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Category: 
Online > Web Feature Article > Industry > Mid Atlantic

Title of entry: 
How a Bad Bunny Beer Ad Got Puerto Rico Tax Money to Shoot in LA

Issue or Publication date:
Feb. 5, 2024

Publication name: 
Bloomberg Tax

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https://news.bloombergtax.com/daily-tax-report-state/how-a-bad-bunny-beer-ad-got-puerto-rico-tax-money-to-shoot-in-la

Entry Essay: 
In her investigation of state film tax credit programs, Bloomberg Tax reporter Angélica Serrano-Román submitted more than 30 records requests to tax and economic development agencies across 15 jurisdictions where film tax credit sales are allowed. Obtaining the data sets required three months of negotiations, file delivery, and sorting through thousands of records ultimately received.

Serrano-Román conducted interviews with numerous sources, including film office directors, industry groups, watchdog organizations, tax practitioners, analysts, and creative professionals involved with a Corona beer campaign that received subsidies in Puerto Rico, despite being produced primarily in Los Angeles. This detail was revealed after Puerto Rico officials claimed the entirety of the ad, which featured Bad Bunny and Snoop Dogg, had been filmed on the island, despite creative professionals involved in the production confirming the bulk of the work—including the two musicians’ appearances—taking place on a Los Angeles soundstage at the height of the Covid-19 pandemic. In other words, Angélica caught Puerto Rico officials in a lie.

Of the jurisdictions queried, only Illinois provided comprehensive data, six offered partial or redacted information, while others were unresponsive or denied document requests altogether citing taxpayer confidentiality. The Massachusetts tax department said it was “not required to conduct research or respond to interrogatories.” Bloomberg Tax made the relevant databases available on GitHub.

Serrano-Román then combed through the data, corrected misspellings and irregularities, and analyzed the information. Using the compiled spreadsheets, she found some of the tax-credited commercials online. In certain cases, she used tools such as the Wayback Machine to recover deleted ads.

The story revealed the allocation of hundreds of millions of dollars in subsidies to multinational consumer product companies like McDonald’s Corp., Kellanova (previously Kellogg Co.), and AbbVie Inc., for promoting items ranging from fast food and breakfast cereal to prescription drugs. Procurement of tax credits varied, with some acquired directly by the companies, while others obtained by their ad agencies. Angélica also showed in detail how some states allow these tax credits to be sold to entirely unrelated companies—including Walmart, Apple, and Bank of America—seeking to offset their state tax liabilities.

After publication, the Puerto Rico government, which was frequently evasive during the reporting process, tried to downplay the story on radio and television, saying that their incentives “are credits, not subsidies.” Afterward, it published its first-ever tax credit analysis, showing that it was recovering only half the investments made in the island’s film industry.

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