Home CaribbeanDominican Republic Review of fuel exemptions for generators seeks to evaluate the Government’s fiscal spending

Review of fuel exemptions for generators seeks to evaluate the Government’s fiscal spending

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Review of fuel exemptions for generators seeks to evaluate the Government's fiscal spending

The Dominican Government will begin the gradual dismantling of the tax exemptions in fuels that companies receive electricity generators established in isolated systems or for their own non-interconnected consumption until the complete removal of that privilege.

In a letter sent to the eight companies in the sector, the government notified that the measure is part of the financial organization process of the State to strengthen its collection capacity and achieve fiscal sustainability.

Only in exemptions for the selective consumption tax (ISC) to the hydrocarbons The State estimated that it will stop receiving RD$18,626.6 million this year, equivalent to 6.5% of the total fiscal sacrifice for 2022, which would amount to RD$285,688.7 million, according to the budget.

In tax exemptions for electricity generation, the State estimated that it will stop receiving RD$6,014.8 million this year, exclusively from the ISC to those hydrocarbons.

According to the General State Budget for 2022, only the free zone sector exceeds that of electricity generation, in terms of the tax expenditure that is projected to grant them, which together with tourism and mining would receive 20.5% of the total exemptions for this year.

The letter indicates that these generators sell their energy to private companies, hotels or for their own generation of a commercial activity, so their commercial rates can reflect their operating costs.

“It is taken into consideration that a high percentage of electricity sales in current isolated systems have commercial rates that could allow these taxes to be part of the operating costs of the businesses that operate there, freeing the State from an expense or tax burden. important, which will contribute to the reduction of the fiscal deficit that each year the Dominican State has to face and assume”, he establishes.

Impacted companies

In addition to the generator Corporación Energética Turística Juanillo (Cap Cana Caribe), the Punta Cana-Macao Energy Consortium, the Punta Cana Tourism Services Corporation, Costasur Dominicana-Casa De Campo, Generadora Eléctrica de Samaná, Compañía de Electricidad de Bayahibe receive exemptions. , Cementos Cibao and the Dominican Corporation of State Electric Companies (Alto Bandera).

In the letter, signed by the Ministers of Finance, José Manuel -Jochi- Vicente, and the Minister of Industry, Commerce and Mipymes, Víctor -Ito- Bisonó, and the Superintendent of Electricity, Rafael Velazco, it is indicated that, in any case, For the calculation of the tariff schedules of each concessionaire, the Superintendence will take into consideration this condition (the removal of the exemptions) that could be reflected in the supply costs.

“This review is intended to cover a complete evaluation of 100% of the fiscal expenditure referring to the exemptions of the fuels to gradually dismantle, in terms of time, by class of beneficiary, to whom said exemptions are granted, as well as the type and quantity of fuel that is currently exempted, “he adds.

The document adds that the first stage of the dismantling is focused on generating companies established in isolated systems or non-interconnected own consumption.

The government maintains that it has been analyzing the annual tax expenditure in order to eventually gradually dismantle said fiscal sacrifice, which is manifested in this case through tax exemptions for fuels.

Electricity rate subsidy

Last October, the Government also began the gradual dismantling of the electricity rate subsidy for customers of electricity distribution companies (EDE), a mandate of the Electric Pact, signed in February 2021. The measure seeks to bring the current rate up to the level that reflects the real cost of the service, with gradual increases determined by the Superintendence of Electricity (SIE) each quarter. As reported on that occasion, the percentages to increase every three months will be minimal until the goal established by the pact is reached.

Degree in Social Communication, Journalism mention by the UASD. Since 2012 he has worked in various print media.

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