The World Bank is proposing that ITBIS (the value added tax on the transfer of manufactured goods and services) should be applied to the industries located in the tax-free industrial parks around the country. To prevent the companies from picking up and leaving hundreds of thousands of workers in the lurch, the World Bank proposes that the application of the new measure is phased in “gradually, so that investors do not pull out from this area.” The study is called “The Dominican Republic: Evaluation of National and Labor Competitiveness”.
The World Bank’s reasoning is partly based on the fact that the Dominican Republic is part of the World Trade Organization (WTO) and as such must comply with the Agreement on Subsidies and Compensation Measures that excludes special treatments for exports in the manner in which they are currently given. By the year 2010 the equality requirement will be obligatory for all member countries, although the requirement could be renegotiated within the framework of the Doha Accord that provides for a five-year gradual adjustment for the free zones.
The proposal comes at a time when the National Competitiveness Council is advocating the convergence of national industry so that non-free zone companies may share many of the benefits that the free zone companies currently enjoy.