May 2016 - Guzmán Ariza | The Dominican Republic Law Firm

New York Times Quotes Guzmán Ariza

The New York Times recently quoted the opinion of Alfredo Guzmán-Saladín, partner at the Guzmán Ariza Law Firm, in an article about the real estate market in the Dominican Republic published in the International Real Estate section on May 11, 2016.

The article referred to the most important factors to be considered when buying property in the Dominican Republic, especially those related to the legal and tax-related due diligence.

Alfredo Guzmán-Saladín has extensive experience in real estate, commercial and tourism matters in the Dominican Republic and has contributed to important international publications about Dominican real estate law, such as Getting the Deal Through and Latin Lawyer.

Guzmán Ariza is the #1 real estate law firm in the Dominican Republic, recognized internationally by the most prominent legal directories, such as Chambers and Legal 500.

[May 2016]

Fundéu to Open in July in the Dominican Republic

The Fundación del Español Urgente (Fundéu) will open in July in the Dominican Republic after reaching an agreement with the Guzmán Ariza Foundation Pro Dominican Academy of Letters signed in Madrid. “Fundéu GA” aims to promote the correct use of the Spanish language in Dominican media.

Fabio Guzman Ariza, president of the Guzmán Ariza Foundation Pro Dominican Academy of Letters and managing partner of the Guzmán Ariza law firm, told EFE that the agreement was “a dream come true”. The foundation has already helped the Dominican Academy of Letters in ventures like the publication of the Diccionario del español dominicano (2013) and the more recent Diccionario fraseológico del español dominicano (2016), the first on Dominican Spanish and the second on popular Dominican phrases.

Fundéu makes daily recommendations to the press and the general public on language issues.

Click here to view the video

[May 2016]

Environmental Permits in the Dominican Republic

All projects in the Dominican Republic must apply for and obtain environmental approval from the Ministry of the Environment and Natural Resources, pursuant to General Law on the Environment and Natural Resources 64-00, which regulates environmental pollution, the generation and control of toxic and hazardous substances, and the treatment of domestic and municipal wastes, among other matters. The type of environmental permit required depends on the nature of the real estate project:

• An environmental licence is needed for projects with a high level of potential environmental impact, which requires an environmental impact study, measures to prevent, mitigate or compensate the environmental impact, and a special program for environmental management and adaptation.

• An environmental permit is needed for projects with a moderate level of potential environmental impact, whose negative effects can be avoided or minimized by measures of mitigation, prevention or compensation, which must be set forth in a special program for environmental management and adaptation, requiring an environmental impact study.

• An environmental certificate is needed for projects with a low level of potential environmental impact, which only requires compliance with current environmental regulations.

• A certificate of minimum impact is needed for projects with a minimum level of potential environmental impact, which only requires compliance with current environmental regulations.

Nationality, Citizenship and Immigration

Introduction

In general, Dominican law reflects the welcoming nature of the Dominican people, permitting entry of most foreign nationals whether visiting for pleasure, business, or retirement. In addition, many foreign nationals can obtain residency or citizenship by submitting properly prepared documents, completing legal formalities, and waiting prescribed time periods.

The principal laws regarding immigration are the Constitution, General Immigration Law 285-04, its predecessor Law 95 of 1939, Immigration Regulation No. 631-11, and Law 171-07 regarding special incentives to retirees.

Nationality

Article 18 of the Constitution establishes the following as Dominican nationals:

a) A person born to a mother or father with Dominican nationality, regardless of the country in which the parent lives;

b) A person born in the Dominican Republic, except a person (i) born to a member of a foreign diplomatic service or consulate in the country, (ii) born to an illegal resident, or (iii) born to a foreigner “in transit” as defined by Dominican law;

c) A person marrying a Dominican national, upon fulfillment of the requirements established by law;

d) The direct descendants of Dominicans residing in a foreign country;

e) A person who is naturalized. The naturalization process is governed by Law 1683, enacted in 1948 and administered by the Department of the Interior (Ministerio de Interior y Policía). An applicant must meet specific residency requirements as explained below.

Article 19 of the Constitution stipulates that a naturalized citizen is not eligible to hold the office of President or Vice President of any branch of the Dominican government, and is not required to take up arms against his or her country of origin.

