The Executive power search exempt payment of the tax on the transfer of industrialized goods and services (ITBIS) in the sale of full flights by Dominican operators to companies abroad, for flights originating abroad with destination to the Republic.
This is proposed in one of the four legislative initiatives that the legal consultant of the Executive Branch deposited in the Senate the day before yesterday, specifically in reference to the Draft Law Number for Promotion and Competitiveness of the Civil Aviation National.
With said draft, the Executive pursues a decrease of the prices of the airfareincrease the number of visitors, establish new domestic and international routes, strengthen the Dominican Republic as a connection point and promote the competitiveness of the national airline industry through tax incentives.
This bill had been demanded by the Dominican Association of Airlines (ADLA), which requires the existence of a local promotion law before signing an agreement of Open skies that the Dominican Government negotiates with the United States, so that there is fair competition at the level of tax regimes.
The ADLA I had not commented on it draft at the close of this edition.
Tariff exemptions, selective and active
In the draft law the Power executive proposes:
- Exemption from the payment of ITBIS in the sale of complete flights by Dominican operating companies to companies abroad (chartering), as long as they are flights originating abroad to the Dominican Republic.
- Exemption from payment of excise taxes, if any, and ITBIS, on lubricants, spare parts, parts and aviation engines that are imported by national and foreign air operators, for the exclusive use of their aircraft.
- Exemption from payment of tax on assets for a maximum of five fiscal years, declared in the Tax Administration.
- Exemption from the payment of tariffs and ITBIS on the importation of ships and aircraft of a specific weight.
- Withholding of only 5% of the tax for payments abroad for training and training of crew personnel by non-residents; use and maintenance of computer programs and software related to the operation of the aircraft and for the insurance of the aircraft.
- Total exemption from withholding tax for income payments abroad for lease of aircraft or aircraft engines and aircraft maintenance and repair services; engine parts and other aircraft parts.
Airlines that can benefit
The ADLA is integrated 14 airlinesof which five fly regularly to different destinations: Arajet, Air Century, Sky High, Sky Cana and Helidosa.
The draft law establishes that the national operating company dedicated to international commercial air transport, which wishes to receive the incentives, must carry out a request directed to the Civil Aviation Boardaccompanied by a business plan.
In addition, present to the Treasury a feasibility study that allows establishing the relationship of the economic benefits that the investment will bring and the tax expenditure (amount of tax revenue that the State will stop receiving) that it will generate.
Then, the Treasury will prepare a cost benefit analysis of the incentives that will be granted that will serve as the basis for issuing your No Objection or observations.
By 2023, the Dominican treasury will stop receiving more than 310,120.7 million pesos due to the preferential tax treatment of sectors, activities and taxpayers, according to the estimates made in the national budget project for that year, an amount greater than the re-estimated amount for 2022.
