PUERTO RICO Trends and Developments Contributed by: Anthony O. Maceira Zayas, Simón Carlo Valentín and Carlos M. Fontán, Maceira Zayas
use tax exemptions, including the exemption for resi - dential solar energy systems. The reform did not move forward after the administration failed to produce fis - cal impact data adequate to evaluate the proposal, and critics argued the bills adjusted brackets and removed narrow exemptions without addressing the structural deficiencies that have made Puerto Rico’s tax code uncompetitive. Any successor legislation would operate within a firm constraint. Under the Puerto Rico Oversight, Man - agement, and Economic Stability Act (PROMESA), enacted by Congress in 2016, the Financial Oversight and Management Board (FOMB) exercises authority over Puerto Rico’s fiscal plans and budget, and any reform that materially affects projected revenues must be demonstrably revenue-neutral under the FOMB framework. The administration framed the failed bills as meeting that standard, a position it could not sub - stantiate with the data presented.
The failed bills signal that comprehensive tax reform requires a level of fiscal documentation that the administration has not yet produced. The administra - tion has committed to a revised proposal, and Senate President Rivera Schatz and House Speaker Carlos Méndez have both identified tax reform as a legislative priority before 2028. What form that revision takes, and whether it touches upon the Act 60 incentive structure, will depend on the administration’s ability to satisfy the FOMB’s revenue neutrality requirements with credible fiscal impact data.
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