Dual Nationality

Article 20 of the Dominican Constitution permits dual nationalities: a Dominican may acquire another nationality without the risk of losing Dominican nationality; a Dominican national, who has acquired foreign nationality by virtue of birth, may at the age of eighteen choose dual nationality or relinquish one of the two nationalities.

Furthermore, except for becoming President or Vice President of the country, a Dominican with dual nationality may hold any elected office in the Dominican Republic, or be appointed to a ministerial position or a position in the Dominican diplomatic service, without relinquishing his or her foreign nationality. If the person wishes to run for President or Vice President of the country, the Dominican dual national must relinquish the foreign nationality ten years before the scheduled election and reside in the country for ten consecutive years before taking office.

Citizenship

The rights of citizenship are only bestowed upon a Dominican national who has reached the age of eighteen, or who is married or has been married before the age of eighteen (Article 21 of the Constitution).

Thus, although a minor can be a Dominican national, the minor will not have citizenship rights, unless married. Citizenship entitles the person to the right to vote, run for public office, vote on referendums, make requests of public interest to policy makers, and report public officials’ misconduct in the performance of their duties (Article 22 of the Constitution). However, citizenship will be revoked for conviction in assisting or participating in deliberate attacks or harm against the interests of the Dominican Republic, including treason, espionage, conspiracy, or taking up arms against the Republic (Article 23 of the Constitution). In addition, citizenship will be suspended for the duration of (i) a sentence for a felony conviction, (ii) a legally declared incompetency, (iii) acceptance to a position with a foreign State within the Dominican Republic not authorized by the Executive Branch, and (d) a violation of any of the conditions of naturalization (Article 24 of the Constitution).

Foreign Nationals

Under Article 25 of the Dominican Constitution foreign nationals are afforded the same rights and subjected to the same duties as Dominican nationals while in the Dominican Republic, with one exception. A foreign national may not participate in political activities in the country except to vote in elections in the foreign national’s country of origin. If a foreign national encounters legal problems while in the country, the foreign national may request diplomatic protection only after exhausting all available remedies before Dominican authorities and courts, except where international conventions provide otherwise. Foreign nationals must properly register with the Registry of Foreigners (Registro de Extranjeros). General Immigration Law No. 285-04 and Immigration Regulation No. 631-1 govern the flow of migrants to and from the Dominican Republic, and grant the Immigration Department (Dirección General de Migración) the authority to control the national borders and administer the law.

Admission to the Dominican Republic

A foreign national is admitted to the Dominican Republic either as a “nonresident” or “resident.” Nonresidents are those who intend to stay in the country for a limited time for a particular purpose such as pleasure or business, and require a visa or tourist card for legal entry. A resident is a foreign national who is staying in the country for an extended period and has obtained legal residency status, evidenced by a residency card.

Nonresident Status

A nonresident foreign national requires permission to enter and stay in the country. Foreign nationals arriving from countries that are party to a dispensation treaty, generally developed countries, are permitted entry by a tourist card and do not need a visa. Tourist cards are purchased for a nominal amount at one of the country’s international airports at the time of entry and before passing through customs.They are valid for three months.

Foreign nationals who are not citizens of a country covered by such a treaty need to obtain a visa before traveling to the Dominican Republic. Application for a visa is made to a Dominican Consulate in the foreign national’s country of origin, or if no such Consulate exists, to a Dominican Consulate in a nearby country. Several types of visas are available depending on the purpose of the visit: tourist, business, work, and student visas. The criteria required for each varies, and the type of visa granted is determined by the Immigration Department. Visa applications are accepted or denied at the discretion of the government. Visas must be obtained before arrival and are typically valid for three months. They cannot be obtained while in the Dominican Republic.

Residency Status

A foreign national, such as a retiree, a person intent on doing business, or an investor, who seeks to stay in the Dominican Republic for a year or more should consider obtaining residency status. Residency status affords the foreign national legal status in the country entitling the person to an identification card (Cédula de Identidad Personal) and access to a more favorable tax structure. Residency status may only be sought while the foreign national is in the country on a residency visa; applicants must be in good health, have sufficient economic means and a clean police record. The process presently involves two steps: temporary residency and permanent residency. Foreign nationals are prohibited by statute from entering the Dominican Republic for residency purposes in the following cases:

a) Contagious illness threatening to public health, except, under certain requirements, when sponsored by relatives living in the DR.

b) Mental illness or physical disabilities, with certain exceptions.

c) Conviction for a crime (drugs, human trafficking, prostitution, terrorism, and other serious offences).

d) Previous deportation without reentry permit or prohibition from entering the country.

