No sooner had the local government signed off on a new law approving a 4 percent tax on controlled foreign corporations this week, that a stateside organization saw an opening to begin luring local manufacturing corporations to move north.
In an ad placed last week week in one of the major circulation newspapers, the New York Biotechnology Association spoke directly to the island’s biotech pharmaceutical industry, which accounts for about 26 percent of the Gross Domestic Product, telling them to “analyze the possibility of moving to New York.”
“In New York [you] will find a more hospitable business environment. For example…There is no 4% tax that will increase your costs, eliminate jobs and reduce the possibilities for success.”
“New York has world-class hospitals, universities, research centers and health care professionals: everything bioscience companies need to find the best scientific talent, discover new drugs and create new jobs,” the ad further said. “In New York, government will not be an obstacle. It will be your ally.”
The ad was placed as the island’s pharmaceutical industry is scrambling in the weak of the approval – in less than 20 hours – of Law 154, which levies the tax on the sales of their products to stateside parent companies. With the tax, the government seeks to collect about $5.6 billion over six years, which is the duration of the temporary charge.
However, the new imposition has sent pharmaceutical companies and related trade organizations reeling, as they say it is an added operational cost they must now take into consideration. Without revealing names, Pharmaceutical Industry Association President Daneris Fernández said this week that the new tax has already resulted in the halting of expansion and development plans for at least one pharmaceutical on the island.
The government, meanwhile, says it will work on a case-by-case basis with the affected companies, to seek out available alternatives to lower operational costs.
Gov. Fortuño, however, has said no changes will be made to the law. PIA has asked for a one-year extension on the application of Law 154.