Tax Reform proposal threatens unsustainable rise in housing prices

Santo Domingo.- The United Construction Sector of the Dominican Republic, including APROCOVICI, ADECLA, AEI, and the Dominican Association of Housing Builders and Promoters (ACOPROVI), has raised concerns about the impact of the proposed tax reform on the housing sector. They warn that the reforms could significantly increase housing costs, affecting access to affordable homes for many Dominicans.

The construction sector estimates that housing prices could rise by over 30% due to changes such as the elimination of the differentiated income tax rate for housing trusts and the imposition of VAT on housing sales and related services. This would cause a 12.5% increase in housing costs and an additional 18% hike due to VAT on non-industrial goods and transportation. They caution that 59% of Low-Cost Housing (LCH) projects would no longer qualify for government subsidies, disqualifying 6 out of 10 Dominican families from obtaining affordable housing.

Additionally, the sector fears that rental prices will surge due to reduced housing supply and increased costs for property owners. This, combined with taxes on short-term rentals, could result in a 56% decline in housing demand, a decrease in investment by 77, 000 million pesos, and the loss of over 115,000 jobs in the sector. The construction sector is calling for a review of the fiscal measures to mitigate these negative effects and ensure continued access to affordable housing in the country. They are committed to working with the government to find solutions through dialogue.