Letter opposing Puerto Rico’s newly enacted 4 percent tax on foreign corporations
Chairman Eng. Raúl Gayá Nigaglioni
Puerto Rico Chamber of Commerce
PO Box 9024033
San Juan, PR 00902-4033
Dear Chairman Eng. Raúl Gayá Nigaglioni:
The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly opposes Puerto Rico’s newly enacted 4 percent tax on foreign corporations. This new tax increase makes drastic changes to longstanding tax law, may have unintended consequences, and is potentially detrimental to new and existing foreign investment in Puerto Rico.
Although the new tax decreases every year until it is phased out in 2016, after it reaches 1 percent, imposing an arbitrary new tax sends a bad signal to business. In all likelihood, the new tax will curb foreign investment, hinder job creation, and hurt the competitiveness of Puerto Rico. By imposing a discriminatory new tax, without notice or the benefit of public hearings, a negative message is sent to new and existing investment in Puerto Rico. A strong incentive is created for foreign companies to look elsewhere for their manufacturing and distribution.
This new tax increase will profoundly affect the decision-making of foreign corporations as they consider whether to continue to do business and deploy their capital in Puerto Rico. An ad hoc tax passed without notice, after the start of the fiscal year, which takes effect in less than three months, will wreak havoc on the business and tax planning of companies in a time of increasing uncertainty in the global economy---creating a hostile tax environment in Puerto Rico. To say that this new tax increase is ill-timed is an understatement.
The Chamber strongly opposes Puerto Rico’s new job-killing tax hike on corporations. We urge you to engage the Puerto Rican legislature, and urge consideration of alternatives to this burdensome and discriminatory new tax.
R. Bruce Josten