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MIDA sues gov’t over Puerto Rico ‘national tax’

Manuel Reyes, vice president of MIDA, signed a sworn statement submitted with the lawsuit, stating its claims as true.

Manuel Reyes, vice president of MIDA, signed a sworn statement submitted with the lawsuit, confirming its claims as true.

The Puerto Rico Marketing, Industry and Food Distribution Chamber (MIDA for its Spanish acronym), filed a lawsuit Thursday against the government, asking the San Juan Superior Court to declare the so-called “national tax” unconstitutional and order the Treasury Department to immediately publish exemption regulations.

The trade group claims, among other things, that the national tax imposes a burden that averages 80 percent of revenue on local businesses, which in some cases may exceed 150 percent, while other sectors that generate more have to pay nothing.

“In other words, the ‘national patent’ is causing Puerto Rican entrepreneurs competing in very difficult circumstances to end up generating losses in their operations and thereby threatens the survival of business and economic activities done in benefit of the consumer and the island,” MIDA said in a statement issued along with the lawsuit documents.

MIDA claimed that it turned to the court after exhausting all legal and administrative remedies to ensure that new tax laws were fair and reasonable, most notably the “national patent.”

“We can not remain indifferent to what constitutes an affront to the initiative and economic activity developed by Puerto Rican entrepreneurs that, far from helping to find solution, increases the economic crisis the island is facing,” MIDA stated.

The lawsuit filed by MIDA and retailer Hatillo Cash & Carry, names Treasury Secretary Melba Acosta as a co-defendant.

The “national patent” was approved under Law 40 of this year, which amended Puerto Rico’s Internal Revenue Code to impose a surcharge on businesses generating more than $1 million in annual gross revenue. The law also authorizes Acosta to implement regulation to grant waivers, a document yet to be drafted, the lawsuit claims.

“Acknowledging the serious damage it could cause companies, the law itself includes a waiver mechanism. However, in practice this mechanism is ineffective and, worse, gives the Treasury Secretary absolute powers to determine the tax without criteria or guidelines to prevent arbitrary and discriminatory treatment,” MIDA said.

The trade group said filing an application for a waiver costs $1,500 and preparing the required documents up to $10,000 for a two-year exemption.

“It places another requirement on taxpayers with less profit or even losses of having to spend money they do not have, without having an idea of how Treasury will make its determination and knowing that it does not solve the problem permanently,” MIDA said.

Author Details
Author Details
Business reporter with 29 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

1 Comment

  1. Is Puerto Rico a sovereign nation? NO.

    Puerto Rico’s name in spanish isn’t Commonwealth (Mancomunidad in Spanish)….Its “Free Associated State” (Estado Libre Asociado) an outright deception pushed by the anti statehood “popular Democrats”
    This has resulted in false sense of nationhood and fears of “loosing our culture” under statehood. Although 98 of Puerto Ricans treasure US citizenship and permanent Union with the US,45-50% desire statehood. The other 45% believe the “something for nothing” propaganda of the Commonwealth party. Yet ,Nov 2012,54% rejected Commonwealth and 61% chose statehood for the first time.
    1.PR is not free. (It belongs to the US.)
    2.PR is not Associated. (Its an unincorporated US Territory subject to the Territorial Clause.
    3. PR is not a state of any kind.




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