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Government will keep 18% ITBIS because goal not reached

SD. Although the tax reform of 2012 projected a reduction of the Tax on the Transfer of Industrialized Goods and Services (ITBIS) to16% in 2015, next year it will be held at 18%.

The reduction contemplated in Law 253 – 12 was conditioned to reaching and maintaining the goal of the tax pressure of the National Development Strategy (END), of 16% for 2015.

In the year 2013, the tax pressure (consisting of tax income as a percentage of the Gross Domestic Product) was 14.7% (according to data of the Ministry of Economy) and the numbers for this year that is nearly over are still not available. But the Directorate General of Internal Taxes (DGII) confirmed to Diario Libre that in 2015 the ITBIS would not go down, information that they would spell out next Monday, 22 December.

The exemptions

The report “Dominican Republic, need for fiscal space and improvement in the use of public resources. An evaluation of the management of public expenditure and financial responsibility,” published by the World Bank in 2014, recommended the elimination of tax exemptions in a progressive manner in order to improve the efficiency and fairness of the Dominican tax system.

This suggestion by the World Bank is in accordance with opinions by the director general of Internal Taxes, Guarocuya Felix, who has said (February 2014 that the increase in tax pressure is annulled by the concession of exemptions, and that according to the study “Income or reforms: Political economy of development in the Dominican Republic?” 2012 – 2013 by the World Bank, estimates these exemptions at about 5% of GDP.

“One of the structural reasons for the persistently weak performance of tax collections is the extensive regime of exemptions, which are estimated to total close to 5% of GDP,” notes the above report.

In the other direction, the president of the National Organization of Commercial Enterprises (ONEC), Ernesto Martinez, was of the opinion that “tax pressure is not going to be a true reflection of what the contributors pay” if the Dominican economy does not become more formalized. For him, if there is no more formality, with or without exemptions it will reflect a low tax pressure.

Martinez said to Diario Libre, over the telephone, that if the ITBIS were lowered the consumers would have more resources, which would spur the economy more. Even like that, Martinez expects that 2015 will be better than the year which is coming to an end.

ITBIS will increase the reduced rates

Law 253 – 12, for the Strengthening of the Collection Capacity of the State, has established an increase to the Tax on the Transfer of Industrialized Goods and Services (ITBIS) of a reduced rate of 11% to a 13% in 2015. This tax is applied to milk derivatives, coffee, edible oils, sugars, cacao and chocolate. In the year 2013, when this ITBIS began to be applied, these products paid 8% and starting in 2016 they will pay 16%.

Source: DiarioLibre

Category: DR News |

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Last updated October 20, 2016 at 7:03 PM
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