The Dominican Free Zones system establishes at least three categories of free zones which offer opportunities for investors and exporters at the different levels of industrial processing, taking into account their location, number, qualification of job posts and the origin of the raw materials and of the products to be processed or finished.

Dominican Free Zones Promotion Law 8-90, defines the free zone as a geographic area subject to special customs and tax controls, where the installation of enterprises that destine their production or services to the international market is permitted, through the granting of the tax and customs incentives necessary to promote their development.

Law 8-90 considers as exports the sales of goods originating from the free zones to Dominican Territory, as well as the sales of goods originating from enterprises in Dominican Territory to the free zones, among which there are the following:

1. Industrial or Services Free Zones: are enterprises authorized by the Dominican Free Zones Council (CNZFE) of the Dominican Republic that are established in a free zone park to dedicate themselves to the manufacture of goods and rendering of services and that destine most of their production and/or services to the international markets.

2. Special Free Zones: are enterprises authorized by the CNZFE whose activities cannot be conducted in a specific free zones park, due to the nature of their manufacturing process that requires the use of immovable assets, be located close to the natural sources or because the nature of the industrial process and the geographic, economic or local infrastructure so requires.

3. Border Free Zones: are industrial, agri business, and agricultural, metal mechanic and energy, among others authorized by the Council for the Coordination of the Border Development Special Zone which operate in Dominican Republic provinces of Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez and Bahoruco.

Depending on the type of free zone and the export business several customs and tax incentives may apply, including the exemption from the payment of the corporate income tax, assets tax, tax on the transfer of industrialized goods and services (VAT), tax on construction, tax on loan agreements, on the register and transfer of real estate property, company incorporation and capital increase tax, municipal taxes, import taxes, customs duties, exemption to the payment for transit and use of ports and airports, among others.

Our professionals can assist you by providing legal and tax advisory for selecting the most appropriate form of free zone available and in pursuing the preparation and filing of free zones operations application for approval by the Free Zones Council.

ABOUT THE AUTHOR: Dr. Felipe Isa Castillo is a Partner, Head of International Business, Foreign Investment & Real Estate at ACLAW, a law Firm in the Dominican Republic. He specializes in international business, foreign investment and real estate law (International Legal Studies LLM in Georgetown University Law Center & Masters in International Business in Universidad Pompeu Fabra in Spain) with more than 20 years of experience in International Business and Trade, Foreign Investment, Free Trade Zones and Cross Border Real Estate practice. Dr. Felipe Castillo is also a Certified Bankruptcy Conciliator and Liquidator and Legal Interpreter.

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Disclaimer: This publication is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. For specific technical or legal advice on the information provided and related topics, please contact the author.