Foreign nationals seeking residency in the Dominican Republic fall into two categories:

a) Those who may apply immediately for permanent residency; and

b) Those who must apply first for temporary residency.

The following applicants may apply immediately for permanent residency status without having to previously obtain temporary residency status:

1) Investors of at least 200,000 USD in local businesses (including free zones and government contracts) or in local financial instruments.

2) Retirees with a monthly pension of at least 1,500 USD (plus 250 USD per dependent).

3) Applicants with monthly income of at least 2,000 USD for five years or more (rentistas).

4) Applicants related to Dominicans or to foreigners with permanent residency status in DR (spouses and children). The application process is essentially the same for both temporary and permanent residency, except for some additional documents required in permanent residency applications.

Expedited Residency

Law 171-07, enacted July 13, 2007, acknowledges the benefit of foreign investments to the general and economic well-being of the Dominican people and nation.

Foreign nationals meeting certain criteria can acquire residency status within forty-five working days from the date an application is admitted for inspection at the Immigration Department (Decree No. 950-01).

Eligibility Criteria

Property owners with rental income, investors, and retirees are eligible to apply for residency on an expedited basis if certain income requirements and other specific criteria are met. The term used to describe this status is “Investment Residency,” and is not always easy to obtain. The foreign national must submit the same documents required for the normal residency process, and additional documents that evidence the foreign national’s eligibility for Investment Residency.

Property Owner with Rental Income

a) Income may be derived from rental property anywhere in the world.

b) Income must be a minimum of US$2000 per month. An additional income of US$250 per month per minor in the immediate family and spouse accompanying the applicant must be added.

c) Proof of rental income evidenced by an official document such as a lease must be certified, authenticated, and translated into Spanish for submission to the Immigration Department.

Investor Criteria

a) The investment must be US$200,000 or more.

b) The investment may be direct or indirect, for example, a real estate transaction, a deposit in a bank account, or an investment in a project in the Dominican Republic.

c) The investment must be registered in the Dominican Republic, evidenced by a Certificate of Investment. Regulation 214-04 on Foreign Investment Registration stipulates the criteria for registering investments with the Department of Export and Investments (CEI-RD). The CEI-RD issues a Certificate of Investment approximately one month from the date of application, and the Certificate must be regularly renewed. The holder of a valid Certificate of Investment can sponsor immediate family members, if an individual, or company employees, if a corporation, for expedited residency.

Retiree Criteria

a) Income must come from a public or private plan providing retirement income.

b) Income must be at least US$1,500 per month. An additional income of US$250 per month per minor in the immediate family and spouse accompanying the applicant must be added.

c) Proof of retirement income must be certified by the plan provider, authenticated, and translated into Spanish and submitted to the Immigration Department.

Processing Time and Residency Validity

Although the time for the expedited process for residency is set at forty-five days, the actual time will depend on how long it takes to authenticate documents in the country of origin, undergo the medical exam, and prepare local documents for submission to the Immigration Department. Investment Residency is valid for one year. One benefit is that within six months of obtaining this status, the foreign national may apply for “Investment Citizenship. If citizenship is not sought, the foreign national has the option of applying for permanent residency.

Citizenship

Anyone eighteen or older may apply for citizenship. Citizenship is granted at the government’s discretion.

The particular situation of the foreign national dictates the application route. The three most common avenues are as (i) a child born in another country to a Dominican citizen, (ii) a spouse of a Dominican citizen, or (iii) a resident.

Child of a Dominican Citizen

Under the Constitution, a child born to a Dominican citizen in another country is a Dominican national and entitled to citizenship. The choice of Dominican citizenship is optional and not automatic; it requires an intentional act by the person upon reaching the age of eighteen or after, and includes filing formal papers with the authorities.

Documents required are the original birth certificates of the applicant and of the Dominican parent(s), and a copy of the parent’s Dominican identification card (Cédula de Identidad Personal).

