Medina asked Senate to lift all taxes on Odebrecht group: Acento

Santo Domingo.- In May 6, 2014 presidentDanilo Medina asked the Senate to exempt "all types of income taxes"of the Punta Catalina power plant project, of the group led by Odebrecht, accusedof paying US$$788 million in bribes in the Dominican Republic and 11 othercountries, acento.com reports Tuesday.

On that date Medina calls Reinaldo Pared tosecure approval of the contract between the State-owned Electric Utility (CDEEE)and Oderbrecht-Technimont-Ingeniería Estrella, which won the questioned tender,initially for US$2.04 billion.

In the letter Medina indicates that theamount stipulated in the turnkey contract is to be reduced to a maximum ofUS$1.95 million.

It explains that the US$92 million differencein favor of the State results from and is subject to, first, to that theparties agree to a "value engineering schedule … that will reduce costs,without under any circumstances affecting the quality" of the power plant.

The second reason for the discount is the Legislativeapproval, under the contract, "of all types of income taxes, as describedin Annex R" of the contract.

Tax breaks in detail

Annex R of the turnkey contract which Medina cites,states that Odebrecht and its associates won’t have to pay the following taxes:

1.- "Income tax"

2.- "All taxes, contributions, taxes,tariffs, municipal taxes," including but not limited to withholdings, tax- to the transfer of industrialized goods and services (ITBIS), taxes andmunicipal taxes, ISC), a tax "levied on the consumption of fossil fuelsand petroleum products (Hydrocarbon Law No. 112-00), as well as any other taxof any nature established by law, decree or resolution of the DominicanRepublic, with the (CODIA) (…), the rates established in favor of theTechnical Vocational Training Institute (INFOTEP) and the rates applicable toSocial Security And Accidents of Work (…)."

3.- Customs duties, import taxes, first licenseplate tax and circulation, whichever is, as set forth below."

It also states that these exemptions areextended "to subcontractors of the Contractor, all goods and servicesintended for the Project, exemptions from the tax on the transfer ofindustrialized goods and services (ITBIS), and applicable import taxes."

It is also recalled that the contractoragrees to complete the works within the deadlines established in accordancewith the Contractual Program, "no later than October 7, 2017."

However, given the difficulties encounteredin obtaining external financing, the authorities expect the coal-fired powerplant with a net capacity of 674 megawatts to be operational by mid-2018.

According to the rating agency Fitch Ratings,the Punta Catalina Thermoelectric Power Station presented a 70% progress onNovember 11 with a total investment of US $ 1,366 million.