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How can a Dominican company be created and how long does the incorporation process take? A Dominican company may be created with a minimum number of seven shareholders, but shareholders participating to fulfil the statutory minimum may have a symbolic participation of one share in the companys capital. The incorporation process -including the drafting and execution of the articles of incorporation and other incorporation documents, the registration of the company name, and the compliance with the publication and filing formalities- takes between 3 to 4 weeks. For urgent cases Pellerano & Herrera offers its clients the possibility of purchasing already existing companies. If you are interested in buying or purchasing a company in the Dominican Republic. To which capital rules and/or requirements does a Dominican company have to comply with? In the Dominican Republic, there are no capitalization rules for companies in general. No minimum capital is required and corporations may finance themselves on whatever debt-equity ratio they might desire. There are no statutory limits, and courts are not allowed to disregard the limited liability rule under any circumstances, nor subordinate credits of shareholders to those of third parties. How can a foreign company establish a branch in the Dominican Republic? In order to establish a branch in the Dominican territory a foreign company has to file a request to the Executive Power, which by decree authorizes the company to fix its domicile in the country. In which areas or services is it mandatory for a foreign person or company to create a Dominican company and/or establish a branch in the Dominican territory? In order to be able to carry out activities in highly regulated industries like banking or insurance, it is mandatory to either incorporate a Dominican company or establish a branch in the Dominican territory. Can foreign companies apply for government construction contracts? Under Law 322 of 1981 foreign companies may bid for government construction projects as long as they are, either affiliated with a Dominican company, or constitute a mixed capital company belonging to both Dominican and foreign investors, and provided that foreign participation in the government contract does not exceed 50%. However, a higher percentage may be accepted in certain cases. What is the highest penalty for the commission of crimes in the Dominican Republic? The highest penalty in the Dominican Republic, which may be applied for the commission of serious crimes, is 30 years of prison. What crimes may be tried by Dominican courts? Dominican courts have jurisdiction to try foreigners who violate criminal laws in the country, even when the victim is also a foreign person. On the contrary, violations committed by foreigners abroad do not fall under the jurisdiction of Dominican courts, even when the accused is a Dominican resident or when the victim is a Dominican citizen. Dominican courts may try crimes committed by Dominican citizens abroad when Dominican laws also punish the violation and the accused is in the country. How is the environment protected in the Dominican Republic? Law 64-00 of 18 August 2000 on Environment and Natural Resources provides comprehensive protection of the environment, which is placed as an essential duty of the State. Law 64-00 regulates soil, water and air contamination, dangerous products, domestic and municipal waste, dangerous products, human settlings, sonic contamination, as well as the use and preservation of natural resources. What is the government body charged of environment regulation? The administration of the environment, ecosystems and natural resources has been placed under the responsibility of the Ministry of Environment and Natural Resources (SEMARN). Environmental aspects of all economic and human activities will be controlled by SEMARN, which will act by way of authorization, supervision, recommendation or consultation, to ensure the comprehensive protection of natural resources in the country. What are the requirements that industries have to comply with under Dominican environmental laws? Any industrial activities undertaken in the country must be provided with an environmental license, which certifies that the respective environmental impact evaluation has been made, and that the activity, work or project may be carried out under the conditions set in the environment management program established therein. What are the sanctions for environmental crimes? Environmental crimes may be punished with fines of up to 10,000 minimum salaries and prison of up to three years. How can a foreign person obtain residence Visa in Dominican Republic? Foreigners may acquire the right to reside in the country through (i) obtaining a residence visa at the Dominican Consulates abroad or at the Ministry of Foreign Relations in the country, which takes between 10 to 12 weeks, and thereafter (ii) obtaining a provisional and then permanent residence card at the General Immigration Office, which takes approximately two months.
