Tourism Minister Felix Jimenez opposes the elimination of tax incentives to the tourism industry that fall under Law 158-01. The monetary and economic authorities of the country committed to propose to Congress the elimination of special tax regimes, such as that authorized by the law. The commitment is made in Paragraph 19 of the section on structural fiscal reforms in the Letter of Intent signed with the International Monetary Fund.
Paragraph 19 of the section on structural fiscal reforms in the Letter of Intent with the IMF states:
“In view of the need to offset the revenue losses associated with the implementation of the CAFTA and the phased reduction of the foreign exchange commission and financial transactions tax that will begin in January 2006, the government is committed to a carefully sequenced tax reform aimed at simplifying the tax system and broadening the tax base, which will strengthen revenues over the medium term. In this regard, the government will develop, with IMF technical assistance, the details of a tax reform by March 2005, and by June 2005 will agree to a strategy for its implementation could be advanced depending on the date of the approval of CAFTA. This implementation strategy will be consistent with our commitment to further consolidate the fiscal position in 2006. As a first step, the government issued, on January 6, 2005, a decree dismantling the existing tax and customs exemptions previously granted through administrative procedures and plans to propose to congress the elimination of special tax regimes (border zones and tourism) by March 2005.
Jimenez estimates that 70% of all investment on the drawing board for the short term depend on taking advantage of the tax incentives.