The National Competitiveness Council (CNC) is bringing attention to the fact that there are policies being implemented in the DR that encourage low value added produce with reduced local components. The CNC also warns that taxes on raw materials, inputs and machinery contradict the stated government policy of promoting exports. In a document distributed to the press, the CNC points out that the 13% exchange surcharge is contrary to commitments the Dominican Republic has signed with the World Trade Organization, and like the previously mentioned taxes, should be promptly eliminated. The CNC estimates that the local industrial sector is burdened with excess taxation of 50%. This is in addition to governmental and financial red tape, and very high transport and electricity costs.
“The diversification of the export sector and integration of local industry into international markets is the best alternative for the sustainable economic development of the DR,” states the CNC.
Nevertheless, the CNC also observes that in many areas there is a duality of conditions between the free trade zone and the local manufacturing sectors. It mentions the differences in customs regimes, access to national and international capital and quality standards. The CNC criticized the fact that the disadvantages the local industry suffer has turned the the sector into an exporter of taxes that need to be paid from the first stage of production. The incentives in place for exporters are not operant. It argues that ITBIS (VAT) should be a tax on the sale of an item, carried out at the time of the transaction. CNC recognized the importance of the free zone sector, but stressed the importance of convergence between free zone and local manufacturing sectors.
CNC points out that in June the country needs to present a new tax scheme as part of the agreements with the IMF. “The moment is timely to work together to achieve coherent policies that will define a single strategy for the industrial sector that is in line with the interests and needs of the state and makes possible sustainable economic development,” says the document.
CNC backs the DR-CAFTA and favors its approval by congress in both countries.