A foreign person may become a Dominican citizen after a continuous residence in the country of at least two years. This residence requirement is reduced to six months (i) if the foreigner has fixed legal domicile in the country, (ii) if the foreigner owns a business or real state in the country, or (iii) if the foreigner has married a Dominican citizen. The naturalization request is made to the to the President of the Republic via the Ministry of Police and Inner Affairs and the procedure may take from one to two years. How can a foreign person get married in the Dominican Republic? Foreigners intending to marry in the Dominican Republic must present the following documents: (i) original passport and a copy, (ii) letter certifying their single status issued by the appropriate authority in the country of origin and legalized by the Dominican Consulate and (iii) tourist card, residence card or personal identity card, as applicable. Is it possible for a couple which has married abroad to obtain a divorce in the Dominican Republic? Foreign or Dominican couples residing abroad who decide to divorce by mutual consent may divorce in the Dominican Republic through a special procedure before the Court of First Instance (quick divorce). In order to get a fast divorce the spouses need to sign a divorce agreement before a Public Notary or similar officer in their country of residence, and at least one of the spouses must be present at the hearing in the country. The process at the court, plus the registration, pronouncement and publication of the divorce, may take from one to four weeks. Can a foreign person adopt a child in the Dominican Republic? Foreign persons may adopt minors in Dominican Republic, under the same conditions as Dominican nationals. Adoption is regulated by Law 14-94 on Minors Protection. Adoption requests must be filed with the Regulatory Body of the System for Minors Protection, who makes sure that all legal requirements, including a trial period during which the minor lives together with the adoptive parent(s), are complied with. The Court of Minors may declare the adoption after recommendation of the Regulatory Body and the Fiscal of Minors. Can foreigners inherit real and/or personal property in the Dominican Republic? Foreigners may inherit any type of property from Dominican citizens or foreigners residing in the country. However, the property inherited is subject to an income tax rate considerably higher than that applied to Dominican nationals. What are the requirements to carry out insurance activities in the Dominican Republic? Law 126 of 1971 on Private Insurance regulates all insurance and reinsurance activities in the Dominican Republic, setting forth the requirements to operate as a national or foreigner insurer or reinsurer in the Dominican territory and placing all insurance companies under the supervision of the Superintendence of Insurance, a division of the Ministry of Finance. Can foreign persons and/or companies carry out insurance activities in the Dominican Republic? Under Law 126 of 1971, foreign companies may operate as foreign insurers or reinsurers in the Dominican market if, among other requirements, they have been organized and operating for more than five years in their country of origin. What are the requirements to establish a banking institution in the Dominican Republic? Financial institutions are under the supervision of the Superintendence of Banks and are subject to the regulatory powers of the Monetary Board of the Central Bank. The requirements to establish a financial institution in the Dominican Republic are set forth in Law 708 of 1965 for commercial banks, in Law 292 of 1966 for development banks, in Law 171 of 1971 for mortgage banks, in Law 5897 of 1962 for savings and loans associations and in the relevant resolutions of the Monetary Board for multibanks. Can a foreign bank establish a subsidiary or a branch in the Dominican Republic? Foreign banks may operate in the Dominican Republic by either incorporating a Dominican subsidiary or establishing a branch, but there are certain restrictions as to the capital composition. The bill for a Monetary and Financial Code currently being discussed by Congress seeks, among other things, to liberalize the banking sector and thus eliminates all the restrictions in this regard. How significant is the Dominican stock market? The Dominican Republic Stock Market (BVRD) started to operate as a self-regulated institution in 1991. Despite the limitations resulting from the lack of adequate legislation, transactions at the BVRD had been growing, if not significantly, at lest steadily, during the last decade. In the year 2000 volumes negotiated at the BVRD reached RD$4,041.7 million. With the passing of Law 19-00 of 8 May 2000 on Stock Markets, which fills in the legislative gaps that were limiting the expansion of financial markets in the country, the Dominican stock market can be expected to acquire significant value, for both local