President Luis Abinader has enacted Aviation Incentives Law 57-23 that creates tax incentives for locally-based airlines flying abroad and domestically.
The law seeks to strengthen the positioning of the Dominican Republic as a connecting point for the transport and logistics of passengers and cargo.
The general director of the Dominican Institute of Civil Aviation (IDAC), Héctor Porcella, says the new law will revolutionize the country’s aeronautical sector by creating better conditions for investors in local aviation, resulting in a boost to tourism development. There are expectations air tickets will soon cost less.
Porcella says that Law 57-23 creates tax incentives for national and international civil aviation. New jobs in aviation will be created.
Porcella explained that the tax incentive regime for commercial aviation aims to improve the competitiveness of the aeronautical sector. He expects new domestic and international routes to and from strategic markets in the Dominican Republic to result from the new law.
The aviation sector in the Dominican Republic had lobbied for the passing of the law to be in a better position to compete with foreign airlines. The aviation sector argued governments heavily subsidize airlines abroad.
Aviation Incentives Law 57-23 creates a regime of tax incentives for national and international civil aviation and establishes the following provisions:
1) Total exemption from withholding tax on income payments abroad for leasing aircraft or aircraft engines and maintenance and repair services for aircraft, engine parts and other aircraft parts.
2) Single and definitive withholding of only 5% of the tax for payments abroad for training and certifications of crews by non-residents; use and maintenance of computer programs and software related to the aircraft’s operation and the aircraft’s insurance.
3) Exemption from the payment of the Tax on the Transfer of Industrialized Goods and Services (ITBIS) in the sale of complete flights by Dominican operating companies to companies abroad (chartering), as long as they are flights originating abroad bound for the Dominican Republic.
4) Exemption from payment of tariff and ITBIS on the import of ships and aircraft of subheading 8802.30.00, corresponding to airplanes and other aircraft with an empty weight greater than 2,000 kg but less than or equal to 15,000 kg, and the subheading 8802.40.00, corresponding to airplanes and other aircraft with an empty weight greater than 15,000 kilograms.
5) Exemption from payment of Tax on Assets declared to the Tax Agency (DGII).
The Civil Aviation Board is responsible for receiving applications and evaluating the files of companies interested in benefiting from the Law 57-23 tax incentives.
The new regulations are primarily aimed at promoting the development of international civil aviation within guidelines established by the International Civil Aviation Organization (ICAO), which contain the international standards, recommended methods and procedures that govern the sector.
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Presidency
10 October 2023