Puerto Rico's Underground Economy And Tax System Essay

Puerto Rico's Underground Economy And Tax System - Essay Example These rules also cover the condition in using US flagships as well as the minimum wage standard. Income coming from other U.S. possessions or Puerto Rico is generally considered as foreign-source income. On the other hand, entities which are instituted other U.S. possessions or Puerto Rico, are usually considered as foreign persons. Special Tax Rules Related to Puerto RicoAs a consequence of the hybrid domestic-foreign conduct of individuals in Puerto Rico, the common ideology of U.S. taxation are qualified by numerous particular rules pertinent to U.S. citizens and inhabitants of, and U.S. persons who are conducting business in the said territory.Other rules, on the other hand, are intended to put off U.S. Federal tax laws from opposing tax incentives applied by Puerto Rico to draw investors. The United States has also placed in tax incentives to help Puerto Rico when it comes to acquiring employment producing investments particularly from companies in the US. The demand for these p articular tax incentives could be traced in part, to the extra costs placed on investing in Puerto Rico mainly since it holds such status as a U.S. possession. When taking into account the earlier U.S. law, definite domestic corporations with operations in U.S. possessions could vote for under Code section 936 to commonly do away with the U.S. tax, which also includes the alternative minimum tax, on particular foreign source income which was associated with their processes in the specified regions.