Puerto Rico Industrial Incentives Fund
What is Puerto Rico Industrial Incentives Fund?
This was an investment fund set up by the governor of Puerto Rico to encourage economic development. The Caribbean island has faced debt for decades and this was part of its bid to keep offering tax incentives for businesses.
Where have you heard about Puerto Rico Industrial Incentives Fund?
It's widely known for being controversial. A report into the fund's activities in 2003 found that it had not complied with its goal of creating new jobs on the island, and had misused around $175 million from various US companies.
What you need to know about Puerto Rico Industrial Incentives Fund.
The fund was set up by Pedro Rossello, governor of Puerto Rico from 1993 until 2001. Its aim was to offset the effects of the US government abolishing the Internal Revenue Code Section 936, which gave US companies an exemption from federal taxes on income earned in Puerto Rico, whether from operations or interest on bank deposits. Rossello and businesses groups claimed getting rid of this exemption would cripple the island's manufacturing industry, which employs thousands of people. The fund's resources came from US companies on the island, which agreed to contribute in exchange for not paying the tax.