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Tax reform needed according to the IMF

The International Monetary Fund (IMF) says the Dominican Republic needs to propose a medium-term plan to increase the amount of tax revenue, while providing a more certain tax regime for taxpayers. The proposal is made at a time talks have yet to begin for the drafting of the National Statistics Pact as ordered by the National Development Strategy Law (Ley Estrategia Nacional de Desarollo END 1-12 that dates back to 2012.

The IMF said that the country collected revenues worth just 13.66% of the Gross Domestic Product in 2015, some 11% below the OECD average and 5% below the Central American average.

The IMF says: “The tax system of Dominican Republic needs a comprehensive structural reform, aimed at simplifying the system and widening the tax base. The reform should eliminate the large number of exemptions under the value-added tax (VAT), property, and other taxes, and rationalize tax incentives. For instance, reducing VAT and property tax expenditure in the Dominican Republic to the average level in the region – including by phasing out the large list of goods and services exempted from the VAT, while maintaining the exemption for education, health, and basic food – could result in an increase in revenue by 1.3 percentage points of GDP.”

“The fiscal adjustment needs to be underpinned by comprehensive reforms that address structural weaknesses in the tax base and expenditure quality. Numerous past reforms have not yielded durable increases in the tax base due to either their ad hoc nature or lack of political will to follow through with the reforms. Over time, these have led to increased complexity and unpredictability of the tax system, without meaningful increases in revenues.”

Source: DR1, Taxnews

Aug 24, 2017

Category: DR News |

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Last updated September 20, 2017 at 12:27 AM
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