Puerto Rico Incentives Code requires tax breaks be made public
Benefits by individual, entity and sector to be published online
SAN JUAN — Puerto Rico Economic Development Secretary Manuel Laboy confirmed to Caribbean Business that language introduced by the House of Representatives to the Incentives Code was included in the measure the governor enacted Monday.
The Incentives Code contains a number of amendments introduced by the lower chamber. Some call for greater transparency regarding individuals and companies that receive tax breaks having to submit information that would be made public in a government website.
House Treasury, Budget and Promesa Committee Chairman Antonio “Tony” said the new code centralizes the incentives under the Economic Development & Commerce Department’s (DDEC) Puerto Rico Business Incentives Office, which will manage the site that will group current and future incentives and publish reports with data on who requests and has received a tax decree.
“That was included in the final measure that is now Act 60 of 2019, and it has two important aspects. The first establishes the cyber portal, which we had already launched that part last year with the Single Business Portal that works on various permits and incentives. So now the Incentives Code will be fully implemented in the Single Business Portal,” Economic Development Secretary Manuel Laboy replied to Caribbean Business when asked about the changes Wednesday during an unrelated press conference. “The second aspect is that it establishes certain parameters on what information will be made public, which includes publishing the sectors that benefit from incentives, how many incentives each sector receives a year and the return on investment, so everyone knows whether the investment made by the government has a return on investment.”
DDEC is required to publish three reports yearly on the portal. These will include the incentives requested and awarded under the code or any other law previously enacted that awarded a decree, such as Act 22 of 2012, known as the Individual Investors Act, for whom new requirements were established.
“All those people who are established under Act 22 are going to have to purchase a home in Puerto Rico, and the donation made to a nonprofit is being raised from $5,000 to $10,000,” Soto explained.
“For us, it’s very important that the people of Puerto Rico have complete and updated information,” Soto said. “We are demanding for reports to be drafted by the Incentives Office that will publish the most extensive information on the decrees that have been awarded and those that will be granted in the future.”
The so-called “Incentives Reports” must, “at a minimum” contain “the name of the exempt business, the principal shareholders, date the decree was requested and granted, preferential rates, the municipality where the business is operating, the municipal exemptions it enjoys, the number of jobs generated or retained in Puerto Rico in comparison to jobs said exempt business committed to maintaining,” Soto stressed.
The majority party lawmaker further said “we are emphasizing” that the tax decrees are contracts and reiterated that those who receive a decree must “comply with the contractual responsibility.”
On June 21, Soto announced that some of the amendments in the Incentives Code would establish an easier process when requesting an incentive, and that a “mechanism is being incorporated so that we can determine if the investment made by the government has a return on investment.”
He explained that he believes the newly required disclosure “strengthens the fulfillment and oversight of the incentives and offers a level of fiscal transparency, accountability and risk management, among others.”
Language was also introduced in the amended Incentives Code to help boost the development of land-based and online betting on sports and esports.