Dominican courthouse overrules 5 percent tax on exports

The Supreme Court of the Dominican Republic ruled a five percent tax on exports as an unconstitutional move as an increasing number of businesspeople –including Spanish hoteliers- was already blasting the initiative.

The Dominican Supreme Court of Justice considered Decree 727-03, issued on August 6, 2003 by the Executive Branch to levy new transitory taxes, as “not in conformity with the Constitution.”

The highest court concluded the Executive Branch breached article 37 of the Dominican Constitution whereby only the bicameral National Congress is empowered to create new taxes and establish the way of collecting the taxed money.

The 5 percent tax on gross revenues reaped out of exportable goods and services –like tourism- was decreed by President Hipolito Mejia last August with a view to raise funds for the “Electricity and Gas Fare Stabilization Fund.”

Mr. Mejia enforced the new excise, plus a 2 percent toll on imports and a one hundred percent tax increase levied on migratory arrangements for people wanting to travel abroad. The new actions are part of a package agreed upon with the International Monetary Fund.

The plan’s goal was to allay a $2 billion shortfall the country had been dragged into as a result of a megabuck scam pulled by the Banister Intercontinental Bank that was only laid bare late last May.

The new tax on exports –a situation that was already hitting the leisure industry pretty hard- was also raked over the coals by Spanish entrepreneurs during Mr. Mejia’s recent official visit to Spain last September.