Good Tax Reform Starts with Good Process

The Dominican Republic’s rushed approach to taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform in June was a missed opportunity that didn’t conform to international standards. Substantial tax law changes were adopted in only seven days, from initial announcement to passage in both houses of Congress and presidential signature. The changes included a 10 percent increase in the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rate from 27 percent to 30 percent, but only for large companies for the next three years. The rushed modifications to payment procedures during tax disputes and lengthy litigation processes resulted in unclear wording that hinders compliance and compromises tax certainty.

While the government’s objective of strengthening public finances is understandable and legitimate, the reform advanced without a meaningful process of consultation with the private sector and other directly affected stakeholders. As a result, there was no opportunity to identify technical concerns, assess implementation challenges, and refine key provisions before adoption.

International experience demonstrates three features of successful tax reform: meaningful consultation with affected stakeholders, transparency throughout the legislative process, and legislation that is drafted with clarity and precision. These are not procedural formalities. They are the foundations of good tax governance and are often what distinguish reforms that endure from those that generate uncertainty and controversy.

Going forward, the Dominican Republic should bear in mind that the process by which reforms are developed is just as important as the substance of the proposals themselves.  Several international examples help illustrate the point.

The Demonstrated Value of Consultation and Transparency

In Europe, governments routinely publish draft tax legislation for public consultation before bills are introduced in parliament. The United Kingdom, for example, has recently updated its 2011 “Tax Consultation Framework” with a set of Tax Policy Making Principles released in 2025, which stress the importance of consultation with businesses, academics, and other stakeholders well before legislation is finalized. The Netherlands similarly relies on public internet consultations for significant legislative proposals, allowing technical experts and affected industries to identify practical implementation issues and suggest improvements before laws are enacted.

In South Africa, the Davis Committee was established by the Ministry of Finance to assess the tax policy framework and make recommendations on measures to support inclusive growth, job creation, and fiscal sustainability. It ran a highly collaborative and transparent consultative process that included hundreds of public submissions and an extensive series of meetings with business organizations and civil society.

Latin America has increasingly embraced similar approaches. Chile’s recent tax reform discussions have involved extensive engagement with business organizations, tax practitioners, and academic experts following the government’s initial proposal, resulting in revisions designed to improve technical consistency and political viability. Colombia has likewise made greater use of structured dialogue with the private sector and civil society during major tax reform initiatives, recognizing that broad consultation can strengthen both the quality and legitimacy of fiscal policy. While no consultation process is perfect, these experiences reflect a growing recognition that better policymaking begins with better engagement.

Greater Tax Certainty and Fewer Disputes

These practices exist for good reason. Consultation helps governments identify unintended consequences before legislation is enacted, reducing the need for subsequent amendments and lowering compliance costs for both taxpayers and tax administrations. Equally important, clear legislative drafting minimizes ambiguity, reduces disputes, and promotes consistent application of tax laws.

Perhaps the greatest benefit, however, is increased tax certainty. Investors making long-term decisions consider more than statutory tax rates. They also assess whether tax rules are predictable, transparent, and consistently administered. Businesses can adapt to higher taxes if the rules are clear and stable. They are far less willing to commit long-term capital when legislation contains uncertainty or when significant reforms are introduced without adequate technical scrutiny.

The Organisation for Economic Co-operation and Development (OECD) has repeatedly emphasized these principles as essential components of sound regulatory governance. Its Recommendation of the Council on Regulatory Policy and Governance calls on governments to conduct open and transparent public consultation throughout the regulatory process, while the OECD’s Government at a Glance report highlights early consultation, transparency, and clear communication in its ranking of country performance on these metrics. These recommendations are not limited to tax policy, but they are particularly relevant in an area where legal certainty is essential for investment, compliance, and economic growth.

Trust and Confidence Are Keys to Growth

Good tax policy is about more than raising revenue. It’s also about building trust in the institutions responsible for designing and administering the tax system. Reforms developed through transparent consultation and expressed in clear, carefully drafted legislation are more likely to command public confidence, encourage voluntary compliance, and support long-term investment.

As the Dominican Republic considers future tax reforms, aligning the legislative process with internationally recognized best practices on consultation, transparency, and legislative clarity would strengthen tax certainty, enhance the country’s investment climate, and reinforce the credibility of its fiscal framework. In tax reform, as in so many areas of public policy, process is not separate from substance—it is an essential part of getting the policy right.

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