flag Dominican Republic Dominican Republic: Investing

FDI in Figures

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 2021 World Investment Report, FDI inflows decreased by 15% to USD 2.6 billion in 2020 (compared to USD 3 billion in 2019), due to the economic and health crisis triggered by the COVID-19 pandemic. The stock of FDI amounted to USD 44.7 billion in 2020. Disinvestments in telecommunications ( -$122m million) and lower investments in SEZs (-11%, to $232 million) and mining (-90%, to $21 million) are responsible for the decline. However, greenfield project announcements increased from USD 1.1bn to USD 2.5bn, driven by the government's passage of a PPP law that improved the business climate for foreign investors. 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.

The Dominican Republic ranked 115th out of 190 countries in the World Bank's last Doing Business report, published in 2020, losing thirteen places in comparison with 2019. 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.

 

Country Comparison For the Protection of Investors

  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 201920202021
FDI Inward Flow (million USD) 3,0212,5603,102
FDI Stock (million USD) 42,126.744,680.947,791.9
Number of Greenfield Investments* 19.016.013.0
Value of Greenfield Investments (million USD) 1,0842,522760

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.

 

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Tax Rates

Tax on the Transfer of Industrialised Goods and Services (ITBIS)
18% (standard rate).
A reduced rate at 16% applies to yoghurt and other dairy derivatives; coffee; butter, margarine and oils; powdered cacao (with or without sugar) and unfilled cacao bars; and sugar.
Exempt items include live animals; fresh, refrigerated or frozen meat; fish for popular consumption or reproduction; milk, eggs and honey; non-processed fruit for massive consumption; cocoa, chocolate and some grains and cereals; certain types of medicines; certain types of books and magazines; education services, including theatre, ballet, opera and dance; health services; electricity, water and garbage collection services; financial and insurance services.
Exports are zero-rated.
Company Tax
27%
Withholding Taxes
Dividends: 10%, Interests: 0 (resident companies)/10%, Royalties: 0 (resident companies)/10% (resident individuals)/27% (non-residents).
Social Security Contributions Paid By Employers
7.10% (pensions), 7.09% (family healthcare), and 1.2% (labour risks insurance)
Other Domestic Resources
Directorate-General for Internal Revenue
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

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%
 
 

Country Comparison For Corporate Taxation

  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.

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Investment Opportunities

Tenders, Projects and Public Procurement
Inter-American Development Bank, Tenders in South America
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Dominican Republic.
Useful Resources
Dominican Republic Export and Investment Centre (CEI-RD) (only in Spanish)
 

Business Setup Procedures

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: October 2022