Puerto Rico Manufacturers Association concerned about GOP tax plan
SAN JUAN – The Puerto Rico Manufacturers Association (PRMA) expressed concern Thursday about Republicans’ tax reform plan, saying it lacks provisions that address the economic activity of companies operating on the island.
The measure contains provisions that will modify the way U.S. companies with operations abroad pay taxes. “As we know, a large part of the economic activity and private jobs in Puerto Rico are directly attributable to the operations of manufacturers of biotechnological products, pharmaceuticals, medical devices and others that could be affected by the changes that are coming,” PRMA President Rodrigo Masses said in a written statement.
The 429-page measure would reduce the corporate tax rate to 20% and a provision that lets multinationals repatriate profits held overseas at a one-time 12% rate.
“However, of particular interest to Puerto Rico, we expect to see details on provisions that may require the immediate payment of tax on earnings outside the United States, provisions aimed at avoiding erosion of the U.S. tax base, as was the border tax; and a change to a territorial regime for companies with operations outside the United States by using foreign entities. These three points directly affect a large number of operations in Puerto Rico and the future of their thousands of employees,” Masses said.
During the past three years the PRMA has submitted proposals to have certainty regarding the future of these operations in Puerto Rico, the association’s president said.
“Our approach has been to recommend measures within the Internal Revenue Code that offer an advantage to Puerto Rico compared with other jurisdictions in which these companies have operations.
“The PRMA, together with the Private Sector Coalition [CSP by its Spanish initials], has made hundreds of direct visits to Congress and the federal executive, we have collaborated with the resident commissioner to design specific incentives that address the concerns of the manufacturing sector and that serve to give Puerto Rico that advantage it needs. In addition, when the governor made his call for a common front, we made ourselves available to offer him the same commercial intelligence and technical input on the matter,” Masses explained.
After Hurricane María, in which, beside the economic impact, companies have had to resolve serious operational problems with energy, telecommunications, transportation and others, it is crucial that the situation be taken advantage of to ensure that the proposed changes to the U.S. Internal Revenue Code position Puerto Rico as a favorable jurisdiction to continue and bring manufacturing businesses, he said.
“We confirm the commitment, on behalf of the private sector, of the PRMA and the CSP to work together with the spokespeople of the Puerto Rican government sector–the Office of the Resident Commissioner, the PRFAA [Puerto Rico Federal Affairs Administration] and the ‘common front’ of the governor to make sure the specific text we can insert in the bill presented today has the necessary impact to guarantee Puerto Rico the competitive advantage it needs,” Masses said.