High earner eyes tax moves

A social media post about a taxpayer weighing a move to Dubai or Puerto Rico points to two very different ways wealthy Americans try to cut capital-gains taxes. One relies on leaving the United States tax net; the other relies on becoming a bona fide resident of a United States territory. (u.ae, irs.gov) Dubai sits in the United Arab Emirates, which says it does not levy income tax on individuals. The same government page says the country does impose value added tax and corporate tax on companies and other entities, so the benefit is not a blanket “no tax” rule for every structure. (u.ae, mof.gov.ae) Puerto Rico works differently. United States tax law says a bona fide resident of Puerto Rico for the entire tax year can exclude Puerto Rico-source income from federal gross income under Section 933. (uscode.house.gov, ecfr.gov) The Internal Revenue Service says bona fide residency usually requires three things: physical presence, a Puerto Rico tax home, and a closer connection to Puerto Rico than to the mainland United States or another country. Its guidance says the physical-presence test is commonly met with 183 days in Puerto Rico during the tax year. (irs.gov, irs.gov) That distinction matters for capital gains. Puerto Rico’s investor incentive, known as Act 60, has been marketed around a 0 percent Puerto Rico tax rate on certain post-relocation gains, dividends, and interest for qualifying new residents, while gains built up before the move are subject to separate sourcing and timing rules. (investpr.org, irs.gov) The rules also changed last month. Puerto Rico’s legislature approved House Bill 505, and tax advisers reported it became Act 38-2026 on March 10, 2026, extending the resident investor program to 2055 but imposing a 4 percent rate on certain investment income for applications filed on or after January 1, 2027. (sutra.oslpr.org, reichardescalera.com) That means “move to Puerto Rico and pay zero” is no longer a complete description for new applicants. Advisers say people who apply on or before December 31, 2026 can keep the current 0 percent structure, while later applicants face the new 4 percent regime. (procopio.com, grantthornton.pr) For United States citizens, Dubai raises a different issue than Puerto Rico because United States citizens are generally taxed on worldwide income unless they change citizenship or use other lawful planning. Puerto Rico is inside the United States system, so the tax play there depends less on expatriation and more on whether income is genuinely Puerto Rico-sourced and residency is real. (irs.gov, uscode.house.gov) The Internal Revenue Service has signaled that it is looking closely at these lines. Recent tax-law commentary on 2025 Internal Revenue Service guidance said sourcing rules, documentation, and the facts of where gains were earned have become central in Puerto Rico cases, especially for investors and digital-asset traders. (pillsburylaw.com, hklaw.com) That is why threads about trust loans, offshore structures, and domicile shopping keep drawing attention online. The headline tax rate is only one part of the calculation; the harder question is whether a taxpayer can prove, on paper and in daily life, that the move actually changed where the income belongs. (irs.gov, irs.gov)