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Pharmaceutical Industry: Tax Benefits of Operating in Puerto Rico

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Report Type Reports and Testimonies
Report Date May 4, 1992
Report No. GGD-92-72BR
Subject
Summary:

As a result of tax breaks given to U.S. companies operating in Puerto Rico, the Department of the Treasury will lose an estimated $15 billion in tax revenues between 1993 and 1997. Throughout the 1980s, the pharmaceutical industry received a large share of such tax benefits relative to the number of jobs they created and the amount of employee compensation they provided. Industry representatives argue that other employment-related information, such as the number of jobs created in companies servicing pharmaceutical corporations, needs to be considered in evaluating the benefits provided under the Internal Revenue Code. GAO found that individual drug companies differed markedly from each other in the taxes that they saved by operating in Puerto Rico and that 17 of the 21 most prescribed drugs in the United States in 1990 were authorized for manufacture in Puerto Rico.

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