The Dominican Republic is a country that offers various incentives and benefits to foreign investors.
Companies can benefit from different foreign investment laws established in various Dominican legislation.
How to invest in the Dominican Republic? What to invest in the Dominican Republic? If you are thinking about investing in this country, this article will inform you about the main tax incentives available to attract foreign investment in the Dominican Republic.
General Legislation on Tax Incentives:
- Law 16-95 – Foreign Investment.
- Law 890 – Free Zones.
- Law 158-01 – Tourism Incentives.
- Law 57-07 – Incentives for the Development of Renewable Energy Sources.
- Law 28-01 – Promotion of Border Development.
- Law 108-10 – Promotion of Cinematographic Activity.
- Law 392-07 – Competitiveness and Industrial Innovation.
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Incentives and Tax Benefits for Foreign Investment:
Law 16-95 on Foreign Investment:
Beneficiaries: Foreign investors.
Benefits:
- National treatment for foreign investors.
- Repatriation of 100% of profits.
- Residence permit program for investment.
- Free access to international currency.
- Easy and quick procedure for investment registration.
Law 890 – Free Zone Incentives:
Beneficiaries: Special customs control regime.
Benefits: Exemption of up to 100% from the following taxes:
- Income Tax.
- Payment of construction tax, loan contracts, and real estate transfer registration.
- Municipal taxes.
- All import taxes, tariffs, customs duties, and other levies.
- All export or re-export taxes, except those established in items f and g of Article 17 of the Law.
- All asset or patrimony patent taxes and ITBIS.
- 100% exemption for transportation equipment.
Law 158-01 – Tourism Incentives:
Beneficiaries: Individuals or legal entities residing in the country that promote, undertake, or invest capital in tourism activities mentioned in this Law.
Benefits: Exemption of up to 100% from the following taxes:
- Income Tax.
- National and municipal taxes levied for using and issuing construction services.
- Import taxes and other fees, duties, surcharges, and ITBIS.
- The law establishes that national or international financing and interest on such financing will not be subject to taxes or withholdings.
Deductions:
- Up to 20% of annual profits when investing this amount in a tourism project covered by this law.
Law 57-07 – Incentives for the Development of Renewable Energy Sources:
Beneficiaries: Companies and individuals developing projects dedicated to producing energy or biofuels from renewable sources.
Benefits:
- 100% exemption from import taxes, ITBIS, and all final sales taxes on imported equipment, machinery, and transformation equipment.
- 5% reduction on interest payments for external financing according to Article 306 of the Tax Code.
- Incentives for self-producers providing up to 40% of the investment cost in equipment as a tax credit against Income Tax.
- Incentives for community projects up to 500 kW can access funding of up to 75% of the total cost of the project and its installation.
Law 28-01 – Promotion of Border Development:
Beneficiaries: Companies dedicated to industry, established or to be established in the provinces of Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez, and Bahoruco.
Benefits:
- 100% exemption from internal taxes and net taxable income from Income Tax.
- 50% exemption on freedom of transit and use of port facilities.
- Exemption from import duties and related taxes.
- Exemption from the exchange commission for importing capital goods, machinery, and equipment.
Note: On January 29, 2021, the Senate of the Republic approved the extension of the exemptions provided by this law.
Law 108-10 – Promotion of Cinematographic Activity:
Beneficiaries: Individuals or legal entities managing, promoting, developing, or supporting cinematographic or audiovisual productions and meeting the requirements established in Article 33 of the Law.
Benefits:
- Exemption from Income Tax for 10 years for technical producers.
- Exemption from ITBIS for goods, services, and/or leases directly related to pre-production, production, and post-production of cinematographic works.
- 15-year exemption of 50% of Income Tax on income received in cinemas in Santiago and the National District. Other territories will have a 100% exemption.
- 100% exemption from Income Tax for the construction of filming and recording studios.
- 25% tax credit on expenses incurred in the Dominican Republic.
Law 392-07 – Competitiveness and Industrial Innovation:
Beneficiaries: Manufacturing industries certified by the Center for Competitiveness and Industrial Innovation.
Benefits:
- Exemption from ITBIS applicable at customs for importing raw materials, industrial machinery, and capital goods detailed in Article 24 of Law No. 557-05 on Tax Reform.
- Refund of ITBIS, Telecommunications Selective Consumption Tax, Fuel Selective Consumption Tax, and the check issuance tax for national or foreign individuals or legal entities classified by PROINDUSTRIA who export to third markets.
- Exemption from withholding Income Tax for foreign individuals or legal entities providing professional services related to product development, material, and production processes.
If you are interested in investing in Santo Domingo or any other location in the Dominican Republic, you are now likely clearer about the tax incentives and benefits for investing in the Dominican Republic.
