18% tax on orders via internet valued under $200?

CFA123

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May 29, 2004
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The Senate has approved a tax on orders under $200 made via internet and shipped into the country. Next week it goes to the chamber of deputies for approval. It's estimated that this will amount to an 18% tax on items under $200.
Opponents say it violates the CAFTA agreement.


De forma sorpresiva en el d?a de ayer el Senado aprob? el lamentable paquetazo o proyecto de reforma fiscal que colocar? impuestos a las compras por Internet que se realicen en la Republica Dominicana, Treinta senadores votaron por la iniciativa, que ser? conocida la pr?xima semana por la C?mara de Diputados.

El art?culo 54 del proyecto de reforma fiscal establece impuestos a mercanc?as que estaban exentas del pago de derechos e impuestos, cuyo valor individual sea igual o inferior a un valor FOB de US$200. Tambi?n ser?n gravados materiales para distribuci?n masiva en cantidades comerciales, tales como algunos tipos de literatura, documentaci?n impresa, peri?dicos y revistas ensobrados o etiquetados en origen.

Adem?s, los env?os de bajo valor exentos de derechos e impuestos, o bien que el monto de ?stos puedan considerarse insignificantes, tales como, muestras comerciales, efectos personales y regalos no solicitados, cuyo valor sea igual o inferior a US$200.

Seg?n an?lisis que hemos realizado, a las compras por Internet se le cargar? un 18% m?s los grav?menes aduanales que apliquen seg?n art?culo.

La Asociaci?n Dominicana de Empresas Courier (Asodec) advirti? que gravar la compra por internet o env?os de bajo valor, viola de manera flagrante los compromisos espec?ficos del Tratado de Libre Comercio (RD-CAFTA). En un comunicado, la entidad entiende que dicha medida, en vez de contribuir econ?micamente en forma significativa a la reforma fiscal, s?lo contribuir? a reducir el nivel de apertura del mercado.

“Exhortamos al Congreso a revisar esta medida que vulnerar? los derechos de usuarios”, expresa Asodec. Se?ala que el RD-CAFTA establece que las partes mantendr?n el nivel de apertura de mercado que otorguen los servicios de env?os urgentes existentes. Agrega que ellos est?n amparados en el decreto 402-05, que fue acogido por el RD-CAFTA.
 

cobraboy

Pro-Bono Demolition Hobbyist
Jul 24, 2004
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Don't they charge ITIBIS on car imports? Wasn't the "first time placa" really just a substitute for import duty?

This will suck BIG TIME. But the local merchants with old stock will love it...
 

Chip

Platinum
Jul 25, 2007
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Santiago
Maybe we'll be lucky and some of the shippers will make a concession on prices or maybe we'll get some newbies in town. Not that it's a big deal given that Miami already has various options for forwarding mail.
 

Criss Colon

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Jan 2, 2002
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yahoomail.com
Does that surprise you???
It is just one more example of "Dominican" proclivity to
#1. Cut of their noses, just to spite their "faces'uuuzus".
#2. Shoot FIRST, and ask questions LATER.
#3."Taxing" the country into solvency.
Just like their "Brilliant Idea", to "Tax" expats, so they will leave the DR, and deprive the DR of millions of dollars in hard currency!!!!
Like the phrase used by Ronald Regan, to defeat "BaBa" Carter,.."Are You Better Off TODAY, Than You Were 4 Years Ago??????????"
We "Americanos" should ask ourselves that same question when we vote next Tuesday!!!!
Can ANY Country, "Tax & Spend" their country into Prosperity??????????
I think anyone with a very basic understanding of the principles of economic policies can answer that question!!!!
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I won't hold my breath waiting for either of chips "Ideas" to ever happen!
Like the "DR Business Plan", includes either "Customer Service", or lowering prices to reflect economic down turns, or tax increases!!!
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Feb 7, 2007
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This article 54 was added at the last moment and was not included in the original proposal of the document. It was added by the BiChamber Committe in the Congress.
Empresas responsables de poner impuestos a compras Internet | Audiencia Electronica

Who is responsible for this? ONEC! The association of retail merchants who has been lobbying LONG and HARD for the US$200 value exemption to be eliminated. They saw an opportunity to make their wish true, and they went for it.

Again, this WAS NOT in the ORIGINAL proposal, it was added on Friday after the lobbying by ONEC!!!

