Dominican Border Zone Tax Incentives Law 12-21

Law 12-21 which Creates a Comprehensive Border Development Special Zone and tax incentives regime covering the provinces located in the Dominican border: Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez y Bahoruco, was enacted on February 22nd of 2021, in order to renew the 20 year tax incentive regime period that phased-out in February 2021, aimed at intensifying and propelling the economic, social and tourism development in the Dominican Republic.

The new 30 year incentive regime period for businesses that operate in the mentioned Dominican border provinces include the following tax exemptions at one hundred percent (100%):

  1. Income Tax.
  2. Selective Consumption Tax applicable to telecommunication and insurance services for project facilities.
  3. On the payment of custom duties and Tax on the Transfer of Industrialized Goods and Services (ITBIS) over imported or locally purchased machinery and equipment, required for the installment and business set up.
  4. On the payment of custom duties and ITBIS over imported inputs and raw material used in the production of ITBIS exempted goods.
  5. On the payment of custom duties for the importation of inputs and raw materials used in the production of goods provided that they are not produced locally.
  6. Transfer tax over real estate property and related taxes over real estate asset transactions pertaining to project land and infrastructure.
  7. On withholding tax payment and duties derived from payments abroad of technology innovation services required by projects during construction and business set-up.
  8. Taxes, tariffs and registration rights related to capital increase and interests in commercial entities domiciled in the comprehensive border development special zone.

Up to 50% ITBIS exemption in the acquisition and import of inputs and raw materials used in the production of goods subject to ITBIS.

At Arthur & Castillo, we can assist enterprises and legal entities that want to apply or renew the license to benefit from this tax incentive regime of Law 12-21.

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