Why the informal reduction or exemption of a municipal fee or charge in the Dominican Republic can cost more than the project it was meant to justify

In Dominican municipal matters, what is not in the ordinance cannot be invented at the window. And what was in the ordinance but was not collected may be embezzlement. The line between incentive policy, administrative courtesy, and criminal offense is thinner than practice suggests, and it is almost always crossed by the subordinate, not the one who gave the order.

I. THE PROBLEM

There is a pattern that repeats in Dominican municipalities: collection is treated as if it were negotiable. A call from the mayor, an adjustment in planning, an informal agreement with the treasury. No one signs anything that looks serious at the time. Everything changes the day the audit arrives.

The issue is not whether the reduction was made in good faith: the issue is who is liable when someone puts it in writing in a report.

II. WHO IS IN CHARGE HERE?

"The Municipal Council is the exclusively normative, regulatory, and oversight body of the Municipality." — Constitution, art. 201.1

Law 176-07 develops this: the Council "in no way exercises administrative or executive functions" (art. 52). The municipal executive enforces ordinances and regulations; it does not replace or modify them (art. 60). The mayor administers; he does not legislate. The planning office applies rates; it does not invent them.

The Constitutional Court in TC/0085/22 reaffirmed that separation forcefully by annulling subsection s) of art. 52, which gave the Council an executive power. The logic cuts both ways: if the Council cannot encroach on the executive, the mayor cannot encroach on the normative by creating, modifying, or dispensing with fees without an ordinance. The foundational precedent remains TC/0034/12: fees can only be created by authorization of the Municipal Council.

III. THE KEY RULES (Law 176-07)

IV. CASES THAT ARE NOT HYPOTHETICAL

The premium tower settled as common construction

A tower is marketed with lobby, parking, rooftop, gym, social area, and retail spaces. But when calculating the license, several areas are treated as if they do not count in the taxable base. The project is sold expensively precisely using those spaces. Years later, when plans, condominium regime, and receipts are cross-checked, the argument falls apart: what increased private value could not disappear from the municipal calculation without a clear legal basis.

Pipelines/networks in exchange for a donation and municipal investment agreement

A supply company uses municipal land, subsoil, or public streets for ducts, pipelines, or networks that serve a large part of the municipality. Instead of settling the fee provided by law (art. 284: 3% of gross annual revenues billed in the municipality), an investment agreement is signed with the mayor's office. The problem: an investment agreement may have political or community value, but does not by itself substitute for the statutory fee nor authorize the failure to settle it.

The LED billboard that "helps the municipality"

A company installs screens or billboards on major avenues and offers free space for patron saint festivals, cleaning campaigns, or institutional messages. Meanwhile, it sells private advertising every day. The municipality receives symbolic support, but leaves collection for outdoor advertising, space use, or renewal weak. The screen shines every night; the file remains dark. A collaboration cannot become a free permit to exploit the city.

The supplier's cross-claim

A company that sold equipment to the municipality refuses to pay fees for its warehouses: "You owe me more than I owe you." Art. 309 does not allow that excuse. The municipal debt is paid, with surcharges. The credit in its favor is claimed separately. They are two different files, and that is not debatable.

V. THE CONSEQUENCES

Invalidity of the act. An administrative act is only valid when it emanates from the competent body and is issued in accordance with the procedure provided by the legal system (Law 107-13, art. 9). A reduction, exemption, or payment facility without normative authorization constitutes a legally vulnerable act, subject to nullity and challenge.

Patrimonial liability. If due to an irregular reduction, exemption, facility, or omission the municipality failed to collect legally enforceable income, the amount not collected without legal basis may constitute harm to municipal assets, giving rise to reimbursement or compensation for the damage caused.

Disciplinary liability. Law 41-08 on Public Function: sanctions up to dismissal and disqualification.

Criminal liability. The direct basis is in art. 310 of Law 176-07: abstention or collusion committed by officials and employees responsible for collecting any income due to the municipality constitutes a crime equivalent to embezzlement, in addition to ancillary penalties.

VI. PRACTICAL RECOMMENDATIONS

• Before applying any discount or facility, demand the ordinance that authorizes it. If it does not exist, refuse and document it in writing.
• To incentivize investment: an incentive ordinance, general, objective, prior, approved by the Council. Never verbal instruction.
• No agreement may be used to erase debt. If that is its real effect, it is not an agreement: it is disguised evasion.
• The taxpayer with a cross-claim pursues it through its own channel. The tax debt is not suspended.
• In the face of an irregular instruction from a superior, object in writing. Silence is not an excuse.

If the taxpayer owes, they pay. If the municipality owes them, they claim. If they need a payment plan, the proper process must be followed. And if an official decided to "fix" or bypass collection on their own, know that Article 310 does not distinguish between who signed the instruction and who executed it. Both failed to collect municipal income. That has a name, and it is not "investment facilitator."

© Analysis prepared by Carlos Romero Polanco, Esq. | For more information, consult Law 176-07, Law 107-13, and case law of the Dominican Constitutional Court.