and foreign companies, as soon as this law has been put into effect. How is the Dominican stock market regulated? Law 19-00 of 8 May 2000, yet to be fully implemented, provides a modern and comprehensive legal and institutional framework to the public offer of securities in the Dominican Republic. It regulates both local and foreign issues of securities, as well as all actors in the market, such as stock exchanges, brokers, compensation chambers, central deposits, risk qualifiers, mutual funds and securization companies. The regulatory body of the market will be the Securities Supervisory Office ("Superintendencia de Valores"). Are there any restrictions and/or requirements to the private offer of securities in the Dominican market? In the Dominican Republic, there is no legal restriction to the private sale of stock or other type of securities. Law 19-00 applies only to public offers, defined as those addressed to the public in general, or to specific sectors thereof, by any of the means of massive communication. Are there any restrictions to foreign investment in the Dominican Republic? Since the adoption of Law 16-95 on Foreign Investment, which creates an attractive legal framework to foreign investors in order to promote the flow of capitals to the country, there are no restrictions to foreign investment in the Dominican Republic. This law sets forth the principle of equal treatment between national and foreign investments, abolishing most of the existing prohibitions and restrictions. Can foreign investors freely repatriate their profits and investment abroad? Under Law 16-95 on Foreign Investment, upon compliance with a simple registration formality at the Dominican Central Bank, foreign investors may repatriate abroad at any time in freely convertible currency all their capital invested and all of the profits obtained there from. Foreign investors may purchase freely from any commercial bank in the country the foreign currency needed to do so without any restrictions and without the need of prior approval from the Dominican Central Bank.
Free zones are regulated by Law 8-90 of January 15, 1990, which seeks to promote the establishment of free zones and the growth of existing ones. The free zone system of the Dominican Republic is one of the most advanced worldwide. The country has been developing its free zone network since 1969, when less than a dozen industrial zones existed throughout the world. It ranks currently as fourth in terms of quantity of free zones, having more than 50 free zones with close to 500 companies. What are the main activities of free zone companies in the Dominican Republic? Textile activities predominate, due to the preferential market access that many of Dominican textile products enjoy to enter the United States market. Other products manufactured in free zones are tobacco, shoes, electrical components, hospital supplies, furs and data processing. What are the incentives offered to companies established in Dominican free zones? Law 8-90 exempts free zone companies from the payment of import duties, income tax and most other tax obligations. Furthermore, the Dominican Republic enjoys preferential access rights, which allow Dominican exports to enter the markets of United States and Europe without having to pay custom duties. What is the government body charged of granting free zone permits in the Dominican Republic? The National Free Zone Council (Consejo Nacional de Zonas Francas de Exportación - CNZF) is the entity charged of regulating and supervising the free zone sector in the Dominican Republic. Does intellectual property protection in the Dominican Republic conform to the TRIPS agreement? The comprehensive reform of intellectual property protection in the Dominican Republic, which took place in the year 2000, has been a great achievement towards the modernization of the business legal framework in the country, and a significant step towards the fulfilment of our WTO obligations. The new laws on intellectual property (Law 20-00 of 8 May 200 on Industrial Property and Law 65-00 of 21 August 2000) conform to, and have been inspired on, the WTO agreement on Trade Related Aspects of Intellectual Property (TRIPS), as well as other international treaties and organizations to which the Dominican Republic belongs. What discoveries may be patented in the Dominican Republic? Patents may be obtained to protect inventions, utility models and industrial designs. Inventions are defined as any idea or creation of the human intellect, whether related to products or processes, capable of being applied to industry. Not patentable subject matter include natural substances, scientific theories and mathematic methods, solely aesthetic creations, presentations of information, computer programs, therapeutic, chirurgical or diagnostic methods for human or animal treatment, living matter and new uses of patented products or processes. How and for how long may patents be obtained in the Dominican