The recently announced tax reform should include measures to encourage locally financed enterprises and contain provisions aimed at creating a level playing field for local businesses, particularly small and medium enterprises, said Rodrigo Masses president of the Puerto Rico Manufacturers Association.
The letter sent to Puerto Rico Gov. Ricardo Rosselló, stated that measures to accomplish this can include those that apply only to local businesses and aim to reduce their transaction costs.
Masses said the tax reform should incorporate concrete and direct measures to stimulate investment, considering that a reduction in corporate taxes would fall short in encouraging investment decisions.
A variety of measures could be implemented, from those related to capital gains taxes on new projects, to the tax treatment to be given to new investments. Measures that offer direct investment stimulus have been successfully implemented in various jurisdictions, he said.
“Our organization believes it is imperative for Puerto Rico companies to strengthen their local capital. They are in an increasingly difficult competitive environment because of the island’s economic situation and the high costs of doing business, which is aggravated by energy costs,” Masses said.
While the PRMA understands the government’s “delicate fiscal situation” and the need for stimulus measures whose fiscal impact is neutral and are a key factor in generating new economic activity, eliminating the tax on inventories is important and should be done through a mechanism that avoids the negative impact to current municipal finances.
“Eliminating this tax is an important and healthy step for businesses and citizens while it helps prevent emergencies as were hurricanes Irma and María we don’t have needed inventories and supplies,” he said, adding the PRMA is available to assist in the implementation of measures, such as labor reform, the tax and the permitting process, and requested a meeting to discuss those issues.