Although the benefits of the measures taken by President Danilo Medina are recognized as positive for Micro, Small and Medium-Sized Enterprises (MSMEs), specialists in tax and administrative law warn that they could be unfair business practices and in some cases be in violation of the law. By means of Decree 164-13, the President ordered government contractors to embrace Law 340-06 on public procurement and contracting to favor small business. The decree orders government procurement to favor the regions where the work will be carried out, authorizing these companies to operate on a cash basis and not accrual basis for taxation purposes and instructs prompt payment from government.
Tax law specialist Edgar Barnichta says that the fact that the government intends to buy from one type of business and not another, could constitute unfairness and violate free trade at least until it is established clearly that contracts will be awarded to companies that present proposals under the same conditions, in terms of price, quality and delivery time.
In relation to the announcement made by the government whereby small companies would be able to pay ITBIS or selective taxes after cash payments are received, Barnichta believes that the measure should be introduced through Congress, since the President does not have the authority to change the method of tax collection. He said that he thinks that this measure, the same as the one that reduces tax payments on low-cost housing until November, is realistic and beneficial, but that both could be in violation of the law. “These are two precedents that look very nice but which legally and constitutionally are in violation of the law,” he said.