Trump protectionism could force DR to compete for investments
Speaking during a conference entitled, “Perspectives of the Dominican Economy in the Context of New Global Challenges”, sponsored by the governmental BanReservas, economist Raúl Féliz said on Wednesday, 1 February 2017, that the Dominican government may need to revise its tax incentives to compete with the United States. Féliz says the DR would have to offer a sufficiently attractive fiscal regime to keep existing businesses and attract new investments.
Féliz warned that US President Donald Trump has announced plans to reduce corporate taxes from 35% to 15%, a reduction in capital repatriation to 10%, and even plans to eliminate taxes for companies investing in fixed assets in the United States.
“Curiously, the United States is going to compete with the Dominican Republic for attracting investments,” he alerted. He said the government may need to revise its own tax structure in order to stay attractive to investors.
Féliz said that in the medium term the expansion in public spending promised by the new US President could spur inflation. To avoid this potential spike in inflation, the Federal Reserve could increase interest rates in 2018, which would increase the cost of private and public borrowing.
Féliz said that all this will be happening at a time when the Dominican economic growth is expected to slow down after three years of rapid growth. “The Dominican economy is slightly overheated,” he said. He expected the stabilization will cause the Gross Domestic Product (GDP) to grow at around 4.6%.
Source: DR1, Hoy
Feb 5, 2017
Category: DR News |