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Medina asked Senate to lift all taxes on Odebrecht group

Santo Domingo.- In May 6, 2014 president Danilo Medina asked the Senate to exempt “all types of income taxes” of the Punta Catalina power plant project, of the group led by Odebrecht, accused of paying US$$788 million in bribes in the Dominican Republic and 11 other countries, reports Tuesday.

On that date Medina calls Reinaldo Pared to secure approval of the contract between the State-owned Electric Utility (CDEEE) and Oderbrecht-Technimont-IngenierĂ­a Estrella, which won the questioned tender, initially for US$2.04 billion.

In the letter Medina indicates that the amount stipulated in the turnkey contract is to be reduced to a maximum of US$1.95 million.

It explains that the US$92 million difference in favor of the State results from and is subject to, first, to that the parties agree to a “value engineering schedule … that will reduce costs, without under any circumstances affecting the quality” of the power plant.

The second reason for the discount is the Legislative approval, under the contract, “of all types of income taxes, as described in Annex R” of the contract.

Tax breaks in detail

Annex R of the turnkey contract which Medina cites, states that Odebrecht and its associates won’t have to pay the following taxes:

1.- “Income tax”

2.- “All taxes, contributions, taxes, tariffs, municipal taxes,” including but not limited to withholdings, tax – to the transfer of industrialized goods and services (ITBIS), taxes and municipal taxes, ISC), a tax “levied on the consumption of fossil fuels and petroleum products (Hydrocarbon Law No. 112-00), as well as any other tax of any nature established by law, decree or resolution of the Dominican Republic, with the (CODIA) (…), the rates established in favor of the Technical Vocational Training Institute (INFOTEP) and the rates applicable to Social Security And Accidents of Work (…).”

3.- Customs duties, import taxes, first license plate tax and circulation, whichever is, as set forth below.”

It also states that these exemptions are extended “to subcontractors of the Contractor, all goods and services intended for the Project, exemptions from the tax on the transfer of industrialized goods and services (ITBIS), and applicable import taxes.”

It is also recalled that the contractor agrees to complete the works within the deadlines established in accordance with the Contractual Program, “no later than October 7, 2017.”

However, given the difficulties encountered in obtaining external financing, the authorities expect the coal-fired power plant with a net capacity of 674 megawatts to be operational by mid-2018.

According to the rating agency Fitch Ratings, the Punta Catalina Thermoelectric Power Station presented a 70% progress on November 11 with a total investment of US $ 1,366 million.

Source: DT

Jan 31, 2017

Category: DR News |

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Last updated March 25, 2017 at 5:40 PM
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