Republic? Patent applications may be filed with the National Office of Industrial Property, and the whole procedure takes about two years. Patents are granted for twenty years, and during that period, the patent holder is entitled to exclusively exploit the invention protected thereby and to object to any acts of third parties that may affect his/her rights. May discoveries patented abroad benefit from a Dominican patent? Inventions patented abroad may also benefit from a Dominican patent. Furthermore, a foreign inventor may have priority rights for filing for a patent in the country, when he has filed a patent application in a member country of international organizations to which the Dominican Republic belongs, or which grants reciprocity to Dominican inventors, but only for a period of one year after having filed for a patent abroad. What type of trademarks may be registered in the Dominican Republic? Law 20-00 protects all types of trademarks, including collective marks and certification marks, providing a wide definition thereof, and excluding generic, immoral or deceiving names, as well as those similar to already registered or in-use trademarks. How and for how long may a trademark be registered in the Dominican Republic? Registration applications may be filed with the National Office of Industrial Property. Registration is granted for a period of twenty years, renewable for consecutive ten-year periods. Renovation applications must provide proof of use of the trademark. What rights does trademark registration grant? Registration grants the exclusive right of use over the trademark and entitles its holder to object to any use of the registered trademark made in any manner whatsoever by third parties, apart from usual commercial indications or legitimately marked products that the holder, directly or indirectly, has put into commerce, whether in the country or abroad, provided the product has not suffered any modification. How can trade names be protected in the Dominican Republic? Law 20-00 protects distinctive signs such as trade names, labels, emblems, slogans, appellations of origin, etc. The exclusive right to use a trade name does not arise from registration, but from its first commercial use. Protection is granted in the absence of registration and ends with the abandonment of the name, which takes place when the name has stopped being used by its holder for more than five years. However, for commercial slogans, the right of exclusive use arises from registration. Registration with the National Office of Industrial Property is not mandatory, and provides for a presumption that its holder has legitimately adopted and used the trade name.
Law 65-00 protects any original intellectual creation, whether literary, artistic or scientific, that may be fixed, transmitted or copied by any existing or future printing, reproduction or divulgation methods. It also protects independent creations deriving from original works, such as those resulting from adapting, translating or in any other manner transforming the original work. It also protects, and regulates the exercise of, related rights, which are granted to performing artists for their performances, phonogram producers for their recordings, and broadcasters their radio and television programs. Are foreign works also protected by copyrights in the Dominican Republic? Law 65-00 protects works from authors having Dominican nationality or residing in the country, or who are nationals or residents of countries belonging to the international treaties ratified by the Dominican Republic, as well as works whose first publication has been made in the country (or in a member country of ratified international treaties) or that have been published here (or in a member country of ratified international treaties) thirty days after their first publication. In the absence of international treaties, protection will still be granted to foreign works, but subject to reciprocity. Where may copyrights be registered in the Dominican Republic and what are the advantages of registration? Copyrights may be registered with the National Office of Copyrights (ONDA). Although the registration formalities provided in Law 65-00 are not mandatory and do not affect the existence or exercise of copyrights, which arise with the creation, it is always advisable to register and thus reinforce by the publicity and guaranties of authenticity and security that ONDA provides the protection of copyrights. What are the sanctions to the violations of intellectual property rights? Violations of industrial property rights may be subject to fines and prison of up to two years. Violations of copyrights may be subject to criminal sanctions including fines and prison of up to three years. Administrative measures may be applied by ONDA and include warnings, fines, temporary or permanent closure of establishments, seizure of illegal copies or machinery used for their production, destruction of illegal samples and others.
