The Senate’s Social and Economic Revitalization Committee recently held public hearings on Bill 374 that seeks to amend the Incentives law for the generation and retention of small and medium sized enterprise jobs.
The proposed amendments seek to ensure that companies that have signed an agreement for Creation or Retention of Jobs continue operating in Puerto Rico once its validity expires. Such were the conclusions during a hearing chaired by Sen. Zoé Laboy-Alvarado on the bill authored by Popular Democratic Party minority Sen. Rossana López-León.
Empresarios por Puerto Rico, a nonprofit that represents a variety of business sectors and companies of all sizes that prodice more than $4 billion in combined sales, agreed with the measure’s purpose establishing that the island’s economy is supported by SMEs. The sector generates more than 80 percent of full-time jobs, the trade group said in written testimony presented at the hearing.
Nevertheless, the organization made several recommendations including one in relation to the requirement of permanence in Puerto Rico. It should establish that that in those cases in which an eligible SME operates with losses that are the result of new impositions established in law or regulations, or the result of unfair competition, deference should be given to Puerto Rico Trade and Export to assess the circumstances on a case-by-case basis.
The group also noted that to guarantee the continuity and effectiveness of this measure, should it become a law, it does not establish a term of validity, providing that Puerto Rico Trade requires reports from the participating SMEs with the objective of monitoring thorough compliance.
Meanwhile, the Puerto Rico Manufacturers Association recommended changing the focus of the measure so that it is aimed at making companies thrive economically, and increase their income, which in turn will allow them to generate more jobs.
“The operation of a small or medium enterprise generates jobs, which has an inevitable impact on the economy and the government receives a return on investment. But the only way to guarantee the permanence of the company and therefore the jobs, is its economic or financial success,” the PRMA said in its testimony.
The Department of Economic Development and Commerce rejected approving the measure, because as written, it would significantly increase the special tax rate imposed on this sector through Law 120-2014, to the extent that it forces businesses to remain in Puerto Rico after the validity of the decree, under penalty of eliminating the tax exemption retroactively.
Puerto Rico Trade and Export also opposed the mesure for similar reasons, adding there are many circumstances that may affect the cessation of operations of that particular business.