Support from Barrick and the financial sector will exceed US$ 25 billion in 2021

President Luis Abinader has received the support of large companies with his willingness to pay taxes in advance of his fiscal year.

Santo Domingo, DR

Barrick Gold’s support for the government to ensure that there are no new taxes will be an advance of some US$47 million in royalties by 2020, independent of the payment of its regular taxes.

But the biggest support will come in 2021, when, according to the two agreements made with the mining company, the government, and the country’s financial institutions, the amount of the advance will exceed RD$25.7 billion.

The Dominican gold is exported by the mining company to Switzerland, India, the United States, and Canada, the latter country where it is refined. The practice of asking for tax advances from large corporations is not new. In the quarter of this year, Barrick made an advance to the Dominican Government, to face the Covid-19 coronavirus pandemic.

Years ago, the late ex-president Joaquin Balaguer came to ask for advances from the Shell fuel company and it is also known that he did so with the large local businessmen to avoid foreign debt.

Mining taxes

In the Dominican Republic, mining operations are subject to income tax, the tax on mining profits (PUN), the minimum annual tax (IMA), which applies to royalties, the net mining refining tax (RNF), and capital gains tax. During the period 2012-2018, the Dominican State collected income from these five taxes applied to mine operations in the amount of RD$65.8 billion.

A capital gain operation of RD$3.15 billion was recorded in the reference period, due to the fact that in 2014 the operations of the previous year were accounted for when the mining company began to exploit and export gold. The advance of royalties (economic consideration paid by the company to the State for the exploitation of metallic and non-metallic mineral resources) is contemplated in Law 146-71 on Mining.

Price for the sale of gold

This is a minimum tax on the sales price and is credited towards the payment of income tax for a given year. The operation pointed out by the President is an advance tax that should not be confused with the negotiation of contractual terms, since it is an agreement in which Barrick Pueblo Viejo will advance this year the royalty that corresponds to it in 2021. This provision was adopted jointly by the parties. For 2021, the agreement with Barrick is for an advance of the royalties in the amount of US$95 million (RD$5,700 million), which will contribute with an improvement of the budgetary year of that year.

With the financial intermediation entities, the Government reached an agreement so that in 2021 they will be advanced the equivalent of RD$20 billion, in addition to the payment of their normal taxes.

With these two agreements, the government of President Abinader was able to manage to send an addendum to the Congress of the Republic, where the proposal of new taxes, included in the draft Budget, would be discussed, and which had been widely rejected by the population, because it would affect the middle class more.

IN POINTS

Production

Last year the mine processed 8.6 million tons, with a movement of 50 to 55 million tons.

Extension

Barrick Pueblo Viejo Mining Company plans to extend the life of the mine by more than 15 years.

Investment

It expects to reach a real foreign direct investment of more than US$3 billion by 2020-2045.