Governor describes meetings on elimination of 4% tax on CFCs as ‘sensitive’
By The Star Staff
Gov. Pedro Pierluisi Urrutia on Thursday described as “sensitive” the meetings he has had with Treasury Secretary Francisco Parés Alicea on the elimination of the 4 percent tax excise tax on controlled foreign corporations (CFCs) operating in Puerto Rico.
The tax provides 20% of the revenues in the budget. The 4 percent excise tax is slated to be eliminated because the U.S. Treasury Department has said that starting in December, it will no longer allow CFCs to take a credit on their federal taxes from the local excise tax.
Resident Commissioner Jenniffer González Colón stated that she had not been advised on the island government’s strategy to mitigate the economic impact.
“Those are some very sensitive conversations that the Treasury secretary and his team and I have been having with the highest officials of the United States Treasury, including Treasury Secretary Janet Yellen. And that came out in the media,” the governor said at a press conference.
“Also, the [island Treasury] secretary has been in communication, in very sensitive conversations with the impacted sector, that is, the largest manufacturers in Puerto Rico,” Pierluisi said. “And he has been drafting legislation and it is important that the secretary keep the legislative leadership informed, particularly the chairmen of the House and Senate Treasury Committees, which he has done, but he must continue to do so. And in the case of the resident commissioner, it is also important that the secretary keep her informed in general terms. And I know he’s going to do it.”
The tax on CFCs generates around $2 billion a year. The federal Treasury Department let the island government know that it had to look for alternatives, because soon the credit will no longer be accepted for those companies.
Officials have been evaluating turning the tax into a regular income tax.