SANTO DOMINGO.– The Association of Savings and Credit Banks and Credit Corporations (Abancord) today expressed its concern about the tax burden that the tax reform project, currently under discussion, would impose on savers through the interest generated by their deposits.
Abancord's president, Cristina De Castro, warned that such a tax could discourage saving, negatively impacting the country's economic growth.
“Our citizens’ savings represent the foundation upon which investments that promote sustainable development are built. A tax on interest, which already pays 10%, discourages this practice, which is essential for the Dominican economy,” De Castro stated.
The president of Abancord added that savings are fundamental to strengthening the financial system and, ultimately, boosting investment and job creation in the country.
Abancord Board of Directors. (External source).
Abancord acknowledged the atmosphere of dialogue fostered by the Government and Congress and expressed optimism regarding a potential review of aspects that could adversely impact the economy. He stressed the need to seize this moment to implement a comprehensive reform.
He drew attention to the potential impact of the proposed tax reform on the quality of the financial system's loan portfolio if the cost of living rises and customers have difficulty meeting their loan obligations.
“We trust that, during the public hearings and the congressional debate, the elimination of measures that discourage saving will be considered. We believe that tax reform should focus on strengthening financial inclusion and facilitating access to banking services for all citizens,” De Castro stated.
The Association reiterated its willingness to collaborate in this process, providing technical arguments based on knowledge of the financial sector, especially for the protection of the savings and finances of clients at the base of the pyramid who make up the portfolios of our entities focused on microcredit, in order to prevent a return to the informal economy, after the great effort deployed by our entities for their financial inclusion.
"We hope that the tax reform will be an instrument to incentivize saving, not to penalize it, and that this will guarantee an environment of stability and prosperity for Dominicans," he concluded.
