Representatives of the United Construction Sector expressed concern about the “decades-long setback” that the proposal could generate. tax reform in the housing sector, particularly in access to affordable housing.
The Association of Home Developers and Builders of Cibao (Aprocovic); Association of Builders and Developers of La Altagracia (ADECLA); Association of Real Estate Agents and Companies (AEI) and the Dominican Association of Home Builders and Developers (ACOPROVI), warn that just as a result of eliminating the differentiated ISR rate of housing trusts, The price of housing would increase by approx. 12.5%. «To these increases would be added an 18% increase for taxing VAT on the sale of homes, for the inclusion of VAT on transportation and non-industrialized goods such as aggregates, and for the 50% increase in the withholdings made at the hands of construction site. That is, this tax reform would result in a total increase in the price of housing greater than 30%,” they explain.
They indicate that, as a result of the proposed 12.5% price increase, 59% of Low Cost Housing (VBC) projects would be removed from their current classificationcausing buyers to lose access to the Low Cost Housing bonus, clashing with the social housing plans promoted by the same government, which means that 6 out of every 10 Dominican families would be disqualified for not having the necessary resources to solve these increases, taking away the dream of thousands of Dominicans of having decent housing.
«To this difficult situation is added that rental prices would rise due to a significant reduction in the supply of housing for these purposes, and a significant increase in the cost for owners, as a result of the decrease in the IPI base from 9 million to 5 million, and the revaluation of properties,” he points out. the construction sector.
He added that all these factors, together with the addition of taxes on short-term rentals, will cause a collapse in housing demanddecreasing sales by approx. 56%, which would motivate a reduction of approx. 77,000 million pesos of investment in new projects, causing negative impacts to the Gross Domestic Product and the reduction of more than 115,000 jobs. These estimates are based on conservative scenarios in accordance with the data for the year 2023 from the MIVED Bulletin of Statistics on Application and Issuance of Housing and Building Construction Licenses.
“This would mean an irreparable decrease in housing construction in the coming years, drastically stopping the progress made in reducing the housing deficit in our country thanks to the trust,” he adds.
Given this bleak scenario for housing, Acoprovi and the United Construction Sector They request that the package of fiscal measures be reviewed in order to mitigate the adverse effects on the housing sector, thus ensuring that efforts to modernize the economy do not compromise the constitutional right of access of Dominican citizens to housing. As a sector, we are committed to collaborating with the government in finding solutions through constructive dialogue.
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