Friday, July 20, 2018

Puerto Rico tax treatment still under congressional consideration

By on May 7, 2018

SAN JUAN – Rep. Rob Bishop (R-UT) said Friday that the House Ways and Means Committee is trying to address issues in President Trump’s tax reform that negatively affect Puerto Rico.

During his visit to the island, Bishop, who is chairman of the House Committee on Natural Resources, which has jurisdiction over Puerto Rico, stressed that economic measures that help create local jobs are needed. Nonetheless, Congress has yet to approve many of the recommendations for economic development suggested by the eight-member Congressional Task Force on Economic Development in Puerto Rico that was established by the federal law Promesa to help jumpstart the local economy.

Despite intense lobbying by the commonwealth, Congress approved the Tax Cuts and Jobs Act earlier this year with provisions that reduce Puerto Rico’s ability to attract investment. Among them, a 12.5% tax on profits derived from intellectual property held by foreign companies may harm the pharmaceutical industry.

The intent of the provision is to drive businesses and jobs stateside by raising the cost of conducting operations offshore. Puerto Rico is treated as an offshore jurisdiction under tax reform.

The reform had to go through a reconciliation process and “there were some things that should and could have been in that bill that could not make it because of procedural guidelines,” Bishop said. “So that means that this is still an ongoing process. The Ways and Means Committee does want to address those issues as well. It could not in the bill that was passed,” he added.

Bishop spoke at a news conference while on his second visit to assess Puerto Rico’s recovery nearly eight months after September’s back-to-back hurricanes struck.

Resident Commissioner Jenniffer González, who was at the news conference, said there was an initiative in the Senate to extend Section 30A tax incentives to Puerto Rico.

She also said she was working with the House Ways and Means Committee on a measure that would help create jobs through empowerment zones, adding that part of the problem in advancing economic legislation for Puerto Rico is that many of the Task Force recommendations fall under the jurisdiction of different committees.

“We have been filing a lot of the recommendations from the Task Force of Economic Growth as individual bills. We are trying now to have one comprehensive, holistic bill with a lot of those proposals. I’m asking the chairman if we can have all those in just one committee,” González said. “The problem is as you get many jurisdictions in all those recommendations they may be headed to different committees in the House and that is the situation.”

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