Puerto Rico Gov. Ricardo Rosselló submitted a new Incentives Code Bill to the island’s legislature, looking to “establish a new transparent and efficient process for the granting and overseeing of all incentives.”
“In the Plan for Puerto Rico, we committed ourselves to grouping in a code all the incentives to simplify our offer for investment and job creation. The New Tax Model returns to the taxpayers hundreds of millions of dollars that were invested in companies that did not generate jobs or benefits for Puerto Rico. The tax incentives are paid by the People and must be productive,” Rosselló said.
The Incentives Code Bill is in line with the government’s public policy of maximizing the performance of the tools available for Puerto Rico’s economic development, the governor added.
“The new Code contemplates a change of vision of incentives and a dynamic platform that is consonant with the reality of creating a code that promotes activities which contribute to the growth of the economy through investment, innovation, export, and the creation of jobs,” Rosselló said.
Economic Development and Commerce Department Secretary Manuel A. Laboy, pointed out that “the new Code responsibly speeds up the application and approval process. In addition, it establishes uniform processes of regulation, measurement, and continuous evaluation after the granting of incentives to guarantee compliance, transparency, and the achievement of fiscal development objectives.”
Laboy also said the new Code establishes a budget process for credits and incentives, which will include a return on investment report and will establish the amount available for each program.
Existing jurisprudence was analyzed from 1960 to the present to draft the bill.
In the process, arbitrarily defined incentives were found, without a proper analysis to determine the reasonable amount, responding to the needs at the time they were granted. Hence, the need for which those incentive were granted may not be valid anymore, government officials said.
Bill to be implemented as promo tool
The bill, which brings together more than 50 different incentive laws, will be implemented as a promotional tool.
“This is a more efficient way to attract, as well as retain, investment and human talent that propels economic development to the island, and we avoid that the money goes out to other jurisdictions that do not contribute to our economy,” Laboy said.
“Equally important, it provides certainty for investment, addressing the main problem that local and foreign investors have communicated to us,” said Laboy.
“On the other hand, it provides tools to grow our local companies with an export vision, incentives for small and medium enterprises in strategic sectors, and special provisions to promote investment in the municipality islands of Vieques and Culebra,” Laboy noted.
The new Code seeks to “modernize incentives and adapt them to Puerto Rico’s fiscal reality” and the global competitive environment, Laboy said.
“This means that, while for years we have had a disorganized, ineffective system that does not benefit the population, now we will have a new system that can be inspected, that is reliable, agile, and transparent. A system that reports to the people of Puerto Rico for the first time,” said Laboy.