The General Directorate of Internal Taxes (DGII) will proceed to revalue the properties, to bring them to the current market value.
SANTO DOMINGO.– All properties whose value exceeds the equivalent value of a low-cost home (RD$5,025,380.75) will pay 1% Property Tax (IPI), according to the proposed Fiscal Modernization Law, presented yesterday by the Government.
“The Real Estate Property Tax (IPI) is being restructured so that from now on the minimum exemption will be set at the equivalent value of a low-cost home (RD$5,025,380.75) and a 1% tax will be levied on the excess when the value of the properties is above that amount. The combined value of improvements and land is included in the taxable real estate assets,” explained Jochy Vicente, Minister of Finance, while presenting the details of the bill on the weekly program “Con la Prensa.”.
He said that the Dominican Republic is one of the countries in the region with the highest exempt amount (USD 175,557.9), citing cases of various countries where the exempt price is much lower.
“Real estate properties are visible and publicly registered, which makes tax evasion more difficult compared to other types of income or wealth,” argues the proposal that will be presented this Tuesday, October 8, before the National Congress.
Vicente argued that in the countries of the Organization for Economic Cooperation and Development, OECD, an international organization made up of 37 states, whose purpose is to coordinate economic and social policies and contribute to the growth and expansion of its members, property tax revenues average 1.90% of GDP.
“In our country, we barely manage to collect 0.2% of GDP, which is practically nothing. The Sanctuary Property Tax is designed to raise very little. For one thing, the current exemption is far too high,” he explained.
He added that current incentive laws have granted exemptions to high-value properties that should be paying taxes, but which benefit from the exemption under a specific law. “Setting the tax exemption at the price level of a low-cost home is a parameter that allows us to protect low-income families while ensuring that wealthier families contribute according to their means,” he argued.
He asserted that strengthening the role of wealth taxes is key to increasing the progressivity of the system.
"The fact that property taxes are an efficient and equitable means of raising revenue strongly supports the case for harnessing their potential by making the tax base more transparent.".
The IPI
It is an annual tax that is applied to the total sum of the taxable real estate assets registered by individuals and trusts.
Currently, the tax applies to properties valued at over RD$9,860,649.00. It is payable in two semi-annual installments. The deadline for the first installment is March 11th, and the second is September 11th of each year. This tax applies to all properties, including homes, urban lots, and buildings used for commercial, industrial, and professional activities.
Real estate values will increase
The official also stated that the General Directorate of Internal Taxes (DGII) will proceed to revalue the properties to reflect their current market value.
The minister explained that, due to the lack of property reassessment, tax revenues have decreased. "The last reassessment was carried out in 2013, and this has resulted in a decrease in the revenue generated from higher incomes.".
