TerraLex Cross-Border Guide to Cross-Border Guide to Business Investment in Latin America & the Caribbean - NEW

The most commonly used types of corporate vehicles in the Dominican Republic are the following:

• The Limited Liability Company (Sociedad de Responsabilidad Limitada-SRL)
• The Stock Company (Sociedad Anónima-S.A.)
• The Simplified Stock Company (Sociedad Anónima Simplificada S.A.S.)
• The Individual Enterprise of Limited Liability (Empresa Individual de Responsabilidad Limitada-EIRL).

For certain investments it is also very common to create a Branch (succursal) of a foreign company already created in a jurisdiction other than the Dominican Republic.

The Law defines as well other types of corporate vehicles to set up, such as Partnership (Sociedad en Nombre Colectivo) and Limited Partnership (Sociedad en Comandita Simple), less popular due to the unlimited and personal liability from their owners.

General Law on Commercial Companies and Limited Liability Individual Companies, No. 479-08 and its amendments by Law 31-11.

For all types of Dominican companies there is a two-stage process:

1. Mercantile registration: With the subscription of Bylaws and a Constitution Assembly for societies (or a Notarial Authentic Act in the case of the EIRL), the entity must be registered before the Chamber of Commerce at the jurisdiction of its principal operation. This process typically takes approximately 3 to 5 business days to complete.
2. Tax ID (RNC) registration: Receiving the mercantile registration certificate, the next step is to register the entity before the General Directorate of Internal Taxes (DGII) to obtain the company’s tax identification (Registro Nacional del Contribuyente-RNC). This registration can be done online or in-person. Estimated times for completion are as follows:

• Online submissions: From 1 to 3 business days
• In‑person submissions: From 3 to 6 business days.

In the case of foreign companies, once the parent entity provides corporate authorization to establish a Branch (Sucursal) in the Dominican Republic, along with certified copies of its constitutional corporate documents and appointment of local representatives—duly apostilled or legalized and translated into Spanish—the same registration process applies as for domestic entities.

The capital requirements for the most common corporate vehicles

No. Law 16-95 on Foreign Investment guarantees the right of investors to repatriate capital and profits without prior authorization, provided they comply with their tax obligations in the country.

There is no general legal requirement that directors (or managers) be Dominican nationals or residents—they may be of any nationality. Nevertheless, specific industry regulations may impose those requirements in particular cases, such as financial sector and telecommunications.

No.

Yes. According to the Dominican system, the entities must comply with the following:

• Ordinary General Meeting. Celebrated each year within 120 days counted upon fiscal year closing. This meeting celebrated by the shareholders/partners has the purpose to approve the Financial Statements and Management Report from the administrators, Dividends decisions, the appoint the Board of Directors and Managers for the following years, and other matters decided within its competence.
• Tax Reports and Filing. This include the presentation of monthly filings and payments of VAT, sales, purchases and withholding taxes; and the annual corporate income tax results within 120 days after each fiscal year ends.
• UBO Reporting. According to Law 155-17 companies must comply with the ultimate beneficial ownership (UBO) reporting to the tax administration at the creation of the company and any time there is any changes in ownership or controlling rights.
• Mercantile Registration Renewal. Biennially, the companies must renew the certificate of mercantile registration before the corresponding Chamber of Commerce.

The Key labour laws and regulations in Dominican Republic are:

a) Constitution of the Dominican Republic. b) Law 16-92, Labor Code c) General Immigration Law. d) Law 87-01, on the Dominican Social Security System. e) Regulations for the application of the Labor Code. f) Regulation No. 522-06 on Occupational Safety and Health.

Foreign employees can obtain work permits through the following visas, depending on the type of company they operate under Dominican Republic immigration laws:

1. Business Visa for Employment Purposes for Private Companies (NM1): This type of visa will require a Job Proposal from the company registered with the Ministry of Labor of the Dominican Republic, and a Certification from the Ministry of Labor, indicating that the company meets the 80/20 requirement, that is, 80% Dominicans and 20% foreigners, in addition to the general requirements for this type of visa.
2. Multinational Company Business Visa (NM1): For this visa, you will be required to provide a copy of your employment contract or agreement with the parent company and a transfer letter, duly legalized and apostilled, in addition to the general requirements for this type of visa.
3. Business Visa for Employment Purposes under the Free Trade Zone Regime (NM1): For this visa, you will be required to have a Work Proposal and a Certification from the National Council of Free Trade Zones for Export (CNZFE) for visa purposes, in addition to the general requirements for this type of visa.
4. Business Visa for Employment Purposes for Companies, International Organizations, or Public Institutions (NM1): This type of visa is intended for experts and technicians who, under the responsibility of foreign governments or international organizations, enter the country under agreements or programs approved by the Government to perform assistance, advisory, or technical cooperation functions. In the case of a Public Institution, an employment contract with the Dominican State institution will be required. In the case of International Organizations, an employment contract with the international organization and a verbal application note for signature by the Head of Mission will be required, in addition to the general requirements for this type of visa.

