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by Justin Velez-Hagan, National Executive Director
A recent article published here, discusses how an amendment to the recent tax extension bill could increase business investment and perhaps even hiring.
The crux of the tax provision allows businesses to fully write off capital expenditures that would normally depreciate over time. As an example, if a company wants to buy a new piece of equipment, say a delivery truck, they would usually be able to deduct from their tax base (increase their cost) by the amount that the truck has lost value during that year (set at a GAAP accounting standard), which in effect reduces their tax bill at the end of the year by a portion of the investment, instead of all at once. However, under the new amendment, companies can write off the entire amount immediately.
The administration believes that this extra tax deduction will allow a greater investment in human capital (increase in hiring) as well as to encourage companies to invest in expansion that they would otherwise have put off. Read the rest of this entry »
You read correctly. In reaction to record budget shortfalls on the island, the Puerto Rican legislature passed a bill raising taxes on some of the largest companies within its borders. Then on Monday, the governor announced plans to reduce taxes on businesses and personal incomes, in an effort to jumpstart the economy.
We will provide an analysis in the coming days, but in the meantime you can read more in the following articles submitted through Reuters, respectively titled “Puerto Rico slaps new tax on offshore business” and “Puerto Rico unveils tax cuts to reignite economy.” Read the rest of this entry »