Although the draft regulation that regulates the procedure for the application of the tax on transfers of industrialized goods and services has not yet been approved (Itbis) to digital services, such as Netflix and Airbnb, the Executive Branch has already contemplated the tax revenue that its collection would bring, in the Draft Law of the General State Budget of 2023.
The explanatory report of the project indicates that there is a group of actions and administrative regulations that, even if executed and promulgated in the year 2022, will have a decisive effect on the fiscal year of the General State Budget 2023, for the sustainability of the resources and compliance with internal and external obligations.
Among these regulations, he cites, as regards the General Directorate of Internal Taxes (DGII), “the approval of the Draft Regulation” that regulates the procedure for the application of the Itbis “to the digital services captured in the Dominican Republic and that are provided by foreign providers”.
“That goes (the collection of the tax)”, affirmed today the Minister of Finance, José Manuel (Jochi) Vicente, although he does not know when it would come into force. “Not going is sacrilege.”
“Airbnb is unfair competition for our hotels, for Dominican hotels, for Dominican workers,” Vicente emphasized in a meeting with journalists from the economic area, referring to the international platform that allows renting accommodation online offered by its own hosts.
However, he acknowledged that “it is not so easy” to define the taxation mechanism. “Because you cannot put an income tax on Airbnb, because it is not here (in the country), and what is being done is, based on international experiences, looking for a way that those digital platformsfor the income they generate from a Dominican source, have reasonable taxation.”
The DGII submitted the draft resolution to public hearings, the approval of which is pending by the Executive Branch. Its owner, Luis Valdez, has anticipated that it is projected to collect more than 3,000 million pesos through taxes on digital platforms.
He said that this amount will be collected gradually, after the Dominican Government begins to implement its collection.
“All the countries of the world are – many have already done so – in the process of taxing everything that has to do with digital platforms because, in essence, this is a new economic activity that has emerged as a result of the advancement of technology, which is eroding the collection capacity of the States”, said the Minister of Finance.
On Wednesday night, the Executive Power, through the Treasurydeposited in the Chamber of Deputies the project of the General State Budget Law for 2023, which raises expenses for the Central Administration for 1,247,578.1 million pesos.
The document, deposited by the Vice Minister of Budget, Accounting and Procurement, José Rijo Presbot, estimates that the total income of the central government will amount to 1,040,005.5 million pesos next year, equivalent to 15.1% of the gross domestic product (GDP) estimated for the 2023.
