Treasury Department publishes 4th edition of Tax Expenditures Report
The Puerto Rico Treasury Department has announced the publication of the fourth edition of the Puerto Rico Tax Expenditure Report (PRTER-2024), as required by the fiscal plan certified by Financial Oversight and Management Board for Puerto Rico on April 4.
“We remain consistent with our commitment to inform citizens regarding the administration of public funds; in this case, about the tax benefits granted by the government to individuals, groups and sectors that represent economic activities that promote development and the people’s social welfare,” said Treasury Secretary Francisco Parés.
This report follows the release of the Audited Financial Statements corresponding to fiscal year 2021 in mid-June, an effort Parés said was well-received by credit rating agency Fitch Ratings, which highlighted the importance of the publication of the government’s audited financial statements and emphasized the improvement in reliability, punctuality and access to relevant information for the markets.
“We’re taking the right steps to make informed decisions that help us build and develop a real and sustainable economy,” he said.
The secretary explained that tax expenditures are the counterpart to regular expenditures presented in the general government budget and complete the picture of government investment in public policy objectives.
The first report, corresponding to tax year 2017, was published in June 2019. The second, corresponding to 2018, was published in May 2021, and the third, with the cost estimates from the year 2017 to fiscal year 2023, was published in March 2022. Parés said the most recent report provides a broader window of projections, from 2022 to 2026.
The report defines tax expenditures, describes the method used to identify them and provides a list of 431 tax expenditures and their costs. Estimates of the cost of tax expenditures for the years 2021 to 2026 are also included, under the tax laws in force in 2021.
The PRTER-2021-2026 also includes revised estimates for tax year 2020 as a point of reference for changes in Puerto Rico’s main tax regimes, including the personal income tax and business income tax, the Sales and Use Tax (IVU, in Spanish) and special taxes.
This report includes tax expenditures attributable to Act 135 of Dec. 2, 1997, as amended (Tax Incentives Act of 1998), and Act 73 of May 28, 2008, as amended (Economic Incentives Act for the Development of Puerto Rico), now Act 60 of July 1, 2019, as amended (Puerto Rico Incentives Code Act).