We hope you’re sat in a comfortable chair as you read the following article on more complications rising in the paying of ITIBIS.
The Tax on the Transference of Industrialized Goods and Services also known as ITIBIS which the Dominican Customs Agency receives from imports is NOT ONLY applied on the product’s value BUT ALSO includes the amount of the tariff to pay (with us so far….good)
Although the ITIBIS is an Internal Tax Agency Levy, it’s up to Customs to collect it when it is taxable from imported good. The problem lies with that is the Customs Department applies 16% even on the tariffs the product has already paid, therefore making it a levy upon another levy.
Just for fun here’s an example….If an imported product whose FOB value, plus insurance and freight total RD$500,000, then there would be a 16% ITIBIS charge on that amount, which is RS$30,000.
However if the product must pay a 20% tariff, the calculated total value would be RD$600,000 (500,000 and 100,000 tariff). What the Customs Dept does is to receive 16% of the ITIBIS on the RD$600,000, with which is levying the RD$100,000 tariff. Got it…?
A lot of Importers are starting to complain about the situation because they say the ITIBIS would have to be applied only to the FOB Value and not to the Insurance, which already pays a selective tax of 16%, nor on the freight, which is also taxed. Quoting “But even less the 20% tariff, because then a tax is received on another tax.”
Luckily for the rest of the world the intrepid newspaper Diario Libre has consulted with the Customs Officials searching for answers asking when the ITIBIS was calculated on an imported product, it was verified that instead of 16% the tax was 19.2%...
The answer was that the 16% of the ITIBIS is calculated on the total value, including the tariff, which raises the payment, as it comprises a DOUBLE TAX.
Thankfully the situation does not occur in the cases of tariff-exempt products, such as those included in the Free Trade Agreement with the U.S. that posts immediate clearing.
