NewsWhore
06-26-2007, 02:20 PM
Treasury Minister Vicente Bengoa has come out in defense of what could be considered a double tax on goods by saying that the procedure is authorized in the Tax Code. Bengoa, as reported in Diario Libre, explained that VAT (ITBIS) is an internal tax and says that it is levied by Customs on all imports to avoid tax evasion. Customs (DGA) director Miguel Cocco also defended the application of ITBIS by pointing to article 339 of Tax Code 11-92. In the DR, VAT (ITBIS) is a tax collected by the Department of Taxes (DGII) and 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).
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