Boycotting this f****s. Grupo Ramos, plaza Lama, Iberia among them ....
 
Feb 7, 2007
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I see a new "service" by shippers - invoice alteration. Anyway it's not that difficult to change invoice in Photoshop. I know that if this goes through, I WILL be doing it and shipping through intermediary point prior to reaching Miami.
 

Chip

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Jul 25, 2007
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I see a new "service" by shippers - invoice alteration. Anyway it's not that difficult to change invoice in Photoshop. I know that if this goes through, I WILL be doing it and shipping through intermediary point prior to reaching Miami.

I've heard through the grapevine that one can contact the vendors directly on Amazon/ebay and see if they'll work with you. :)
 
Feb 7, 2007
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Some sellers on Ebay will... maybe on Amazon. But not if you buy directly from Amazon, JCP, Old Navy, etc. The only option is a "stopover" point where the invoice is swapped.

Also some car parts sellers do not always send invoice. I guess the shippers will ask for it, the it's easy to fake it, including faking bank statement showing correct amount.

I buy some stuff from China paying by Western Union. Easy to do as well, simply making 2 payments, and invoice showing only the smaller payment, and yes there is proof here WU receipt etc. nobody can say anything. But it won't be possible to do it always. So let's pray that the Congress (diputados) will reject this Article.

Also, has anybody actually stopped to think what DELAYS this will cause in package clearance? Right now "dutiable" packages are delayed 2-3 days, and that comprises only a small minority of packages that has to go through detailed customs clearance to pay taxes etc. If ALL packages have to go through this, it won't be the taxes that will ruin online buying and Miami shippers, but the customs (DGA) delays.
 
Feb 7, 2007
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The only place that sells computers/notebooks (Dell, HP, Sony) at prices comparable to DIY imports is "JR Technology" in Santo Domingo. I do not know how they do it, but they sell Dell laptops at virtually the same price the exact/very similar model would go for on DELL-US site. I root for them. One of the FEW retailers in the DR that understands that volumes can make up for margins. And I wish retailers like Plaza Lama, Grupo Ramos, Iberia, etc. a slow and painful death.
 

caribmike

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Jul 9, 2009
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18 % ? So be it... Them: Plaza Lama, Grupo Ramos, Iberia still WON'T get my business!

Well, for Groceries but not for pricey stuff...
 
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Feb 7, 2007
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I have TWO cellphone numbers for TWO PLD CONGRESSMEN.

Anybody who is willing to add to the cause, feel free to PM me and I will send you their phone numbers plus a short sample SMS message you can send to them, asking to vote NO for Art. 54 when it goes for voting on Tuesday.
 
Feb 7, 2007
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One unforseen (positively mitigating) side effect will be that all Internet purchases, if taxed with 18% ITBIS, will become tax deductible immediately. So far, product bought overseas and imported via courier with the US$200 exemption could not be tax deducted, only after paying a 25% foreign purchase "tax" on services and non-dutiable items. If a US$100 computer parts imported are now assessed 18% ITBIS, the assessed value (in RD$) + ITBIS will automatically become tax deductible, same way as any importer deducts the cost of goods + import ITBIS/duties. DGA will give you the duties declaration which is tax deductible document. You (your company) will be able to use ITBIS offset against ITBIS collected from your customers. There will no longer by a 25% tax assessed, because the goods are now officially imported and passed through DGA. I see many private courier accounts being converted to business accounts in order to deduct ITBIS + cost of goods. At the end, the government will be worse off, ITBIS will just be deducted from ITBIS received from customers (any sale) so the company will remit less ITBIS to DGII. Also cost base (tax deductible) will increase, so companies will pay less income tax (the cost of goods will now form part of tax deduction), giving you a 25% "back" (value of income tax) off the cost of the imported good.

Se estan haciendo su propia tumba....
 
Sep 4, 2012
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I have TWO cellphone numbers for TWO PLD CONGRESSMEN.

Anybody who is willing to add to the cause, feel free to PM me and I will send you their phone numbers plus a short sample SMS message you can send to them, asking to vote NO for Art. 54 when it goes for voting on Tuesday.

I commend you for the initiative bu c'mmon, this is the DR we're talking about, a SMS won't do a heck of a lot on its own....lol
 
Feb 7, 2007
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To give you a live example to the above:

a DR company sells RD$100,000 to customers.
Charges them RD$100,000 + 18% ITBIS (RD$118,000 total).
this DR company has RD$50,000 in costs.
Its cost is RD$50,0000 + 18% ITBIS (RD$59,000 total).

