He called on the government to review and reconsider aspects of the reform that negatively impact the real estate sector, and to establish an open dialogue between the public and private sectors to find solutions that do not compromise access to decent and affordable housing.
SANTO DOMINGO– Opinions continue to flow regarding the controversial Tax Modernization Bill, presented to the country last week by the Luis Abinader administration and currently under review in the Chamber of Deputies. The Association of Real Estate Agents and Companies (AEI) has reacted to the proposal, highlighting that investments accumulated by the country in recent years through real estate development incentives could be jeopardized and could affect ongoing projects.
“The possible alteration of these incentives could discourage future investments and affect ongoing projects, negatively impacting tourism and real estate development and causing the migration of large amounts of capital to other nearby destinations,” the entity representing real estate brokers said in a statement.
He adds that the proposed reform could have significant negative effects on the benefits established by Law 158-01, on the promotion of tourism development.
“This law has been fundamental in encouraging foreign investment in the tourism and real estate sector, contributing to the economic development of important areas of the country, the creation of jobs and the development of the areas where real estate projects are located,” the document says.
It maintains that the Association recognizes the importance of a comprehensive and participatory fiscal modernization as an instrument for the progress of the country, after arguing that a solid and equitable fiscal structure is fundamental to improving the living conditions of all Dominicans and promoting the sustainable development of the various productive sectors, including el inmobiliario.
“We firmly believe it is possible to strike a balance between the need to increase tax revenues and maintain a robust and accessible real estate sector for all Dominicans. It is essential to preserve our position as the paradise of the Caribbean and continue to be leaders in Caribbean tourism. To that end, it is crucial that tax reform be implemented in a way that strengthens our economy without compromising the attractions that have made our country a premier investment and tourism destination,” states the AEI's position.
AEI executives. (External source).
It adds that the organization is committed to collaborating constructively with the relevant authorities and other institutions in the sector to ensure that the tax reform benefits all sectors of Dominican society.
The following are the points that, in the opinion of the AEI, are concerning in the Fiscal Modernization Bill, proposed by the Executive Branch to the Dominican nation:
-Increase in housing costs: “An increase of between 7.54% and 12.53% in housing prices is projected. This increase would directly affect the Dominican middle class, making it more difficult to access homeownership.”.
-Reduction of the threshold for the Property Tax (IPI): “This would negatively impact both owners and tenants. A significant increase in rental prices is expected as a result.”.
-Elimination of the differentiated rate for housing trusts: “This could result in a 12.53% increase in the price of low-cost housing and a 7.54% increase in middle-class housing. It is estimated that 6 out of 10 Dominican families who were planning to acquire their first home would be immediately disqualified, and that is alarming.”.
Decrease in home sales: “A reduction of approximately 56% in home sales is projected. This could result in a loss of investment of 77,285 million pesos and a reduction of approximately 115,465 jobs in the sector.”.
-Impact on legal certainty and investment: “The proposed reform could discourage investment in rental housing. A negative effect on the legal certainty of the real estate sector is expected.”.
– Impact on Law 158-01: “The proposed reform could have significant negative effects on the benefits established by Law 158-01, regarding Confotur. This law has been fundamental in incentivizing foreign investment in the tourism and real estate sectors, contributing to the economic development of important areas of the country, job creation, and the development of the areas where real estate projects are located. The potential alteration of these incentives could discourage future investments and affect ongoing projects, negatively impacting tourism and real estate development and causing the migration of large amounts of capital to other nearby destinations.”.
Additional Taxes: “Applying the ITBIS to the transport of materials and short-stay rentals could have additional repercussions on the costs and competitiveness of the sector with other destinations, which would significantly affect tourism.”.
Call for dialogue
The AEI called on the government to review and reconsider aspects of the reform that negatively impact the real estate sector, and to establish an open dialogue between the public and private sectors to find solutions that do not compromise access to decent and affordable housing.
Similarly, it suggests considering measures that preserve the progress achieved through Law 189-11 for the Development of the Mortgage Market and Trusts, as well as Law 158-01 on tourism incentives, which it says have been fundamental to the development of the country's real estate and tourism sector.
Finally, it recommends seeking alternatives that allow for fiscal modernization without jeopardizing the well-being of citizens and the development of the real estate sector.
