Business Opportunities in The Dominican Republic
The Dominican Republic, located on the island of Hispaniola in the Caribbean, has experienced significant economic growth over the last decade. It ranks second among the fastest-growing economies in the Caribbean and Latin America.
It is a middle-income country with an economy based on agriculture, tourism, real estate, mining, services, and Free Trade Zone manufacturing. To start a business in the Dominican Republic, key economic sectors include agriculture, construction, healthcare, financial services, transportation, hospitality, and local manufacturing.
Since tourism forms a significant contributor to the country’s GDP, exports can set up an offshore company in the Dominican Republic to explore opportunities in sectors related to agricultural products, hotel and restaurant equipment, and construction.
The Dominican Republic provides a favorable business environment, with the government offering foreign investors tax incentives and other benefits. Investing in the country’s Free Trade Zones can be particularly profitable for foreign investors setting up a company in the Dominican Republic.
Benefits of Starting a Business in The Dominican Republic
The advantages of doing business in the Dominican Republic are many, from its proximity to the United States of America to an investment-friendly environment.
Here are the key reasons why setting up a company in the Dominican Republic is worth the investment:
- Strategic location: The central location of the Dominican Republic in the Caribbean serves as a strategic point of commercial interconnection between North America, Europe, and Latin America.
- Tax incentives: The government of the Dominican Republic offers tax incentives for foreign businesses relocating or expanding in the country. According to the country’s Free Trade Zones laws, domestic and foreign investors get 100% exemption in national and local taxes, such as value-added, income, import, patent, and taxes on assets and equity.
- The easy company registration process in the Dominican Republic: The process of company incorporation in the Dominican Republic is relatively straightforward, with a typical 2-3 weeks processing time. As per the World Bank’s Ease of Doing Business report 2020, the country shows improvement in starting a business, enforcing contracts, getting electricity, dealing with construction permits, and resolving insolvency.
Requirements for Starting a Business in The Dominican Republic
Here are the essential requirements to do business in the Dominican Republic:
- Minimum capital requirement: The minimum cost of incorporating a company in the Dominican Republic depends on the type of business entity and can range from DOP 100,000 to DOP 30,000,000. Companies must pay a certain sum at incorporation, depending on the minimum capital.
- Business registration: A foreign company can start a business in the Dominican Republic by registering with the Mercantile Registry of the Chamber of Commerce. The company registration process in the Dominican Republic also involves obtaining a taxpayer ID from the country’s National Taxpayers Registry.
- License for real estate companies: Real estate companies must apply for a license to operate as the national executive, as per the Law for the Creation of the Dominican Association of Real Estate Brokers (ADCI) and Regulation of Real Estate Brokerage in the Dominican Republic.
- Legal support: It is necessary to have the support of a local lawyer and a legal representative to ensure a proper company registration process in the Dominican Republic and compliance with the country’s laws and requirements.
Types of Business Structures in The Dominican Republic
While setting up a company in the Dominican Republic, businesses can choose from one of the following structures:
Individual Limited Liability Company (EIRL):
- An Individual Enterprise of Limited Liability (EIRL) in the Dominican Republic is a limited liability company that one individual can only incorporate.
- Unlike other business entities in the country, there are no minimum or maximum capital requirements to set up an EIRL.
Limited Liability Company (SRL):
- The most common business entity in the Dominican Republic is a limited liability company (Sociedad de Responsabilidad Limitada, SRL).
- An SRL can have between two and 50 members, and the liability of its members is limited to the amount of capital they contribute.
- A minimum capital of DOP 100,000 is required to incorporate an SRL, with at least 1% of that amount paid during incorporation.
Simplified Joint Stock Company (SAS):
- A Simplified Joint Stock Company in the Dominican Republic is a commercial entity in which the shareholders’ liability is limited to the amount of their capital contribution.
- The company has a minimum capital requirement of DOP 3,000,000, the value of which is established by the bylaws.
- Companies must pay at least 10% of the capital at the time of SAS incorporation.
Joint Stock Company (SA):
- A Joint Stock Company in the Dominican Republic requires a minimum of two shareholders at the time of incorporation.
- The shareholders’ liability in SA is limited to the capital they contribute to the company. The company’s capital is represented by freely transferable shares of minimum DOP 1.
