Monday, November 28, 2022

Uncertainty Reigns in Act 154 Tightrope

By on March 12, 2022

Lawmakers Seek Changes to Protect Treasury Revenue, Manufacturing

P.R. Department of Treasury Secretary Francisco Parés announced new regs from the IRS

Puerto Rico’s manufacturing industry, as well as nearly a third of the commonwealth’s budget, lays in the balance, with the end of the federal credit for Act 154 of 2010’s 4 percent excise tax on U.S. controlled foreign corporations (CFCs), as local lawmakers wait for the U.S. Congress to act on legislation that could mitigate the blow to the island’s economy before resorting to a local Plan B.

In December, Treasury Secretary Francisco J. Parés announced that the U.S. Internal Revenue Service (IRS) had finally published new regulations with revised criteria for granting of foreign tax credits, which included the elimination on Dec. 31 of the federal creditability of the Act 154 excise tax, which contributes to one-fifth of net
commonwealth revenues.

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