In a letter sent today to lawmakers in Puerto Rico, The Retail Industry Leaders Association (RILA) warned that a proposed gross receipts tax amendment would have devastating effects for retailers doing business in Puerto Rico.
HB 1073 would impose a new tax on gross receipts, referred to as a “Super Patente” to businesses in an effort to fix Puerto Rico’s debt crisis. The gross receipts tax would have a dramatic and disproportionate effect on low-margin businesses, such as retailers. RILA is urging the legislature to oppose such drastic measures that would unfairly penalize retailers, forcing them to be faced with tough decisions on future employment opportunities and expansion of operations on the island.
“When companies are saddled with significant financial burdens in order to maintain operations in specific jurisdictions, it not only stifles growth within the region but punishes the consumer with higher prices,” said Joe Rinzel, vice president of state government affairs. “A gross receipts tax is not sound public policy as it taxes a business regardless of profitability.”
The legislation is being considered by the House and Senate in Puerto Rico.
“If the Puerto Rican legislature is determined to pass this detrimental tax, at the very least US retailers should be able to take a US foreign tax credit for the gross receipts taxes paid in Puerto Rico.”
Full text of the letter can be viewed here.
RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.