With this draft bill, the Executive aims to reduce airfare prices, increase the number of visitors, establish new domestic and international routes, strengthen the Dominican Republic as a connection point, and promote the competitiveness of the national airline industry through tax incentives.
Taken from Diario Libre
SANTO DOMINGO- The Executive Branch seeks to exempt from the payment of the tax on the transfer of industrialized goods and services (ITBIS) the sale of complete flights by Dominican operators to companies abroad, for flights originating abroad and destined for the Republic.
This is proposed in one of the four legislative initiatives that the legal advisor of the Executive Branch deposited the day before yesterday in the Senate, specifically in the one referring to the Preliminary Bill Number for the Promotion and Competitiveness of National Civil Aviation.
With this draft bill, the Executive aims to reduce airfare prices, increase the number of visitors, establish new domestic and international routes, strengthen the Dominican Republic as a connection point, and promote the competitiveness of the national airline industry through tax incentives.
This proposed law had been demanded by the Dominican Association of Airlines (ADLA), which requires the existence of a local development law before the signing of an open skies agreement that the Dominican government is negotiating with the United States, so that there is fair competition at the level of tax regimes.
Tariff exemptions, selective and assets
In the draft bill, the Executive Branch proposes:
- Exemption from ITBIS payment on the sale of complete flights by Dominican operating companies to companies abroad (chartering), provided that the flights originate abroad and are destined for the Dominican Republic.
- Exemption from the payment of selective consumption taxes, if any, and from ITBIS, on lubricants, spare parts, components and aviation engines that are imported by national and foreign air operators, for the exclusive use of their aircraft.
- Exemption from the payment of tax on assets for a maximum of five fiscal years, declared to the Tax Administration.
- Exemption from the payment of tariffs and ITBIS on the importation of ships and aircraft of a specific weight.
- Withholding of only 5% of the tax for payments abroad for training and instruction of crew personnel by non-residents; use and maintenance of computer programs and software related to the operation of the aircraft and for the insurance of the aircraft.
- Total exemption from withholding tax on payments of income abroad for the leasing of aircraft or aircraft engines and aircraft maintenance and repair services; engine parts and other aircraft parts.
Airlines that can benefit
The ADLA is made up of 14 airlines, five of which fly regularly to different destinations: Arajet, Air Century, Sky High, Sky Cana and Helidosa.
The draft bill establishes that the national operating company dedicated to international commercial air transport, which wishes to receive the incentives, must make an application addressed to the Civil Aviation Board, accompanied by a business plan.
In addition, submit to the Ministry of Finance a feasibility study that establishes the relationship between the economic benefits that the investment will provide and the tax expenditure (amount of tax revenue that the State will stop receiving) that it will generate.
Then, the Treasury will prepare a cost-benefit analysis of the incentives to be granted, which will serve as the basis for issuing its No Objection or observations.
By 2023, the Dominican treasury will stop receiving more than 310,120.7 million pesos due to preferential tax treatment for sectors, activities and taxpayers, according to estimates made in the national budget project for that year, an amount greater than that re-estimated for 2022.
