Puerto Rico.

The Puerto Rico USA Foundation, a collection of firms that enjoy tax benifits because of their operations in the commonwealth, warned that a foreign tax reform bill introduced in the House of Representatives last week could erode the international competitiveness of U.S. companies.

The legislation, introduced by House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., and Rep. Willis Gradison, R-Ohio, would scale back tax credits under Section 936 of the Internal Revenue Code. Section 936 offers tax benefits to U.S. firms that have manufacturing operations in Puerto Rico.

The Puerto Rico USA Foundation said in a statement last week that foreign nations offer "substantial tax advantages" to their multinational businesses, and that Section 936 has evened the global playing field.

Noting that Puerto Rico's per capita income is less than half of that of the poorest state, the group said, "The 936 incentive remains critical to Puerto Rico's development."

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