Thursday, February 2, 2023

Puerto Rico Strengthens Tax Credit System

SAN JUAN ( Associated Press) – Puerto Rico announced Tuesday it will begin cracking down on those abusing the US territory’s tax credit system, an opaque sector that has long been unregulated and claims an average of $270 million is per year.

The finance secretary, Francisco Pérez, said the creation of a new centralized system to manage investment-related tax credits would generate an additional $130 million per year for the government and reduce the tax burden for the island’s 3.2 million residents. resident.

For years, the Puerto Rican government has been unable or unwilling to provide hard statistics related to tax credits given, for example, to those who build hotels or invest in local manufacturing or the film industry.

It is a system that is not subject to the slightest audit, Pares said at a press conference. He estimated that 20% of claims are false, either because of technical errors related to the current antiquated system or because people try to cheat the system.

The measure was announced a week after Puerto Rico’s governor raised the annual cap on tax credits from $38 million to $100 million for film projects developed on the island.

Parez said the current incentives will expire over the next few years and then they will enter the new system, which will go into effect on Wednesday.

In the previous system, the island’s Department of Finance, Department of Economic Development, Department of Housing and Tourism Company were responsible for overseeing the tax credit. Now the entire responsibility will be of the treasury officers.

The announcement comes as the US territory emerges from the largest municipal bankruptcy in US history and generates more revenue amid a deepening economic crisis.

Nation World News Desk
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