This DR company now needs to buy online and import a computer accessory/board valued RD$6.000 with import courier cost RD$500. Let's say that this same article costs RD$10,000 + ITBIS in the DR.

Up to now, this company collected 18.000 ITBIS from customers, remitted $9.000 ITBIS to DGII (18% on 100k - 18% on 50k).

It had two (actually three) options:

OLD CASE SCENARIO:

Option 1)

IMPORTING at RD$6.000 + RD$500 courier
It paid 25% income tax on RD$49,500 of RD$12.375 (50k - 500 pesos courier fee). It had to do a creative accounting to account for that RD$6.000 or pay it from after-tax profit. It ended up with RD$37,125 in aftertax profit, but has to deduct the cost of article from this aftertax profit because it was not tax deductible. The final aftertax profit is RD$31,125

Option 2)

IMPORTING at RD$6.000 + RD$500 courier
Declaring foreign purchase of RD$6,000 and paying a 25% tax in order to deduct this purchase.
It paid 25% income tax on RD$43,500 of RD$10.875 (50k - 500 pesos courier fee - 6.000 article deduction). Aftertax profit is RD$ 32,625, but we need to pay the 25% tax on "foreign purchase" (which is RD$1500 - 25% of RD$6000) that did not come in through official channels. So the company ended up with RD$31,125 in aftertax profit. Same aftertax profit as in CASE #1.


Option 3)

BUYING LOCALLY at RD$10,000
It paid 25% income tax on RD$40,000 (50k - 10k article purchase). It remitted RD$1800 less to DGII on ITBIS it collected form customers (1800:1800 offset). Buying locally it ended up with RD$30,000 in aftertax profit.


IF, and WHEN, this article 54 goes through and is enforced, the situation this company will face is following:

NEW CASE SCENARIO:

Sale: RD$100,000 + 18,000 ITBIS
Cost: RD$50,000 + 9,000 ITBIS
Article Cost: RD$6,000 + 1,080 ITBIS
Courier cost: RD$500
The company will remit only RD$7,920 in ITBIS to DGII instead of RD$9,000 that would have been the case in the first case scenario. The company will now be also able to DEDUCT cost of the article bought online overseas, without having to pay any additional foreign purchase tax.*

*Foreign purchase tax of 25% is paid on anything and everything bought and paid abroad that does not pass through customs, including services rendered, in case the taxpayer wants such payment to be tax deductible.

Income tax: 25% @ RD$100,000 - RD$50,000 - RD$6,000 - RD$500 = 25% of RD$43,500 is RD$10,875, which leaves RD$32,625 aftertax profit.

So while the mentioned company has to PAY RD$1,080 (18% ITBIS) on the RD$6,000 value imported article, it ENDS UP having the HIGHER after-tax profit at the end of year than it would have otherwise (currently) had. It also remits less collected ITBIS to DGII to compensate for ITBIS paid for importation. (ITBIS remitted = ITBIS collected - ITBIS paid in purchases and services).

As I said, se estan haciendo su propia tumba ....
 
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MpJuly

Member
Apr 30, 2009
467
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Why we buy abroad? Because of the choice and it is cheaper, but if you add 18%..... more the expensive transport fee (EPS, MBE etc...).

In the futurn, the country will start to be expensive, unless we live like the people, without too much superfluous...
 

pelaut

Bronze
Aug 5, 2007
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Quality vitamins & supplements are not available here. Those that are are outlandishly expensive.
A depressed U.S. may look more and more attractive for fixed income retirees.
 

AlterEgo

Administrator
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Jan 9, 2009
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Mr AE's brother has recommended we ship all our boxes and the solar panels we bought NOW because he sees problems in the future with those too :-(
 

cobraboy

Pro-Bono Demolition Hobbyist
Jul 24, 2004
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I wouldn't mind buying here and paying a little more IF the merchandise wasn't crap and often out of date.

Go into, for instance, and decent technology store. They will have 20% of the variety of even a Best Buy, not to mention NewwEgg or Tiger Direct...

And I still think that you can but a product a tad cheaper than even WITH the 18% and shipping...remember, PICHARDO bragged about the outrageous markups his buddies put on items.