- Joint Stock Companies in the Dominican Republic have a minimum capital requirement of DOP 30,000,000.
Company Registration Process
The company registration process in the Dominican Republic is pretty straightforward. However, investors and business owners must methodically follow the steps to incorporate a company in the Dominican Republic to comply with the laws and regulations.
Step 1: Choose a legal business entity
- Foreign investors and entrepreneurs can choose from four primary legal entities when setting up a company in the Dominican Republic.
- These include a Limited Liability Company (SRL), an Individual Limited Liability Company (EIRL), a Joint Stock Company (SA), and a Simplified Joint Stock Company (SAS).
Step 2: Appoint a legal representative
- If the company’s shareholders are not located in the Dominican Republic, the business owner must provide a Power of Attorney (POA), allowing a legal representative to handle the process locally.
- The relevant party must sign this document.
- Additionally, foreign shareholders must provide additional documentation, be legalized and apostilled (if necessary), and sent to the Dominican Republic.
- Translate all your non-Spanish documents for acceptance by local agencies.
Step 3: Confirm the availability of the company name
- Check the availability of the company name at the Mercantile Registry (Registro Mercantil).
- This government agency maintains a database that allows searching for similar names to ensure the chosen company name is unique and does not infringe on existing trademarks or company names.
Step 4: Request and purchase the company name
- The ONAPI agency in the Dominican Republic will publish your proposed company name in a national newspaper and accept public comments.
Step 5: Draft bylaws for the company
- To start a business in the Dominican Republic, one must draft the company’s bylaws, which will serve as the foundation and governing document for the company’s management.
- The bylaws document must be notarized by a public notary in the Dominican Republic and reviewed by a local lawyer.
Step 6: Pay the incorporation fees
- Pay the fees and taxes to register a company and submit all the necessary documents to the Commercial Registry of the Dominican Republic.
- They should also pay the incorporation cost at the Internal Revenue Service Office and the Banco de Reservas de la República Dominicana.
Step 7: Submit the documents and register the business
- To officially establish a company in the Dominican Republic, one must pay incorporation fees which enable them to submit the required documents to the Dominican Chamber of Commerce for approval.
- It is important to have a lawyer review and prepare all necessary documents to avoid any issues during the approval process. The company officially exists once the Chamber of Commerce approves the documents.
Step 8: Register as a taxpayer
- To become a tax contributor, companies must register with the National Taxpayers Registry (DGII) to receive a unique identification code called Registro Nacional de Contribuyentes (RNC) assigned by DGII.
- This process can be done online via the DGII platform, and companies must send physical documents to their offices.
- Required documents vary depending on the type of company being registered.
How Much Does it Cost to Incorporate a Company in The Dominican Republic?
The cost of incorporating a company in the Dominican Republic depends on the following factors:
- The type of business
- The volume of business activities
- The fees of service providers
The approximate cost of incorporating a company in the Dominican Republic is US$9,950 in the first year. The annual company costs for the second year onwards are US$2,800. The average total fee for company incorporation in the Dominican Republic is US$17,300.
Are Foreigners in The Dominican Republic on Certain Passes Allowed to Start a Business in The Dominican Republic?
Foreign companies can start a business in the Dominican Republic by establishing a local subsidiary, setting up a branch office, or acquiring shares in an existing Dominican company.
Shareholders, partners, members, officers, and directors of a Dominican company only necessarily need to be Dominican citizens or residents if specific circumstances require it.
Foreign companies have several options to start a business in the Dominican Republic. There are no strict requirements for the nationality or residency of individuals involved in a Dominican company, with some exceptions.
Government Assistance for Foreign-owned Businesses
Based on the 2020 and 2021 Investment Climate Statements by the U.S. Department of State, foreign companies looking to set up an offshore company in the Dominican Republic’s free trade zones for export outside the Dominican territory can receive assistance from the National Council of Free Trade Zones (CNZFE).
Furthermore, several business associations, including the Association of Foreign Investor Businesses (ASIEX), facilitate communication between the government and the private sector.
How Multiplier Can Help?
Multiplier can assist you by offering a robust, reliable, and secure infrastructure to start a business in the Dominican Republic without the hassle of incorporating a new entity.
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