Doing Business in DR

Investment in the Dominican Republic

The Dominican Republic is a country that offers multiple opportunities for business and investment. The strategic position of the Dominican Republic allows an easy access to the markets of the Unites States, Latin America and the Caribbean. Its growing economy is supported by an ongoing process of modernization and reinforced by aggressive efforts to promote trade liberalization and economic integration. The Dominican Republic enjoys an environment of political stability and democratic consolidation. For all these reasons, the country conform the ideal option for companies and persons of any nationality wishing to expand their investments. Free zones and tourism are currently two of the most promising sectors for foreign investors, but traditional areas like agriculture and mining are also developing. Other sectors like construction electricity and telecommunications are economically expanding, while financial insurance services are also becoming attractive as the local market diversifies.

 

Reasons to Invest in the Dominican Republic:

  • Strategic Geographical advantages and nearshore location.
  • Stable Economic and Political environment.
  • Foreign Direct Investment (FDI) friendly environment.
  • Sound legal framework for foreign investment.
  • Preferential market access to the United States, Europe, Central America, and the Caribbean.
  • Abundance of competitive, experienced, qualified labor force, and customized training.
  • Predominant bilingual work force. 
  • Modern transportation infrastructure.    
  • Advanced and strongest telecommunication sector in Latin America.  
  • Supporting industries & services competitive costs for doing business.
  • Quality life standards.
  • Highly developed free trade zone system.
  • Efficient shipping networks.
  • Up to 90% LTV financing from USA and Dominican banks.
  • Land acquisitions by foreign without restrictions.
 

Foreign Investment Sector

 

Investment Incentives

  • Equal treatment for local and foreign investors.
  • Minimum investment restrictions
  • Free access to foreign exchange through local banks
  • 100 % repatriation of capital and profits.
  • Technology transfer recognized as investment.
  • Investment protection through multilateral Investment Guarantee Agency (MIGA) and the Overseas Private Investment Corporation (OPIC) Founding member of the World Trade Organization (WTO)
 

Global Foreign Investment

 

Year

Stock of direct foreign investment - at home

Percent Change

Date of Information

2008

12,750,000,000

 

2007 est.

2009

15,590,000,000

22.27 %

31 December 2008 est.

2010

17,950,000,000

15.14 %

31 December 2009 est.

2011

19,450,000,000

8.36 %

31 December 2010 est

 

Foreign Investment DP World Caucedo

Pintura rupestre cueva IbericaDP World Caucedo is a World-class marine terminal and free zone, located in Punta Caucedo, Dominican Republic, 25 kilometers from the city of Santo Domingo, commercial and political capital of the country.

Caucedo is part of the DP World portfolio of marine terminals. DP World is an international leader in operations, new terminal development, logistics, and other related services. DP World’s experience, knowledge, and dynamism have been brought to Caucedo, a testament to the successful model of high efficiency and productivity.

This private port commenced operations in December of 2003, with state of the art technology. Additionally, the port security systems are the most advanced in the industry, along with a unique combination of acquired security certifications.

Our highly trained staff and the continued support and experience provided by DP World, place us in an advantageous position to provide world class services not only for the local import and export markets, but also for transshipment services requested by the world’s most important shipping lines.

In 2009 Caucedo increased its volume by 23%, and according to the United Nations Economic Commission for Latin America it was the fastest growing port in the region. In 2010, the terminal handled more than 1,300 cargo ships and exceeded 0,000 TEUs (twenty foot equivalent container units)

DP world is a joint venture container terminal facility in which DP world owns 35 %.

In 2007, DP world Caucedo was certified to ISO/PAS 28000 security standards and is an accredited member of the Customs-Trade Partnership against Terrorism (C-TPAT) initiative by US Customs and Border Patrol.

DP world’s marine terminal at Port Caucedo, Dominican Republic, has become the 13th in its portfolio to be involved in the United States anti-terrorism Container Security Initiative (CSI) smoothing the way for faster delivery of goods to the US for its customers.

 

Investors Residence Program

  • Objective: Provide benefits to foreign investors by granting them special residency status.
  • Beneficiaries: Foreign investors, family member, and project technicians.
  • Main requirements: Foreign investment registered at CEI-RD (centro de exportacion e inversion). Minimum investment of US$200,000.00
 

Real Estate Investment

The process of buying real estate in the Dominican Republic is fairly simple and somewhat similar to the process in the United States.
A Contract of Sale is signed by both the buyer and the seller, before a Dominican notary (notaries in the DR are required to have a law degree) or may be certified through the Dominican Consulate in the US. The buyer normally posts a deposit for the property, usually not less than 10% of the total purchase. The Contract of Sale is submitted to the Dominican Internal Revenue Office for assessment and payment of the transfer taxes. Then, with financing in place, and all the conditions of the Contract of Sale met, the Contract of Sale and the Certificate of Title are submitted to the Title Registry Office to be recorded. A new Certificate of Title issued in the name of the buyer is supplied by the Title Registry Office.
 
As is the case in many markets, there is a risk of fraudulent real estate transactions. With the immense interest in Dominican real estate, there are cases of one property being sold to multiple buyers, property being sold by individuals who do not in fact hold title, and land that cannot be developed being sold to prospective developers. Caution is advised.
 
 
REAL ESTATE TAXES, FEES, AND FINANCING
 

Real Estate Transaction Fees

In the Dominican Republic a transfer tax of 4.8% of the appraised value of property is due at closing. Title insurance is available through Stewart Title at 1.0 to 1.5% of purchase price as one-time charge.

 

Property Tax

The property tax rate in the Dominican Republic is very attractive. Property valued under RD$ 5,000,000 pesos (approximately $165,000 US) are not subject to property tax. Property valued in excess of $165,000 (US) are taxed at a rate of one percent of the value above $165,000: A property valued at $265,000 will be assessed a tax of one percent of $100,000--$1000 annually).

 

Capital Gains, Income Tax, and Entity Structuring

The Dominican capital gains and income tax rate is 25%. Holding real estate in a corporation offers the advantage of allowing related expenses to be deducted.
 
Property may be held as an individual, a Dominican SA (Dominican corporation), an off-shore company, or a US LLC. For all real estate held in a corporation, documentation must be submitted in Spanish to the Mercantile Registration in the Dominican Republic.
 

Real estate owned as an individual or a Dominican SA is subject to Dominican income tax. Capital gains tax is due whether owned as an individual or by any entity, Dominican, off-shore, or US.

 

Financing

Up to 90% LTV is available from both US and Dominican banks. The origination fees range from 0 - 1% with Dominican banks to 3.5% with some US lenders. US lenders generally require cross collateralization of US property equity. Some lenders will finance the transfer tax, and possibly furniture and appliances.