Puerto Rico’s economy is severely threatened by the proposed tax reform bill being considered in the Senate. The future of at least 250,000 jobs on the island is at risk. Contact your Senators to request they treat corporations in Puerto Rico as a domestic jurisdiction for tax purposes. Puerto Rico needs special exemption from these rules to protect its already weak economy and to be able to implement a successful economic development plan.

HOW TO TAKE ACTION:

Call the Capitol switchboard at 202-224-3121 and follow the prompts to reach your Senators and Representative. Fill out the blanks and read the script when the staff answers the phone or leave a voice message. Or find your Member of Congress here

SCRIPT:

“Hi, my name is [NAME], I am a voting constituent living in [CITY/TOWN] and my zip code is [ZIP CODE #].

I’m calling to urgently request that [YOUR SENATOR /REPRESENTATIVE’S NAME] safeguard jobs in Puerto Rico by treating the island as domestic for tax purposes in the proposed tax reform bill. Currently, Puerto Rico is considered as foreign and the tax bill imposes a 20 percent excise tax to foreign corporations. Thus, this new tax applies to corporations established in the Island. Puerto Rico needs special exemption from these rules to protect its already weak economy and to be able to implement a successful economic development plan. Otherwise, experts project the Island could lose up to 250 thousand jobs. Since approximately 80 percent of medical devices and pharmaceutical goods produced in Puerto Rico are consumed by U.S. citizens, the legislation affects all Americans. The stakes are just too high to ignore.
Will [YOUR SENATOR’S NAME] publicly support treating Puerto Rico as a domestic in jurisdiction in the US tax code?

 

BACKGROUND:

There are about 50 firms in Puerto Rico that manufacture drug products and medical devices. These are high-skilled jobs that contribute to over 30 percent of Puerto Rico’s gross domestic product. Unfortunately, existing Federal tax reform legislation threatens to kill up to 250,000 jobs in the Island. Since approximately 80 percent of medical devices and pharmaceutical goods produced in Puerto Rico are consumed by U.S. citizens, the legislation affects the public health of all Americans.
The tax code treats Puerto Rico as foreign for tax purposes, meaning that corporations on the Island are treated as foreign corporations.
The tax bill being considered by the Senate imposes an excise tax on certain amounts paid by a U.S. corporation to certain related foreign corporations. Payments, other than interest, are subject to the new 20 percent excise tax. The payment is due on every purchase. This means that the excise tax applies when a parent corporation buys a good manufactured in Puerto Rico by its subsidiary located on Island. If a foreign corporation buys the same product from a domestic (mainland) subsidiary, the excise tax does not apply.
This is not a provision specifically targeting Puerto Rico. However, it negatively impacts the Island because the U.S. tax code treats Puerto Rico’s corporations as foreign corporations.
Puerto Rico needs either special exemption from these rules, a reduced rate, or some other specially designed treatment to incorporate them as domestic corporations into the tax code.

 

ADDITIONAL RESOURCES:

GOP Tax Plan Would Batter Puerto Rico’s Economic Backbone The Republican tax bill will cut thousands of Puerto Rico jobs

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