Building on proposals made by consultants contracted by the Mejia government, a team of PLD economists ? Daniel Toribio, Juan Hernandez and Rafael Camilo ? have prepared a 31-article tax reform bill. As reported in Hoy newspaper today, their reform package would increase the ITBIS (VAT) tax from 12% to 16% for most items already taxed, expand or add new taxes to advertising, alcoholic beverages, tobacco, gambling, air and maritime transportation, telecommunications and bank deposit yields. President Hipolito Mejia received the bill yesterday from Monsignor Agripino Nunez, as part of the agreements signed by President Mejia and President-elect Leonel Fernandez for the advancement of the tax reform. Mejia and Fernandez committed themselves to preparing a fiscal reform to be submitted to Congress before 15 July.
The proposals include:
15% tax on bank deposits, commercial paper and financial certificate yields
15% tax on gambling profits and any prize offered during a promotion
An additional 20% tax on alcoholic beverages and beer
A tax on cigarettes, to be adjusted quarterly to reflect inflation, set at 130% from a previous 65%
10% additional tax on the telecommunication sector
10% tax on advertising
16% tax on insurance premiums
An additional real estate luxury tax of 1% to be assessed on homes or lots worth more than RD$3 million, with an exemption given to those homeowners who are 65 years of age or older, are the sole proprietors of the real estate in question and whose properties have not been transferred in the past 15 years
20% tax on real estate rentals
3% tax on real estate transactions
10% tax on commissions and any kind of remunerations paid for services rendered
The dismantling of the tax exemptions in Law 6-04 that established the Banco de Fomento de la Vivienda y la Produccion, as well as those in Law 2801-01 for the Zona Especial de Desarrollo Fronterizo and Law 158-01 for the Fomento al Desarrollo Turistico.
A tax on new companies for 0.5% of its authorized capital
A 1% tax for anyone bringing capital from abroad back to the country in the 12 months after the reform?s ratification, which amount must be declared in the returns filed with the DGII
2% tax on payments made by the government and its departments
The preservation of the 1.5% tax on gross sales calculated on the values paid in 2004