The basic rate of custom duties ranges between 0.3%, 8%, 14% and 20%. Law 146-00 of 27 December 2000 reduced the top 35% existing before. This law provides also for the application of Article VII of the GATT as method of valuation of merchandises from July 2001 on, date on which the Dominican Republic is committed to start applying these rules. Custom duties are calculated and paid in Dominican pesos. The conversion into pesos of the value of the goods is made according to the official exchange rate applicable at the time of payment. In addition to custom duties, the importer has to pay (i) the selective consumption tax charged on certain products, which ranges from 10% to 80%, calculated on the CIF price of the good plus custom duties, and (ii) the tax on the transfer of industrialized goods and services (ITBIS), which accounts for 12% of the CIF price of the product plus duties. Are there any exemptions to the payment of custom duties in the Dominican Republic? Apart from free zones, there is very little exoneration to the payment of import taxes. These are limited to some basic products, agricultural products like insecticides and herbicides, articles to be used by international organizations or the diplomatic corps, articles to be used for religious worship and samples for exhibition at international fairs. Furthermore, Law 146-00 of 27 December 2000 maintained and reinforced duty exemptions for strategic economic sectors. Do Dominican products enjoy any preferential tax treatment to enter foreign markets? Many Dominican products can enter freely the US market without having to pay any type of custom duties pursuant to the Caribbean Basin Initiative (CBI). Under the enlargement of the CBI that in the year 2000 introduced the textile parity, a wide range of textile products (until then excluded from the CBI, but benefiting from a partial duty reduction under the US Harmonized Tariff Schedule) may also enter the US free of custom duties, provided they have been made, with some exceptions, out of US materials. Furthermore, under the Lome/Cotonou Convention, ACP countries like the Dominican Republic may export most of their products free of duties to the countries of the European Union. To which regional trade groups does the Dominican Republic belong? The Dominican Republic is a member of the Association of Caribbean States (ACS) and has signed free trade agreements with the Caribbean Community (CARICOM) and Central America, which have already been ratified by Congress and are scheduled to be put into effect very soon. The country is also an active participant in the negotiations undertaken by the American nations towards the formation of a Free Trade Are of the Americas (FTTA).
The current monthly minimum wage for private sector employees is the following: - RD$3,415 for companies with assets over RD$500,000; What is the amount of fringe benefits to which employees are entitled under Dominican labor laws? Legally mandated fringe benefits (i.e. Christmas bonus, participation in profits and paid vacations) amount to approximately 35% of the basic wages of the employee, but most Dominican firms estimate that the amount of fringe benefits usually paid by them amounts to 45% of the salary. Are there any restrictions to the employment of foreign workers in the Dominican Republic? Under Dominican labor laws, at least 80% of any company's workers should be Dominican citizens. Supervising officers should preferably be Dominicans, but there are no restrictions at manager levels. How can a foreign person obtain a work permit in the Dominican Republic? In order to be able to work in the Dominican Republic foreigners need only to obtain a residence card based on their work contract through the usual procedures before the Ministry of Foreign Affairs and the Immigration Office.
Pursuant to Law 50-87, the Chamber of Commerce and Industry of the National District has an Arbitration and Conciliation Council which can act as arbitrator for the solution of disputes arising between individuals and/or companies. The decisions of this council are definite and enforceable, not being subject to any appeal before judicial courts, which makes this a very attractive and effective option for the solution of conflicts in the Dominican Republic. Can foreign judgments and/or international arbitration awards be enforced in the Dominican Republic? Foreign judgments and/or international arbitration awards are not enforceable in the country until a Dominican court declares through an "exequatur" that such decision is valid and enforceable in the Dominican territory. The request to obtain this declaration or "exequatur" must be made to the Court of First Instance and the process usually becomes litigation similar to ordinary claims filed at the court.
Under Law 146 of 1971 any national or foreign person or company may register the discovery of mineral deposits and request to the General Mining Office of the Ministry of Industry and Trade exploration or exploitation concessions. Exploitation concessions are granted for a period of 75 years. How are mining activities taxed? Mining activities are subject to the corporate income tax rate (25%) applicable to companies in general. Furthermore, the purchase of a mining business patent issued by the Ministry of Industry and Trade is required, and exports are charged with a 5% tax calculated on the FOB price of the minerals exported. This last payment may however be deducted from the income tax payable in the same fiscal year in which the export is made.
