Dominican Republic Advances Fiscal Reform and Gaming Sector Restructuring

In response to ongoing global economic challenges, the government of the Dominican Republic has adopted an extensive anti-crisis economic package intended to improve the country’s finances while stimulating economic growth and protecting vulnerable segments.

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According to Magín Díaz, Minister of Finance and Economy, the proposed package would allow the authorities to achieve “a more sustainable state of public finances and the protection of the most vulnerable sectors in light of the persistent international crisis.” The government expects to earn between 40 and 50 billion Dominican pesos with its adoption.

As outlined in the relevant documentation, the strategy involves four major elements: pro-growth policies, tax system simplification, measures against tax evasion, and fiscal consolidation. The main goal for the authorities is to preserve the levels of public spending in order to maintain enough funds for investment and social protection programs.

Fiscal Consolidation Includes Increased Tax Burden on Large Companies and Casinos

Among the key components of the fiscal consolidation package adopted by the government, the temporary increase in corporate taxation of large companies stands out. According to the package, the authorities intend to impose a three-percentage-point surcharge on Corporate Income Tax (ISR) until the end of 2028. As a result, the rate is likely to rise to 30%.

The measure concerns only those companies whose revenues amount to over 1 billion pesos per year. In general, such enterprises constitute about 0.8% of all enterprises active in the country. Apart from that, there are certain adjustments to check fees and fees associated with e-transfers, their rate is to be increased from 0.15 to 0.2%.

Moreover, the government intends to introduce a selective consumption tax on electronic cigarettes. In addition to these measures, there are plans to impose higher taxation on gambling-related activities and casinos; however, the details concerning the issue are not clear yet. Another measure aimed at improving revenues is a $10 hike in ticket taxes for airlines.

Senators Adopt New Law for Transformation of National Lottery into a State Institution

Within the context of the aforementioned fiscal reforms, the authorities of the country are also seeking to change the regulatory system of the country’s gambling sector. To that end, a new piece of legislation has been submitted to the Senate, which suggests transforming the National Lottery into a fully independent state entity with financial independence.

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Promoted by Senator Pedro Tineo, the initiative would enable the transformation of the National Lottery, thus making it the main supervisor of lotteries, sports betting, casinos, electronic games, and other gambling-related activities.

Currently, the National Lottery operates under the jurisdiction of the Ministry of Finance and Economy and performs many of the tasks of the Directorate of Casinos and Games of Chance (DCJA).

Centralization of Control Functions and Formalization of the Sector

Approval of the initiative would mean a further expansion of the powers of the National Lottery; specifically, it would be able to take care of inspection, regulation, and enforcement of gambling activities in the country. It is important to note that the legislative initiative came in the wake of the activation of the National Regularization Plan for lottery offices, betting houses, and gaming businesses by Decree 197-26.

As per the plan, the task of tax collection and ensuring compliance with the law will be assigned to the General Directorate of Internal Taxes (DGII). Meanwhile, the National Lottery will act as a member of the Advisory Council, which will be responsible for the implementation of the plan.

In addition to that, National Lottery Administrator Teófilo Tabar was appointed as the temporary head of the program.

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Source: SBC Noticias