Engineer Magin Díaz Domínguez, director general of the Tax Agency (DGII) is optimistic that for the first time tax collections will be more than what was budgeted. Díaz said tax collections have reached RD$201 billion in the first six months of the year, that is RD$22 billion more than last year when collections were RD$179 billion. He said for the first half of the year, the DGII had budgeted RD$197 billion. “We have collected RD$4.6 billion more than budgeted”, he told Diario Libre in an interview.
Díaz said the closing of delinquent businesses has been effective. He also said that fuel tax collections were up 18%. Upon being named to the position, Diaz stated a new tax reform was not necessary and what was needed was more efficient tax collections and a reduction in evasion.
During the interview with Diario Libre, he expressed his opposition to raising taxes. He explained that already the ITBIS tax (value added, sales tax) in the Dominican Republic is above the average for Latin America, that is 15-16. In the Dominican Republic, the ITBIS is 18%. The Latin American average income tax rate in 25 and in the DR it is 27%. The rate of taxes on fuel, alcohol and cigarettes are already higher than the regional average. “There is no margin to increase rates, that is the reality,” he said. Nevertheless, Congress recently tagged on an increase in the telecom bills to pay for the 911 Emergency System.
Magin Diaz advocated for simplifying the taxation system. He favors the reduction or elimination of tax exemptions. “The evidence is that in countries where there are lower levels of evasion, there are less exemptions. He said in countries where the level of evasion is low, the value added tax is applied to all products. He argued that the large number and variety of exemptions create difficulties for the tax administration. “It is a challenge to collect in a country with so many exemptions,” he said during the interview. Díaz says this is an issue to be discussed for the drafting of the Fiscal Pact ordered by the National Development Strategy Law.
Díaz estimated tax evasion at 43% and wants to reduce it to 33%. He favors the connecting of all cashiers at businesses to the central system of the DGII. He said the initial focus has just been on big business. He estimated another 100,000 will be required in the next two years.
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Diario Libre
10 July 2017
