DOMINICAN REPUBLIC: An Introduction to Dominican Republic
The Dominican Republic: The Commercial Hub of the Caribbean
The Dominican Republic, a Spanish speaking country located in the central Caribbean, with a population of more than 10 million and a per capita income of USD8,476.80, is best known for its ever-growing tourism industry, which is currently having one of its best years on record, with more than ten million visitors in 2022. Nevertheless, the country has much more to offer. Its strategic location in the centre of the Caribbean Sea, its rapid economic recovery and growth following the pandemic as well as its political stability, make the Dominican Republic a very attractive place to invest in Latin America, as all sectors of this country’s economy continue to grow rapidly and new legislation emerges to enhance certainty and facilitate doing business and attract foreign investment.
Logistics centres and free trade zones
Recent legislative advancements include the new Maritime Trade Law and the new Customs Law, both of which focus on the security, modernisation and continuous growth of the maritime trade sector and the possibility of installing logistics centres and logistics operating companies in the Dominican Republic. These two new laws, together with the country’s first-rate connectivity by air and sea with the Americas and the Caribbean and the well-established land connectivity within all its regions, will help promote the Dominican Republic as a regional logistics hub, allowing it to increase its competitiveness for logistics chain activities and “nearshoring” platforms. These logistic centres also allow the country to undertake inventory planning for supply chain management and ensure greater organisation and efficiency in the logistics chains of merchandise supply, storage and transport, all of which will result in greater competitiveness and benefits for the wider market.
Likewise, the development of these logistics centres will also positively impact one of the most profitable and important business sectors in our country: the Industrial Free Trade Zones. This sector is regulated by the Industrial Free Trade Zone Law, which provides numerous fiscal and customs incentives for those industrial free zones established in the Dominican Republic, including exemptions of up to 100% on taxes on income, company incorporation, capital gain, real estate transfer, loan contracts, and import and export, as well as on tariffs, industrialised goods and services transfer taxes (ITBIS). Industrial Free Trade Zone Enterprises are already experiencing rapid growth hand in hand with the creation of new logistics centres which will expedite import and export processes.
Dominican corporate law and the stock market
Regarding Dominican companies, their structure and operation, we highlight that the Dominican Companies Law contemplates versatile corporate vehicles that adapt to the needs of the businesses to be carried out through them. A great post-pandemic benefit has been the virtualisation of all corporate records and the possibility of achieving the registration and documentation of corporate operations remotely and expeditiously. There is also a favourable and conducive environment for commercial operations such as mergers and acquisitions, among others.
The Dominican Stock Market has also experienced rapid growth in recent years is with the enactment of the Stock Market Law in 2017, which created a centralised trading mechanism, enabling new investment instruments and opening the way for public or private issuers to enter the market. In 2021 the Dominican stock market became even more attractive with the enactment of the Law for the Promotion of the Initial Placement Offering (IPO), through which additional incentives were established for a period of three years, including the exemption of the capital increase tax for issuing companies, the elimination of the capital gain withholding taxes on shares traded on the stock market and the significant reduction of capital gains taxes for investors.
Digital advances in the Dominican Republic
Among other significant milestones, we must highlight the implementation of “virtuality” in commercial operations through the enactment of the Law on Electronic Commerce, Digital Documents and Signatures, through which the modernisation of public institutions and of the legitimacy of documents signed and/or shared digitally was made possible. This Law also introduces the concepts of “Signature Certificate” and “Certification Entities”, recognising those signatures based on digital documents issued by certifying entities accredited before the competent authorities as secure signatures. Consequently, this Law guarantees the legitimacy of commercial operations that are digitally consented to and executed, as per the rulings that are in place in that regard.
Notably, the Dominican Republic has been drawing attention to its digital advances. In view of the rapid growth of commercial operations through digital means, internet providers are required to ensure the availability, integrity and confidentiality of the data processed through their networks and Dominican legislators are currently working on a bill that further seeks to guarantee cybersecurity on electronic platforms.