Angélica Serrano Román

This article was originally published in Bloomberg Tax.

Four law and consulting firms and a former official of the Organization for Economic Cooperation and Development are competing for a million-dollar contract to advise Puerto Rico on the impact of the global minimum tax in the US territory.

Procopio, Cory, Hargreaves & Savitch LLP stands out among the four firms that submitted proposals to provide guidance to the local government on effects of the OECD-led tax deal agreed to by over 140 countries in 2021. The firm submitted its bid with Juan Carlos Pérez Peña, an international tax consultant and former adviser on aggressive tax planning at the OECD, who helped write many of the global minimum tax rules.

Pérez Peña announced late last year that he was leaving the OECD. He also previously worked for the Mexican government.

The 15% global minimum tax, also known as Pillar Two, is a top-up tax on multinational corporations with a revenue of over 750 million euros (roughly $812 million). The initiative focuses on reducing tax competition and profit shifting from high-tax jurisdictions to low-tax jurisdictions, such as Puerto Rico. The territory is known for providing substantial incentives to corporations and wealthy investors.

Puerto Rico’s Treasury Department, which provided the applicant information Thursday in response to a records request, opened the bidding process in early December.

The other applicants are Holland & Knight LLP, headquartered in Florida; Kevane Grant Thornton, the Puerto Rico member firm of Grant Thornton International Ltd.; and Miller & Chevalier Chartered, based in Washington.

The solicitation, which closed Dec. 29, called for applicants with at least 10 years of experience in international tax law analysis, a deep understanding of Puerto Rico’s tax laws, and knowledge of the OECD’s framework on the global minimum tax. Additionally, interested firms needed to have a presence in Washington and possess extensive experience in the taxation of multinational enterprises on a global scale.

Treasury Secretary Francisco Parés Alicea—who has said he would resign at the end of the month to join the private sector—told Bloomberg Tax last year that Puerto Rico wanted to participate in the global corporate minimum tax deal and wouldn’t wait for guidance from the US, as the mainland was perceived to be “further behind in the process.”

He also mentioned that the global minimum tax discussions had posed additional challenges for his agency, particularly following the IRS’s issuance of new rules regarding US foreign tax credits. This transition involved going from a 4% excise tax on products manufactured on the island and acquired by their parent companies to a 10.5% income tax rate for most manufacturers. In discussions with manufacturers that might also be affected by the global minimum tax, the companies requested additional tax credits or incentives to mitigate the impact, Parés Alicea said.

Bloomberg Tax also asked the island Treasury Department for the applicants’ proposals and the rubric or instrument used to assign scores or evaluate the applications. The department said a winner hasn’t been chosen yet, and it couldn’t provide the information.

“At the moment, the process of evaluating and awarding proposals has not concluded,” the agency said in a statement. “However, we reserve the right to raise any objections according to the law regarding confidentiality or any other matters that may prevent the delivery of the requested information.”

Holland & Knight LLP said it couldn’t comment. The other firms and Pérez Peña didn’t immediately respond to questions about their applications.

—With assistance from Lauren Vella.

Photo: Xavier Garcia/Bloomberg