Supreme Court Ratifies That Airports Cannot Benefit from Tourism Incentives
On February 26th, the Third Chamber of the Supreme Court of Justice, acting as the Court of Cassation, issued ruling number SCJ-TS-25-0318, rejecting the appeal for cassation filed by a major business group in the country against a ruling issued by the Superior Administrative Court (TSA).
With this ruling, the Supreme Court of Justice (SCJ) sets a fundamental precedent regarding the application of Law 158-01 on Tourism Promotion and Development, dated October 9, 2001, and its amendments.
Regarding the applicability of the incentives provided, the ruling states that “the final classification authorization issued illegally, by exceeding the sectors that can specifically benefit from the tourism incentive regime, which does not include airport infrastructures, air transportation, or airport services.”
The decision is based on the provisions of Article 3 of the aforementioned Law 158-01, which declares the establishment of companies dedicated to the tourism activities listed in that article as of special interest to the Dominican State.
The legislator expressly excluded airport infrastructures from the incentives, which is legitimate. A tax incentive law is a privilege granted by the State that serves specific purposes: to promote activities that generate investment, employment, and foreign currency revenue. Subsequent amendments to Law 158-01 also excluded airport infrastructures.
When the project in question submitted its request to the Tourism Promotion Council (CONFOTUR) on June 26, 2020, there were three private international airports in the country: Punta Cana, La Romana, and Cibao. None of them benefited from the incentives under Law 158-01, not due to lack of interest, but because they understood the legal limits imposed.
This ruling establishes that not all activities linked to tourism automatically access the tax benefits of Law 158-01. By its nature, a tax incentive law is restrictive and must respond to what the State wishes to promote and a cost-benefit study for the country.
Another point addressed by the SCJ was that “it was an undisputed fact in the case that the environmental license No. 0385/2020, dated July 16, 2020, issued by the Ministry of Environment and Natural Resources, was not part of the documents presented for the issuance of the final classification of the project.”
While the ruling does not go into detail on this aspect, understanding that there were other legal reasons of greater weight, we cannot overlook that Article 17, Paragraph II of Law 158-01 stipulates that “no incentive may be granted if the investor does not have the proper environmental license granted by the Ministry of Environment and Natural Resources.”
The appellant who contested the approval resolution by CONFOTUR had stated before the TSA that: “Resolution No. 110-2020, dated July 16, 2020, from the Tourism Promotion Council, which contained the granting of the Final Classification, was issued without the environmental license No. 0385 being available, so there was no study or review of this by CONFOTUR, in violation of the provisions contained in Article 17, Paragraph II of Law 158-01.”
Additionally, the ruling captures another significant jurisprudential principle: “We could not confirm that it had been made known to the plurality of interested parties through any mass communication media, given its importance.”
This refers to the so-called “social license,” which is indispensable for large-scale projects. The Regulation for the environmental permit and license system requires “at least one public consultation in the project’s area of influence.” A “significant” project cannot benefit from the tax incentives of Law 158-01 and its prerogatives without this social legitimacy.
Finally, the SCJ ruling ratifies what was decided in ruling SCJ-TS-23-1451, dated December 15, 2023, where the Supreme Court, “in its role as the final authority in judicial control of legality, has definitively established the inadmissibility of the exhausted administrative process,” among other reasons, because, according to the appellate court, the President of the Republic acted “beyond his authority, as he directly determined which company would be the beneficiary of its construction and operation, when, according to the law, the Executive Branch’s role is limited to granting or not granting approval for the establishment of an airport at a specific location.”
Justice Has Been Served!
The SCJ ruling reaffirms what was decided in the SCJ-TS-23-1451 ruling, dated December 15, 2023, where the Supreme Court, “in its role as the final authority in judicial control of legality, has established the inadmissibility of the exhausted administrative process.”
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