The Association of Industries in the Dominican Republic (AIRD) is calling for fairer tax and tariff guidelines for the country to compete with its equals in Central America. According to Hoy, the DR runs the risk of losing 190,000 jobs once the free trade agreement with the US goes into effect. AIRD says that medium and small-scale manufacturing is now extremely vulnerable to the new rules of play.
Pointing out that the sector contributes 14% of the local GDP, the AIRD highlights the fact that local industry pays at least twice as much tax on raw materials and capital goods imports compared to the DR’s competitors in Central America. Local manufacturing also pays higher interest on loans than any nation in Central America except Honduras, and it pays for electricity that is easily twice as expensive as any nation in Central America. Property taxes on industrial property are higher than any country in the region with the exception of Nicaragua.
AIRD recommends that the government remove the exchange rate commission on imports that is currently at 13%, and the 3% tax on raw materials imported to supply the local markets. To level the field a bit in the short term, the AIRD would like to be able to deduct the property tax from the net income, and the automatic return of the VAT (Itbis) paid in advance on tax-exempt items.
The group also wants the “One Window for Exports Plan” that has been talked about for years to go into effect, as well as the correct application of Law 84-99.
Also on their list to make Dominican companies competitive is the possibility of accelerated depreciation of equipment and machinery, an increase in the percentage of deductions allowed by the Department of Taxes on improvements in the infrastructure of the agro-industrial sector, and the elimination of the much-debated consular invoice.
In the medium term, lower cost financing, total fulfillment of the Electricity Law – especially regarding the application of the non-regulated users option – and equal conditions for the local pharmaceutical industry with regard to intellectual property rights and obligatory licenses, are among their other proposals.