The impact of COVID-19 on formal firms in the Dominican Republic: evidence from monthly tax returns

In this note, we measure the impact of the COVID-19 crisis and the resulting lockdown on formal firms in the Dominican Republic, using monthly value-added tax (VAT) records from January 2018 to March 2021. Overall, firms’ revenue fell by 8.5 percent, or 393 billion Dominican pesos (USD 6.9 billion), in real terms in the 12 months after March 2020 compared to the 12 previous months. The crisis had very different effects on sectors, with the primary, manufacturing and essential retail sectors experiencing a smaller shock than non-essential retail and the hospitality sectors. Whilst most sectors report sales levels in March 2021 similar to pre-crisis levels, the hospitality sector has experienced very little recovery since the initial phase of the crisis, with sales still 50 percent below pre-crisis levels.