DOMINICAN REPUBLIC: An Introduction to Corporate/Commercial

The Dominican Republic has become one of the strongest economies in the Central American and Caribbean region. It has experienced significant growth over the past 20 years, and for 2021, the growth of our economic GDP closed at 12.3%.

In the Dominican Republic, an appropriate legal framework has contributed to increasingly important investment in sectors such as tourism, construction, manufacture, free trade zones, energy and water, transportation, among others.

As a result of the pandemic, the legal framework for corporate matters has seen the process of digitalization being expedited. Our institutions were forced to digitize their processes and offer services through digital platforms, and in this sense we have to applaud the exhaustive work done by the Chamber of Commerce and Production of Santo Domingo, Inc., the Real Estate Jurisdiction, The Tax Authority (or DGII by its acronym in Spanish) and our Judiciary, which offered, and continues to offer, their services via online platforms in order to guarantee that legal operations and developments continued to flow during the COVID-19 pandemic.

One of the great achievements in the corporate area was the digitization of certain services of the Chamber of Commerce and Production of Santo Domingo. Within twenty-four hours, you can now obtain renewals of commercial records, modifications and even updates of data from the Mercantile Registry, as well as obtain certified copies and/or certifications of registered companies. Services such as incorporations, the registration of documents and modifications of corporate bylaws or structures are still managed via personal deposits, which presents certain delays, since these are executed through appointments rather than a quick access platform to the institution. However, among the priorities of the institution for the year 2022 is to complete the digitization process and launch the FEDOCAMARAS (Federation of Chambers of Commerce of the Dominican Republic) digitalization project.

Over the last two years, in the post-pandemic era, we have seen a special interest and development in issues related to fintech, which has meant an increase in the incorporation of companies that offer this service. The promotion of the development of e-commerce and the guidelines that are being promoted by our Tax Authority are aimed at the implementation of electronic invoicing, which will eventually be considered mandatory for companies operating in the Dominican Republic.

Additionally, in 2021 we saw an important economic reactivation that, according to the preliminary numbers presented by the Chamber of Commerce and Production of Santo Domingo, showed the incorporation of new companies increased by 42% compared to the end of fiscal year 2020.

From the regulatory aspect, during the last trimester of 2021 and 2022 we have seen significant changes in tax matters that have been discussed and implemented by the DGII that affect corporate law, as they come to regulate issues such as: tax treatment for reorganizations, capital gains tax, the application of VAT on digital platforms, the regulation of a simplified taxation regime, among others. Most recently, the DGII published for discussion the Draft for Capital Gain Regulations, which closed on 18 February 2022. Currently the draft regulations for the application of VAT on digital services provided outside the Dominican Republic are open for discussion.

However, these regulations should be well received because they help determine the position of our tax administration in certain aspects, that were long required, in order to avoid the uncertainty of criteria applicable in cases of reorganizations and sales of companies/or assets.

Finally, we estimate that during 2022 we will see a significant continuance of our economic reactivation and therefore an increase in market transactions in areas such as real estate, health, free trade zones and local manufacturing. We will also see a continuous development of the corporate market and legal practice aimed at good corporate governance and compliance; and the development of new structures through Public Private Partnerships and trusts that have offered viable corporate structures to important projects.