Customs double dipping?

[NewsWhore]

The VAT (ITBIS) tax that the Customs Department (DGA) levies on imports is not just applied to the product value but is also levied on the duty. In essence, this is a double taxation. Even though VAT (ITBIS) is a tax collected by the Department of Taxes (DGII), it is up to Customs to collect it when the imports are subject to duty. The problem arises when Customs applies the 16% tax to the duty as well as the value of the item itself, a clear case of a tax on a tax. For example, according to Diario Libre, if the cost of your product, including insurance and freight was RD$500,000, you would supposedly pay a VAT of 16% or RD$80.000. However, if the same product was subject to, say, 20% duties, you would pay the 16% VAT on the product, plus the duties. (RD$500,000 + RD$100,000 = RD$600,000 X 16% = RD$96,000). Importers say that the government should collect the VAT on the price FOB, since both the insurance and freight charges are already taxed, and that there should certainly not be any VAT on the duties levied. Diario Libre asked the DGA to respond and their only comment was that the DGA levies the 16% VAT on the total bill.

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