The business sector of the Dominican Republic demands that the country comply with the National Development Strategy Law to address a fiscal pact and not a reform as the Government is managing, and warns that this would put a brake and constitute an obstacle to the economic recovery of the country after being shaken by COVID-19.
Yesterday, the Association of Industries of the Dominican Republic (AIRD) issued a statement in which it noted that, given the situation created by the COVID-19 pandemic, “this is not the time for a hasty tax reform, especially when the high prices of commodities and the extraordinary increases in maritime freight are external factors that companies have momentarily assimilated, but which at a certain moment could translate, together with a short-term tax reform scheme, into an inflationary pressure that is difficult to overcome ”.
“It is necessary to put an end to short-termism in fiscal matters – AIRD added – and embrace the mandate of the National Development Strategy Law, which indicates that the Economic and Social Council is the space for discussion and concretion of pacts between the different economic forces. and social policies that allow the adoption of policies that, by their nature, require a commitment from the State and the cooperation of the entire nation, such as the Fiscal Pact, aimed at financing sustainable development and guaranteeing long-term fiscal sustainability. , through a comprehensive fiscal restructuring ”.
He added that it is time to consider a procedure that could imply a setback. “At this time we must be able to guarantee the reduction of the deficit in the electricity and fuel sectors, approve pending investments that will allow the State to collect higher revenues, firmly combat illicit, evasion and informality, and temporarily redirect spending. of the Government towards improving services to citizens, so that medicine is not harsher than disease ”.
Proposal is advanced
Earlier, the head of the General Directorate of Internal Taxes (DGII), Luis Valdez, said yesterday that the government’s proposal for the announced tax reform is well advanced.
“It is very advanced. The Finance Minister will be handling this and it will be presented in the next few days, ”he reported.
Regarding the legitimate document that has been released with proposals discussed within the Government for a tax reform, Valdez pointed out that “it is a draft of a proposal that was made at some point, but it is not definitive.” He reiterated that the Minister of Finance will inform when the official proposal will be presented.
Reform of the Tax Code
The new president of the ANJE, Luis Manuel Pellerano, stated that a comprehensive review of the Tax Code cannot be postponed. “We cannot continue to resort to isolated tax reforms,” he said.
When he delivered his first speech yesterday as head of the institution, he suggested that a thorough review of public spending should be started in order to achieve levels of efficiency and transparency that are a benchmark for the region.
“As a country we still have to face the enormous structural and institutional challenges that we already had before the pandemic,” he said. He cited the quality of education, citizen security, the strengthening of transparency and institutionality, among others.
Part of discussed proposals
Diario Libre recently confirmed the legitimacy of the document that was leaked last weekend, with proposals that the government has discussed for a tax reform. These include varying the amount paid for the vehicle label, establishing a tax for sugary drinks, increasing the income tax (ISR) from 25% to 35% for the higher income salary scale, eliminating the deduction of the educational expense of the ISR and take away from legislators the privilege of importing exempt vehicles. Also, it has been discussed to establish a single rate of 16% for the tax on the transfer of industrialized goods and services (Itbis). In addition, it has been proposed to eliminate the advance for individuals and MSMEs, and temporarily increase the income tax rate for legal entities to 30% in the three years following the approval of the reform, and return to 27% at the end of that term.