SANTO DOMINGO. -The Dominican Confederation of Micro, Small and Medium Construction Companies Inc., (Copymecon) said yesterday that the ideal scenario for the Fiscal Modernization Bill presented by the Government is for it to be comprehensive, addressing all aspects of the country's tax system and tackling the problem of tax evasion.
The entity points out in a press release that currently, evasion of income tax and ITBIS exceeds 40%, and other agents avoid paying taxes.
“And that in addition to being comprehensive, it must be progressive, where those who earn more pay more, that is, in proportion, and that the tax burden does not depend so much on indirect taxes, since these by their nature are regressive or counterproductive,” he points out.
Eliseo Cristopher, president of the entity, stated that the proposed Tax Reform should contain incentives that contribute to the development of the MSME sector, in terms of formalization and working efficiently in the area of development of all sectors of the country and the well-being of its citizens.
Eliseo Cristopher. (External source).
Although he acknowledges that the Reform is intended to address the population's demands for basic services and prevent the debt from continuing to grow, he understands that if medium and small businesses do not formalize, the State will lose out on tax revenue and the guarantee of a more qualified workforce.
Cristopher, a representative of the construction SME sector, stated that several of the points concerning the treatment of this sector were suggested by Copymecon, with the aim of seeking better incentives and greater inclusion in the nation's development plans, from both the government and private sectors.
“Furthermore, the construction MSME sector proposes that the reform be carried out through a Fiscal Pact, where all social and productive sectors of the nation are involved, as established by Law No. 1-12 of the National Development Strategy (END-2030), taking into consideration the vulnerability and development of MSMEs, a sector that impacts the development and stability of local economies and forms part of the majority of the economic and business fabric in the country,” the press document highlights.
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The organization representing small and medium-sized construction companies proposed a "Single Tax" for SMEs, consolidating all tax and social security contributions as a way to reduce costs and simplify processes. This will encourage business formalization with all the associated benefits, ultimately contributing to increased tax revenue.
He explained that the single tax can be considered with a grace period and a preferential rate for one year and then segmented every three or six months, considering the respective capital and productive capacity of construction companies and entrepreneurs and SMEs.
“Because the country’s business fabric is mostly made up of MSMEs, more pronounced in the construction sector and considering the existing levels of informality, for reasons that, for the most part, they cannot face the tax burden due to their high level of economic vulnerability.”.
Copymecon appreciated that the tax modernization project includes a reduction in the tax burden for micro, small and medium-sized enterprises and eliminates the advance payment for individuals and micro-enterprises, and that small and medium-sized enterprises will pay based on 40% and 60% of the income of the period, respectively.
“Finally, we at COPYMECON understand that, for this reform to be more effective, it must be complemented with other reforms, for example: reforms to the Public Spending Law, Law No. 87-01 on Social Security, the Labor Code, as well as all those that are charged to the Budget and Public Spending Law, the General Law of Purchases and Contracts, among many other obsolete laws.”.
