Private groups ask gov’t to ‘simplify and improve’ Puerto Rico’s tax system
A coalition of eight organizations that represent Puerto Rico’s private sector sent a letter to the Puerto Rico governor’s executive mansion, La Fortaleza, expressing their support of Senate Bill 1298/House Bill 1839 regarding the need to reduce tax rates for individuals and corporations, as well as the adoption of simplification measures for the tax system.
The coalition includes the CPA Society; Puerto Rico Manufacturers Association (PRMA); the Puerto Rico Chamber of Commerce (CofC); the Puerto Rico Bankers Association (ABPR, in Spanish); Puerto Rico Restaurants Association (ASORE, in Spanish); the Retail Trade Association (ACDET, in Spanish); the Chamber of Food Marketing, Industry and Distribution (MIDA, in Spanish); and the United Retailers Association (CUD, in Spanish). The Advisory Group to Simplify and Improve the Tax System also joined them to stress the need for specific technical changes to the bill.
In the letter, the coalition acknowledged the legislature’s consideration of modifications to the bill, requesting that any changes involve the private sector’s input through public hearings.
The coalition highlighted that the bill should aim to achieve several objectives:
– Lowering Puerto Rico’s individual tax rates. This includes the regular rate and the adoption of an inflation adjustment for rates and certain deductions to mitigate the impact of inflation on individuals’ tax burden.
– A reduction in Puerto Rico corporate tax rates, currently at 37.5% — the second-highest globally, according to the Tax Foundation. According to the OECD database for 2022, the average corporate rate of 114 jurisdictions was 20%.
– Initiatives to simplify the tax system to improve the business environment in Puerto Rico without decreasing revenue collections.
– To evaluate the proposal using the “Neutral Deficit” parameter, rather than “Neutral Revenue,” which allows paying for the reduction in rates through fiscal discipline or efficiency.
The coalition also said it is opne to the adoption of the proposal in phases to reduce the fiscal impact, but recommends the reduction in rates for individuals and corporations be addressed simultaneously.