In the current context of international economic uncertainty, the measures announced by the government to incentivize productive investment take on special importance. Accelerated depreciation for businesses, the elimination of the 2% mortgage tax, and the elimination of advance payments for microenterprises are tools that can revitalize the real estate and construction sectors, strengthening investment, employment, and economic growth in the Dominican Republic.
From a technical and economic perspective, accelerated depreciation allows companies to recover their investments for tax purposes in a shorter time. This improves cash flow, frees up resources for reinvestment, and increases companies' capacity to undertake new projects.
In construction, where investments in equipment, machinery, technologies and assets are usually significant, this measure can translate into a greater capacity to develop projects of different scales.
When a company buys a long-term asset, for example a crane, an excavator, a power plant, office equipment, vehicles, or even certain production facilities, tax legislation usually does not allow it to deduct all of that expense in the same year.
Instead, you should spread it out over several years through depreciation.
But with accelerated depreciation, that same company could deduct a larger portion of the asset's value in the early years.
What effect does that have?
Having higher deductible expenses in the early years allows taxable profit to decrease, the company to pay less income tax in the short term, retain more available cash, and improve its cash flow.
On the other hand, the elimination of the 2% mortgage tax has a direct impact on the real estate market. Although this cost often goes unnoticed during the buying process, it represents an additional burden for those acquiring a home or investment property.
Eliminating these taxes reduces transaction costs and facilitates access to financing. This incentivizes the purchase of houses, apartments, land, commercial premises, and tourist properties, strengthening demand and contributing to the appreciation of real estate assets.
The elimination of the advance payment for micro-enterprises also deserves a positive assessment.
Thousands of companies linked to construction (contractors, suppliers, workshops, finishing companies, electrical installations, plumbing, carpentry, blacksmithing and multiple specialized services) will be able to have greater liquidity to operate, grow and invest.
Instead of allocating resources in advance to pay taxes, they can use them to strengthen their operations, hire staff, acquire equipment, or expand their services.
The combined effect of these measures can create a virtuous cycle for both sectors. More business liquidity means more investment; more investment means more projects; more projects generate employment, stimulate the supply chain, and strengthen economic activity.
These signals are also relevant for foreign investors. At a regional level, where capital seeks stable markets with clear rules, any initiative aimed at reducing costs, stimulating investment, and facilitating business development improves the country's competitiveness as a real estate investment destination.
Similarly, new opportunities are opening up for Dominican investors. Both those developing projects and those seeking to acquire real estate for rental income, capital appreciation, or retirement find a more favorable environment for making investment decisions.
These proposals come at an opportune moment. Beyond their immediate fiscal impact, they constitute tools that can boost growth, strengthen confidence, and stimulate economic activity in these two strategic sectors for the country.
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