Santo Domingo.- After the government withdrew its proposed tax reform, tourism entrepreneur Frank Rainieri emphasized the need for periodic review of all laws, clarifying that the Dominican Republic’s Tourism Law is aimed at enhancing competitiveness, not providing incentives. He believes this misunderstanding exists both within the government and the private sector. Rainieri points to Mexico, a key competitor, which halted its incentive law in 2019 but maintains only a 16% value-added tax (VAT) on essential tourism-related items. In contrast, Dominican businesses pay 18% ITBIS, a 20% ad valorem tax, and additional taxes on items like televisions, reaching a 56% tax burden.
Rainieri questions the ability of Dominican tourism businesses to compete under these tax pressures, highlighting that Mexico’s lower VAT offers a substantial advantage. He argues that the Dominican Republic must decide if it truly supports tourism, likening it to the export-oriented free trade zones. Rainieri insists the Tourism Law should be seen as a means of fostering competitiveness against 200 other countries rather than as a direct incentive.
While he acknowledges instances of abuse in applying the law, Rainieri attributes this to “politicians giving favors to friends” and stresses his opposition to such practices. Despite the flaws, he advocates for improvements within the legislation to better serve the tourism sector’s competitive needs.
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