Foreign investors have the option of obtaining a Residence Visa, depending on their investment type, upon meeting the following requirements: a. Residence Visa for Direct Investment. b. Residence Visa for Investment for Companies Operating Under the Free Trade Zone Regime. c. Residence Visa for Investment in Border Development Projects. d. Residence Visa for Investment in Tourism Development Projects. e. Residence Visa by Investment as Pensioners or retirees. f. Residence Visa for Investment as an Annuitant. Each of these visas must be requested at the Dominican Consulate in the applicant's country of origin or second residence. Dominican Residency is then requested according to the immigration category chosen from the General Directorate of Immigration of the Dominican Republic.

Foreign investors in the Dominican Republic enjoy broad rights to acquire and own real property, largely equivalent to those of Dominican nationals. Prohibitions or restrictions for property acquisitions impact both to Dominicans and foreign individuals and entities

The Regional & Bilateral Free Trade Agreements are the following:

1. Dominican Republic–Central America–United States Free Trade Agreement (CAFTA‑DR). In force for the Dominican Republic since March of 2007. This FTA reduces tariffs and promotes market access for goods and services across six Central American countries plus the U.S. Includes cross-border services, investment protection, labor and environmental disciplines.

2. CARIFORUM–EU. Economic Partnership Agreement (EPA). Signed in October 2008, and effective since 2009. It provides duty‑free access of Caribbean exports to the European Union and regulatory frameworks covering investment, services, public procurement, and IP.

3. EPA with the United Kingdom** (CARIFORUM‑UK)**. Effective since January 2021. It is a continuity agreement replicating CARIFORUM‑EU EPA post-Brexit.

4. CARICOM–Dominican Republic Free Trade Agreement (CARIFORO). Signed in 1998, and effective since 2002. The agreement Promotes reciprocal trade with CARICOM member states.

5. Partial Scope Agreement with Panama. In force since 2003. Grants duty-free access for selected goods for both parties.

On the other hand, the Dominican Republic is part of multilateral agreements, to promote and protect investments, including World Trade Organization (WTO); TRIPS (Agreement on Trade‑Related Aspects of Intellectual Property Rights) and TRIMS (Trade‑Related Investment Measures); MIGA Convention (Multilateral Investment Guarantee Agency) ; and New York Convention (1958).

The Dominican Republic has signed as well numerous Bilateral Investment Treaties with individual countries, providing investor protections such as national treatment, fair and equitable treatment, free transfer of funds, and dispute resolution mechanisms, with countries such as Chile, Finland, France, Italy, Korea, Morocco, Netherlands, Spain, Switzerland, and Taiwan.

The Dominican Republic offers a diverse legislative frame to promote investment in different areas and sectors, including:

Tourism Development Promotion Law 158-01 (CONFOTUR) and its amendment. With tax exemptions that go up to 100% of income tax for 15 years, property transfer tax, annual real estate tax, custom tax, capital gains, among others.

Law on incentives for renewable energy and special regimes 57-07. With exemptions to import duty & VAT exemptions for renewable energy equipment, income tax exemption on electricity generation and sale from renewable energy sources, among others.

Law 8-90 of Free Trade Zones. With 100% exemption from corporate income tax for up to 15 years, VAT, customs duties, export duties, municipal taxes, and capital gains tax exemptions.

Law 108-10 for the Promotion of Cinematographic Activity in the Dominican Republic. With tax incentives for film, television, music video, studios, and cinemas, including VAT exemptions, income tax exemptions, and a 25% transferable tax credit on local production expenditures.

Law No. 2801 creating a Special Border Development Zone. Created to target economic development near Haiti border areas, and includes 100% exemptions from income tax for up to 20 years, VAT, and customs duties taxes, applicable to diverse sectors including industrial, agro‑industrial, tourism, and energy.

Law No. 392-07 on Industrial Competitiveness and Innovation (PROINDUSTRIA) and its amendments. Promotes industrial innovation and export competitiveness granting customs duties & VAT exemptions on raw materials, machinery and capital goods imported for local production, as well as tax reimbursement for exporters and accelerated depreciation regime.

All types of legal entities (Dominican companies or branches of foreign companies with permanent establishment) must comply with the reporting and tax payment established by law to the taxpayers. Those obligations are, in general, the following:

Incorporation and Increased Capital Tax. Applies only to Dominican companies, it is equivalent to 1% of the authorized share capital, as part of the requirements for completing the formalization process and each time the company increases its share capital.

Corporate Income Tax (ISR). The standard corporate income tax rate is 27% on all taxable earnings of the company, whether retained or distributed profits.

Asset Tax (ISA). The Asset Tax is applied at a rate of 1% on the total taxable assets of a company. This tax is assessed annually and is calculated based on the company’s assets, net of depreciation and amortization, excluding certain exempt items. If the company’s corporate income tax exceeds the amount due for the Asset Tax, the company is not required to pay the Asset Tax. Rural property and non-constructed terrains are exempt from this tax.

Value Added Tax (VAT) (ITBIS). This tax applies generally to the transfer of industrialized products and the rendering of services. The general VAT rate 18%. A lower rate of 16% is charged for convenience goods such as yogurt, butter, coffee, sugars, chocolate and cacao. Other basic products and services such as cereals, meat, fish, water, fuels, electricity services, residential leases, financial services are VAT-exempt.

