Discussions with US Treasury over tax on CFCs continues
SAN JUAN – Gov. Ricardo Rosselló was confident Wednesday that the U.S. Treasury will continue to recognize the credit at the federal level to foreign corporations that pay a 4% excise tax on the island under Act 154.
The governor’s expressions come about after La Fortaleza presented this week legislation that seeks to extend the tax on foreign corporations for an additional 10-year period. The companies that pay the tax receive a credit at the federal level thanks to a temporary authorization by the U.S. Treasury.
“I see that the creditability will continue. It is a responsibility to some extent,” the governor said while emphasizing that “the federal government also has to do its part.”
He added that his administration has been in “communication” with the Treasury regarding the matter and that due to the transition in the federal government, “the most relevant talks have been with staff that will remain in the Treasury.”
“The fact is we are in the process of continuing the dialogue with those who are going to be the new federal officials,” Rosselló said.
However, the federal government has yet to express its opinion on the continuation of the credit. Meanwhile, officials of the past administration have assured conditions aren’t favorable for the Treasury to continue to back such tax treatment, unless transposed into a modified source-income rule. The latter would result in less revenue for the public coffers than the 4% tax.
Meanwhile, Promesa’s fiscal control board required the government of Puerto Rico to not consider in its revenue projections the more than $2 billion a year captured by the tax amid absence of a bill that extends its validity.
Speaking to the press, Rosselló assured that he has met with representatives of all industries that pay the tax locally before filing the measure that includes extending the tax.
“Far from doing it without consulting, we sat down, we established what our model would be because we want to…practice what we preach, which is transparency, and let the different players know what’s going to happen in this effort,” the governor explained.