The Dominican Republic boasts the largest economy in the Caribbean and Central American region and ranks seventh in Latin America. An upper-middle-income developing nation, it has a diverse economic landscape, with essential sectors including tourism, mining, manufacturing, energy, real estate, and infrastructure.
In the last 25 years, the Dominican Republic has undergone significant economic expansion, with an average annual expansion of 5.3% between 2000 and 2019, driven primarily by capital accumulation and private consumption.
The country’s 11.1 million substantial ethnically diverse population is a compelling factor attracting entrepreneurs and small business owners. Tax incentives, favorable business policies, and a thriving economy make the Dominican Republic an attractive choice for entrepreneurs looking to set up a sole proprietorship in the Dominican Republic. Overall, the Dominican Republic’s economy has been resilient and continues to attract foreign investment, making it an essential player in the region’s economic landscape.
Want to know how to register a sole proprietorship in the Dominican Republic? Read on to learn the process.
Who can be a Sole Proprietor in the Dominican Republic?
A sole proprietor is someone who owns 100% of a business and operates it on their own.
An individual with a valid identity card and an electoral card can register for a sole proprietorship in the Dominican Republic. In other terms, an adult aged 18 years or older can start a sole proprietorship in the Dominican Republic. A Natural Person or Persona Fisica, who is identified as a liberal professional engaged as an engineer, lawyer, publicist, etc., can also start a business after registering as a State provider or Proveedor del Estado.
Setting up a sole proprietorship in the Dominican Republic requires completing and submitting relevant forms and documents and obtaining the necessary permits.
Benefits of Sole Proprietorship in the Dominican Republic
In the Dominican Republic, setting up a sole proprietorship has many advantages.
Here are the key advantages of setting up a sole proprietorship in the Dominican Republic:
- The country has been the fastest-growing economy in the Caribbean region over the last 25 years, with a GDP of $94.2 billion in 2021.
- Ideally located in the heart of the Caribbean, sharing the border with Haiti, it lies close to the US hub Miami. The strategic location is a gateway to outstanding trading opportunities with the developing Central American economies.
- Being a member of the Central American Free Trade Agreement (CAFTA) and the Caribbean Community (CARICOM), it offers the unique opportunity to trade with Central, South, and North American countries with minimum barriers.
- Low operating and comparatively lower labor costs are the biggest advantages for sole proprietors setting up their countrywide businesses.
- The time required to start a sole proprietorship in the Dominican Republic is minimal, with a considerably easy incorporation process taking only about 14.5 days.
- Being a sole proprietor, an individual can have absolute control over the decision-making process. This eliminates any conflict of opinion and increases the company’s overall efficiency.
- Unlike LLP companies or partnerships, the owner of a sole proprietorship will have limited liability with regard to the assets and complete ownership over the profits earned.
- An EIRL or Individual Enterprise of Limited Liability does not require minimum capital.
Documents Required for Registering Your Company in the Dominican Republic
Here is a list of documents required to set up a sole proprietorship in the Dominican Republic:
- A copy of the company’s bylaws and articles of incorporation.
- Tax identification number
- Business name registration
- A copy of the company’s registration with the Chamber of Commerce.
- A copy of the company’s registration with the Ministry of Industry and Commerce.
- A copy of the company’s registration with the Ministry of Labor.
- Social Security Registration
Other Criteria for Registering a Sole Proprietorship Company in the Dominican Republic
To register as self-employed in the Dominican Republic requires several other steps and criteria. Here are some of the other important criteria for registering a sole proprietorship in the country:
- Type of business entity: The initial step in registering a sole proprietorship is to determine the type of business entity you wish to establish. The Dominican Republic offers five options for entities, including sole proprietorship.
- Registration with the Chamber of Commerce: All businesses in the Dominican Republic are required to register with the Chamber of Commerce. This involves filling out an application form and providing certain documents such as identification, proof of address, and tax identification number.
- Tax Identification Number (RNC): To register a sole proprietorship, you must obtain a Tax Identification Number (RNC) from the Internal Revenue Service. The process involves completing an application form and submitting it along with various supporting documents, such as identification, proof of address, and business registration documents.
- Obtain Business Permits and Licenses: Certain permits and licenses are required depending on the type of business. For example, if you plan to operate a restaurant, you must obtain a health permit from the Ministry of Public Health.
- Consultation with Local Attorneys or Accounting Firms: It is recommended to seek guidance from local attorneys or accounting firms to ensure compliance with all relevant regulations and requirements.
It is essential to note that the process of registering a sole proprietorship in the Dominican Republic may vary depending on the type of business, and seeking professional guidance can simplify the process and ensure compliance with all relevant regulations and requirements.
How to Register a Sole Proprietorship Firm in the Dominican Republic?
To start a sole proprietorship in the Dominican Republic, entrepreneurs must register their businesses with the relevant business authority per their location.
- Step 1: Register the company’s trade or commercial name with the National Office of Industrial Property.
- Step 2: Register the enterprise with the Mercantile Registry of the Chamber of Commerce. Suppose you want to register as an EIRL. In that case, you have to submit the following:
- Constitutive act notarized by a lawyer
- Proof of contribution from the corresponding bank
- Copy of identity and electoral card of the individual owner
- Step 3: If your enterprise is an EIRL, file for the National Taxpayers’ Registry at DGII (Internal Tax Office) to obtain the RNC (tax identification number) and apply for fiscal receipts. Submit a copy of the identification card or passport of the owner and proof of address to complete the registration process.
- Step 4: If you are a Natural Person registering as a State Provider, you must register with the General Directorate of Public Contracting. Submit the following documents:
- Copy of electoral and identity card
- Required forms validating address, bills, and other documents by the General Directorate of Public Contracting
- Original tax certificate
- Step 5: Next step is the nomination and appointment of the Director.
Establishing a sole proprietorship in the Dominican Republic comes with benefits, including tax exemptions, freedom to make decisions, and exclusive ownership over the profits earned. However, the process of registering the company and setting it up can prove to be a hassle without the right guidance.
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