Selective Consumption Tax (ISC). If the company sells specific goods or services such as alcohol, tobacco, or telecommunications, the company must settle and pay the ISC according to current rates which varies according to the good or service provided.

Capital Gains Tax. All companies are subject to capital gains tax when selling applicable capital assets such as real estate property, financial assets (stocks and shares), intangible assets (trademarks, patents, licenses). The tax rate is 27% .

Withholding Taxes. Dividends and profit distribution are subject to 10% tax. Payments abroad, royalties and technical service to foreign entities are subject to 27% withholding tax. Salaried employees taxes go from exempted to up to 25% and will be withheld monthly from any excess of their salary that exceeds the annual income tax exemption.

In the Dominican Republic, competition law does not impose restrictions specifically on foreign investors opening legal entities. However, the general competition framework and sector-specific regulations may still be relevant when structuring an investment. The main legal framework is Law No. 42-08 on the Defense of Competition (Ley General de Defensa de la Competencia), ruled by The National Commission for the Defense of Competition (Pro-Competencia).

Yes, the Dominican Republic recognizes and enforces ADR mechanisms, including mediation, conciliation, and arbitration, both local and international. The legal framework is modern and aligned with international standards, particularly for arbitration.

Arbitration process is ruled by Law No. 489-08 on Commercial Arbitration. The country is also party of the New York Convention that recognizes and enforces foreign arbitral awards and arbitration agreements.

The Alternative Dispute Resolution Center (Centro de Resolución Alternativa de Controversias-CRC) of the Chamber of Commerce in Santo Domingo, is the main local institution created to handle commercial, construction, corporate, and investment-related disputes, offering institutional rules aligned with international practice in ADR matters.

Yes. Foreign Investment Law No. 16-95 offers equal treatment to foreign and local investors. The main pillars of this law include no prior authorization needed to invest in most sectors (with few sectoral restrictions); the right to repatriate profits and capital freely in foreign currency; and access to national courts and arbitration for dispute resolution.

Bilateral and multilateral agreements of which the Dominican Republic is party include as well investment protection clauses, fair treatment declarations, Most Favoured Nation treatment, and access to dispute resolution mechanisms.

According to the Central Bank preliminary report of the Dominican Republic, GDP registered an expansion of 5.0% in 2024 compared to 2023. This result consolidates the Dominican Republic as the leading growth economy in Latin America.

The most relevant economic activities in terms of added value include hospitality, energy, real estate and manufacturing (including free zones), and livestock all of which have experienced significant growth driven by dynamic real estate M&A and private equity markets with the proper policies and support from the government along with a legislative framework that attracts global capital.

The Dominican Republic offers a dynamic, strategically located, and investment-friendly environment for foreign investors, with strong legal protections, free trade agreements, and diverse sectoral opportunities.

The most viable and attractive sectors for foreign investment are those backed by robust legal incentives, infrastructure development, and growing demand both locally and internationally. These industries and sectors include Tourism and hospitality, Renewable Energy, Real Estate and Infrastructure, Free Trade Zones, Technology and Business Process Outsourcing (BPO), Agroindustry, Health and Medical Manufacturing and Services.

Public Private Partnerships's structure is promoting new opportunities for private investment in infrastructure, transport, ports, energy, and health.

The Dominican Republic has made significant improvements in infrastructure in recent years, positioning itself as a regional leader in logistics, tourism, and energy. While challenges remain, particularly in regulatory and permits procedures, the overall state of infrastructure is favorable and increasingly attractive to foreign investors.

With the promulgation of Law No. 47-20 on Public Private Partnerships, several projects are in current execution and include the development of new highways, sanitation, airports, and smart cities. PPP’S structure is promoting new opportunities for private investment in infrastructure, transport, ports, energy, and health.

By 2025 the country has 8 international airports with modern facilities, 16 commercial maritime ports and 5 touristic terminals, over 80 industrial parks and specialized free zones with custom infrastructure for diverse sectors, strong investment in telecommunication and technology, and the main road network connecting the cities, the country’s infrastructure modernization supports a positive long-term outlook for the foreign investment.

Investing in the country offers strong opportunities, but like any developing market, it also involves a range of risks that investors should carefully assess. These risks can be legal, regulatory, economic, or operational in nature. However, many of these risks can be mitigated with proper planning, due diligence, and structuring of the investment. Local counsel with adequate expertise, market knowledge and recognized background are strongly encouraged for any type of investment in early stages of the investment.

Other risk related to climate & natural disaster exposure, particularly considering the vulnerability to hurricanes, floods, and climate-related disruptions (frequent in the Dominican Republic), can be mitigated with proper investment in infrastructure and flood-safe construction standards and proper insurance coverage for the property and business interruption.

When referring to the political scenario, the Dominican Republic enjoys the advantages of stability. However, it is always important to consider changes to policy and tax priorities swifts. In this sense, it is very important to structure the investments to benefit from long-term incentives laws with legal stability clauses while taking advantage of investment treaties and their protection, when needed.