SANTO DOMINGO– Christian Molina, executive president of the Dominican Association of Trust Companies (Asofidom), asked this Thursday during the public hearings of the National Congress not to alter the current treatment of trusts, highlighting that it is a figure that has played a leading role in the advancement of housing in the Dominican Republic since its creation in 2011.
“If there’s one sector where we’ve seen a drastic change since the 2011 trust law, it’s the housing sector. That incentive, the 10% as a single, final income tax payment, has yielded such a significant result that we would have to be very stubborn to eliminate it,” the representative stated after speaking in the Chamber of Deputies, where opinions from various sectors on the Fiscal Modernization bill have been heard since 10:00 a.m.
He argued that the country had a huge housing deficit, noting that in 2017 there were only 5,700 new and used homes on offer, while by the end of last year, through the trust, more than 50,000 homes had been delivered through fully private investment.
He said that banks had issued more than 160 billion pesos in loans by the end of last year. What does that mean for consumer banking and the Dominican economy? “Banking drives the economy, and so does construction,” he emphasized.
Christian Molina. (External source).
Molina emphasized that the trust is a transparent entity. “What’s in there is transparent. The construction business has become transparent, does not evade taxes, and respects anti-money laundering regulations,” he stated.
He added that if it costs a builder more money in taxes to build through a trust, he will refuse to work with that structure.
He pointed out that the proposed tax reform is detrimental even to the State itself. “It’s so detrimental that it’s not even in the State’s best interest. How many public trusts do we have today? Imagine that, if the reform passes as is, the State itself will have to pay 27% in taxes when it creates a trust.”.
He opined that the trust should continue to receive the treatment it has today, which is 10% as a single and final payment of income tax.
“Look, this isn’t something we invented. This is how it works in all the countries where trusts have prospered: Mexico, Colombia, Argentina, Panama. Trusts don’t pay taxes directly,” he explained.
“How should it be?” he asked. “If the trust earns 100 pesos at the end of the year, the person who creates the trust has to declare 100 pesos in their income and pay the corresponding tax. But not the trust itself. The trust should never have tax personality,” Molina emphasized.
