Group criticizes government for imposing huge costs on small, mid-sized businesses
The United Retailers Association (CUD), one of Puerto Rico’s largest business organizations, escalated its campaign Tuesday for a comprehensive restructuring of the island’s permit system and the permanent repeal of the inventory tax—two measures the group says are critical to improving operational efficiency and safeguarding supply chains.
CUD president Ramón Barquín III said the current regulatory framework imposes significant costs on small and midsize enterprises, which make up the backbone of Puerto Rico’s retail sector. He argued that the permit process functions as a “hidden tax,” delaying business openings, expansions, and compliance efforts while increasing overhead for entrepreneurs.
The inventory tax, a local property tax charged on the physical goods a business owns and holds in stock, has been a longstanding point of contention for retailers, wholesalers, and logistics operators. The CUD maintains that the tax discourages companies from maintaining adequate stock levels, raising the risk of shortages during hurricanes or global distribution disruptions. Over the past year, the organization has held forums, submitted technical recommendations, and testified before the Legislature, warning that the tax undermines both competitiveness and resilience.
The tax, however, is an important source of revenues for cities, which oppose its repeal.
Barquín said the government must move toward a unified, digital permit platform that reduces processing times and eliminates redundant requirements. He also criticized municipalities’ dependence on inventory tax revenue, arguing that the practice distorts business planning and limits investment.
With more than 17,000 member businesses across 169 categories, the CUD’s position carries weight in Puerto Rico’s retail and service sectors. Its renewed push for reform comes amid broader calls from industry groups for regulatory modernization and structural tax changes aimed at improving the island’s business climate.
