Watchdog economist urges Puerto Rico to adopt Global Minimum Tax
Espacios Abiertos’ Daniel Santamaría-Ots points to $3.8 billion revenue potential from taxing multinationals.
Puerto Rico must enact legislation to incorporate the Global Minimum Tax (GMT) to potentially capture $3.8 billion in government revenue, according to economist Daniel Santamaría-Ots, research director at Espacios Abiertos, a nonprofit that promotes transparency, accountability and public engagement in government.
He shared his insights during a panel discussion titled “Global Minimum Tax: International Perspective and Local Context” held at the University of Puerto Rico’s Río Piedras campus.
Santamaría-Ots explained that the GMT would apply only to companies with incomes exceeding $790 million. He emphasized that the tax is not specific to Puerto Rico but is part of a global initiative requiring multinational companies to pay the tax.
“The issue is where they will pay it and who will collect it,” he said, noting the opportunity for Puerto Rico to benefit. He mentioned a previous attempt to introduce GMT-related legislation locally, which stalled “in the upper chamber and raised certain flags at the local Treasury Department.” He believes these “technicalities could be resolved with a new draft legislation. If a special session is convened, we need to see if the Global Minimum Tax topic will be included.”
Santamaría-Ots stressed that discussions in Puerto Rico should focus on retaining multinational companies, strengthening their presence, expanding their labor force and maintaining the island’s competitiveness globally.
“If there is legislation, this is what can be captured,” he added.
A study conducted earlier this year by Espacios Abiertos examined the effects of the 15% GMT in Puerto Rico, highlighting both opportunities and risks. The study noted that digitization and globalization have allowed multinationals to shift profits to low-tax jurisdictions, leading to significant global tax revenue losses.
In response, more than 140 economies have collaborated to implement the GMT to ensure fair taxation and adequate funding for public services.
Starting in 2025, the GMT will affect subsidiaries in Puerto Rico whose parent companies have subsidiaries in countries that have adopted the agreement promoted by the Organization for Economic Cooperation and Development and the Group of 20, which is made up of industrialized and emerging-market nations, including Europe.
Currently, multinational and foreign corporations in Puerto Rico pay an effective tax rate of 2.43%.
right jump in the wagon first. most of these companies are in PR for their tax exemption, lets kill them so they leave. interesting fact when these companies analyze their cost of doing business in PR if we keep eating away their profits they will go. example with one year of their cost of energy they camn build a new plant