San Salvador.- Dominican Treasury Minister Vicente Bengoa has said that Central America, Panama and the Dominican Republic have to negotiate a treaty with the United States aimed at preventing double taxation. Bengoa made this suggestion during the fifth meeting of Central American, Panamanian and Dominican Treasury Ministers.

The meeting, which is being held in San Salvador, was attended by the president and vice-president of El Salvador, Antonio Saca and Ana Vilma de Escobar, as well as Customs Directors from across the region and representatives of the International Monetary Fund (IMF) and the Central American Economic System (SIECA).

The Dominican minister, who is president of the Central American council of treasury ministers said that a framework agreement was ready and approved which could be used as a basis for negotiations.

He added that an “Agreement on Good Practices for Foreign Investment” had also been drawn up.

He stressed the importance and urgent need to approve this agreement, because following the DR-CAFTA agreement’s entry into effect many companies are coming to the region and this could create “taxation cannibalism” between countries, “which try to attract investments on the basis of tax exemptions”.

“For this purpose, we must harmonize incentives though a Good Practices Agreement. If we don’t come to an agreement on this important point of DR-CAFTA’s implementation, the tax base in our countries will be eroded and they will receive lower income for funding education, health and infrastructure, which is required for economic development”, said Bengoa.

He said that the worst-case scenario would be for governments to have to make tax reforms that would affect local producers, employees and consumers.

Antonio Saca, president of El Salvador, told reporters and participants that the Dominican minister’s declaration had taken the words out of his mouth.

He said that the best way of improving a government’s income was to boost economic activity and improve tax collections, rather than raising taxes.

He said he was in agreement with Bengoa’s statements, “because, if not, what might be gained by increasing economic activity could be lost with all incentives and the only ones who win are the foreign investors, not the country”.

The central item on the agenda was “Central American, Panamanian and Dominican Customs Union”. The Dominican Republic was also represented by Customs deputy director Eduardo Rodríguez, and the Economic Research director at the Treasury Ministry, Martín Zapata.