiction has always been considered a "safe haven" with favourable tax conditions. By raising the levy, Puerto Rico authorities expect to receive an additional $11.9 million, while the new law provides for tax reductions for firms with annual revenues below $100,000.

"The increase in the annual presence fee raises the bar for both registered and potential investors who plan to become residents of Puerto Rico in order to obtain tax breaks. But this increase in fees seems to imply that the participants in the cryptovoltaic market must be millionaires who own a fortune with instant liquidity. This is not the case with most investors and entrepreneurs", — commented Giovanni Méndez, managing partner of tax consulting firm Geo Tax.

According to Geo Tax, to "move" to Puerto Rico, cryptographic entrepreneurs must pay $750 as registration fee, $5,000 as special investment fund fee, $10,000 as annual contribution plus a new annual fee of $5,000. Mendes believes the new law has its advantages, but it is very different from the previous law, so with high market volatility, many Puerto Rican cryptographic entrepreneurs may decide to change their jurisdiction.

Even some offshore jurisdictions have stricter requirements for cryptographic activity. Last fall, Malta updated its anti-money laundering cryptographic regulations, which led the Bittrex exchange to leave the "Blockchain Island".