The Dominican Republic is among the main recipients of FDI in the Caribbean and Central America. FDI covers about 50% of the country's current deficit. According to UNCTAD 2022 World Investment Report, FDI inflows decreased by 21.1% to USD 3.1 billion in 2021 (compared to USD 2.5 billion in 2020). The stock of FDI amounted to USD 47.7 billion in 2021. However, greenfield project announcements decreased from USD 2.5 billion to USD 760 million. More than 60% of the value of the projects announced went to three sectors: financial services, renewable energy and medical devices (three projects each, out of a total of 14 projects). Traditionally, about 30 % of total FDI inflows went to tourism. The USA is the main investor, followed by Canada and Spain. Chinese investments are expected to increase. Mexico’s share of inflows increased sharply due to América Móvil’s investment programmes through 2022 (for a total of $1 billion). This would support the development of the IT services industry as envisaged by the initiative República Digital, launched by the Government with the aim to attract more high-tech foreign investment.
According to the Economist Business Environment, the Domenican Republic ranks 65 out of the 82 countries reviewed for their investment climate. Some of the country's significant incentives for investors include political stability and prime access to the U.S. market, thanks to a Free Trade Agreement (CAFTA). However, inadequate infrastructure, problems with the electricity supply, corruption, non-respect of contracts, disregard for court rulings and a lack of standard procedures for customs fees on imported goods remain difficulties that foreign investors have to face in the Dominican Republic. The country has adopted policies of greater openness to international trade and investment in the last decade. Nevertheless, the specific legal framework for FDI of the Dominican Republic - which is open and liberal - hasn't been modified since 1995. Still, given that the Government aims to double FDI inflows in the upcoming years, a national competitiveness plan with a key focus on entrepreneurship and innovation has been developed. The government intends to further attract foreign investment, and one of the measures that have recently taken to reach that goal is an amendment to the mining law. Given that mining is one of the economy’s main pillars, if effectively agreed with international sectors, the new law should actually attract new investments in the country. Another incentive is the Investor Visa Programme, where foreign people who invest at least USD 200,000 can gain permanent residency in the country, and after 18 months they can become citizens. Additionally, the Export and Investment Centre of the Dominican Republic (CEI-RD), which is a government agency created in 2013, offers help to foreign investors in the country. The investment climate in the coming years will largely depend on whether the Government demonstrates the political will to implement reforms necessary, mainly those aimed to promote competitiveness and transparency. France is currently one of the key investors. The Canadian company Barrick invested almost USD 4 billion in a gold mine in Pueblo Viejo, the largest single investment in the country to date. Fresh foreign investment in tourism infrastructure keeps landing into the country and, at the moment, there are many resorts and hotels being developed.
Dominican Republic | Latin America & Caribbean | United States | Germany | |
---|---|---|---|---|
Index of Transaction Transparency* | 5.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 8.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Foreign Direct Investment | 2020 | 2021 | 2022 |
---|---|---|---|
FDI Inward Flow (million USD) | 2,560 | 3,197 | 4,010 |
FDI Stock (million USD) | 44,686.0 | 47,883.0 | 51,893.0 |
Number of Greenfield Investments* | 16.0 | 13.0 | 30.0 |
Value of Greenfield Investments (million USD) | 2,558 | 736 | 3,542 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Personal income tax | Progressive rates from 0 to 25% |
Up to DOP 416,220 | 0% |
DOP 416,220 - 624,329 | 15% |
DOP 624,329 - 867,123 | 20% |
DOP 867,124 and above | 25% |
Capital gains tax | 25% |
Dominican Republic | Latin America & Caribbean | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 7.0 | 28.2 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 317.0 | 327.5 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 48.8 | 46.8 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
Setting Up a Company | Dominican Republic | Latin America & Caribbean |
---|---|---|
Procedures (number) | 7.00 | 8.00 |
Time (days) | 16.50 | 25.22 |
Source: Doing Business.
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Latest Update: September 2023