The acquisition of real estate property rights by foreigners is not subject to any special conditions or requirements, thus falling under the same legal regime applicable to Dominican nationals. How much tax has to be paid for the transfer of real property in the Dominican Republic? The transfer of real estate property is subject to the payment of the following taxes and duties: (i) 4% of the purchase price;
The corporate income tax rate is currently 25% on the taxable income of each fiscal year. This tax must be withheld at a corporate level from the dividends paid by the company. As to individuals, the tax rate increases in proportion to the income, the highest rate coinciding with the corporate rate of 25%. The employer must withhold this tax from the salary paid to the employee. Payments made abroad are also subject to a 25% income tax, to be withheld by the Dominican party. Interests owed to foreign financial institutions are taxed with a lower rate of 5%. A 10% tax rate applies to income obtained in the course of business activities, such as fees, commissions, etc., which has to be withheld by the person or company making the payment. Are foreign persons and/or companies taxed under Dominican fiscal laws? Foreigners are only required to pay tax on income of Dominican origin and, after the third year of residence in the country, also on income of foreign source. Branches of foreign companies are given the same tax treatment as Dominican companies. What is the VAT rate in the Dominican Republic and how is this tax applied? The Dominican equivalent of the VAT is the ITBIS, which applies to (i) the transfer of industrialized goods, calculated on the net transfer price plus accessory services, (ii) the import of industrialized goods, calculated on the CIF value of the goods plus custom duties, and (iii) the provision and lease of services, calculated on the value of service excluding mandatory tips. The ITBIS rate is currently 12%. Advertising services are taxed with a lower rate of 6%. Is there a special tax for luxury products in the Dominican Republic? The Selective Consumption Tax applies to the transfer of certain goods
manufactured in the country, to the import of certain products and to
the provision of certain services. Examples of these goods and services
are alcohol and tobacco derivatives, vehicles, jewelry, certain home
appliances, hotel rooms, etc. The tax rate ranges from 5% to 80% and
is payable monthly. Law 146-00 established a selective tax to vehicles,
which ranges form
Law 153-98 of 27 May 1998 on Telecommunications modernized the measures for the regulation of the sector, adapting them to the requirements of the World Trade Organization (WTO) and the International Telecommunications Union (ITU). It regulates the installation, maintenance and operation of telecommunication networks, as well as the provision of services and equipment related to telecommunications. The regulatory body of the sector is the Dominican Institute of Telecommunications (INDOTEL). How are concessions and/or licenses to provide telecommunication services granted? Law 153-98 sets the principle of free provision of telecommunications services, and thus any company that complies with the established requirements (which include the need to be organized as a Dominican limited liability company) is entitled to request concessions for the provision of telecommunications services, which are granted by INDOTEL for renewable periods of five or twenty years. Concession requests must be handled pursuant to the principles of equal treatment and non-discrimination. Licenses for the use of the radio electrical spectrum are granted by public bidding. As to broadcasting services, the applicants must be Dominican nationals. Are concession holders entitled to interconnection? Since the provision of telecommunication services is of public and social interest, concession holders are entitled to the following in order to install their networks and/or equipment: (i) to connect their equipment to public telecommunication networks, (ii) to use public property, (iii) to create easements on private property, and (iv) to interconnect their networks with other concession holders. What is the degree of State intervention in the telecommunications sector? Law 153-98 sets forth a number of rules in order to promote the free operation of the telecommunications market in conditions of effective competition. It establishes the principle of minimum regulation and maximum operation of the market in all aspects, including pricing and negotiations between providers. INDOTEL may only intervene when there are not enough conditions in the market to ensure an effective competition. What are the technical standards of telecommunications in the Dominican Republic? Technical standards conform to the international practices applied in the zone to which the country belongs, which is the World Zone Number 1 (formed by United States, Canada and a group of Caribbean islands). What are the main laws that regulate tourist activities in the Dominican Republic? Tourist activities fall under the jurisdiction of the Ministry of Tourism, which has adopted the following rules to regulate the main tourist related businesses: Rule 2115 on Classification and Norms for Hotels Pursuant to Law 351 of 1964, as amended by Decree 3326 of 1978 and Law 96 of 1988, casinos are also subject to the supervision of the Ministry of Tourism. Are there any incentives to tourist activities in the Dominican Republic? The Dominican Tax Code provides that private investors wishing to participate
in the tourist sector may obtain tax exemptions through the signature
of special agreements with the Executive Power, upon authorization
of the National Congress. Furthermore, tourist projects may be eligible
to benefit from the credit facilities granted by international financing
institutions such as the World Bank, the Inter American Development
Bank and the European Investment Bank, tourism being one of the sectors
considered to be important for the development of the national economy. |
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