Spouse of a Dominican Citizen

A foreign national who legally marries a Dominican citizen may apply for citizenship after six months of marriage, no matter the location of the marriage. The foreign spouse must provide an authenticated and translated copy of the marriage certificate and the documents shown below under Residents, with some variations.

Residents

A foreign national with Permanent or Investment Residency status may apply for citizenship after the prescribed waiting periods of two years for permanent residency and six months for investment residency.

Residency status must be active to apply for citizenship. The documents required for citizenship are: an authenticated and translated copy of the birth certificate from the foreign national’s country of origin; the original and colored copies of the foreign national’s passport; photos of the foreign national in a prescribed format; the renewed residency card; and an affidavit prepared by a Dominican attorney and signed by the foreign national.

Citizenship Procedure

Once the proper documents for one of the above cases are ready, the application for citizenship is filed with the Department of Interior. Approximately two weeks after filing, the foreign national will be called to appear personally before the Department of Interior in the Dominican Republic for an interview, conducted solely in Spanish. The questions and answers can be reviewed before the interview. Within five months after the interview, the foreign national will be summoned to personally take the oath of citizenship, granted and signed by the President of the Dominican Republic. Approximately two months after taking the oath, the foreign national will be issued a Dominican birth certificate, and be permitted to obtain a Dominican identification card (Cédula de Identidad Personal). The foreign national must appear personally to obtain the identification card from the issuing government office. With the identification card and evidence of citizenship, the new citizen is entitled to apply for a Dominican passport, a separate but relatively simple process.

GUZMÁN ARIZA ON IMMIGRATION

Guzmán Ariza is the premier law firm in the Dominican Republic for immigration with a vibrant practice serving Fortune 500 clients such as Coca-Cola, Johnson & Johnson, The Gap, Kraft Foods, etc. Our lawyers have convenient access to the Immigration Department and assist company executives, investors and retirees seeking residency or citizenship. We perform regular and personal checks on the status of every application to provide clients with immediate notice when papers are ready.

Registering a Patent in the Dominican Republic

Patent registration in the Dominican Republic is governed by Law 20-00 on Industrial Property.

To start the process, the following information and documents are required:

1. Applicant’s full name, address, occupation, and identity document (copy).

2. Inventor’s full name, address, occupation, and identity document (copy).

3. If the applicant is not the inventor, deed of assignment of the invention, authenticated at the nearest Dominican Consulate or apostilled.

4. Title to the invention or utility model.

5. Power of Attorney granted to the local representative, authenticated at the nearest Dominican Consulate or apostilled.

6. Two copies of the description. As for the description itself, it must depict the invention in such clear and complete terms so as to allow for its evaluation, as well as permit any person skilled in the art to which it pertains to be able to use it. The description of the invention shall state the name of the invention and shall include the following information: (a) the technological, agricultural, scientific or other field to which the invention refers to or applies; (b) the previous technology known to the applicant that may be considered useful for understanding and examining the invention, and any reference to previous documents and publications related to said technology; c) a description of how the invention provides a solution to a certain technical problem, and the advantages of this invention compared to previous inventions that solved the same problems;(d) a brief description of the drawings, if applicable; (e) the best way known by the inventor to execute or implement the invention using examples and making references to the drawings; (f) the manner in which the invention is capable of industrial application, unless clearly evident from the description or nature of the invention;

When the invention relates to biological material that cannot be described in a manner that enables any person skilled in the subject area to use the invention, and when such material is not available to the public, the description shall be supplemented by depositing such material at an institution designated by the National Office for Intellectual Property. This must be indicated in the description, along with the name and address of the deposit institution, the date of deposit and the receipt number.

7. One or more claims. The subject matter for which protection is sought through a patent is described by claims. The claims must be clear and concise and shall be entirely supported by the description. The claims shall contain: (a) a preamble that defines the object of the invention (this preamble shall include all known aspects of the invention considered to be state of the art); and (b) a description of the elements that make the invention novel, focusing on the aspects you want to protect.

Each main claim may be followed by one or more dependent claims, with reference to the main claim and specifying the additional features to be protected.

8. Drawings. The applicant shall furnish a drawing whenever necessary for the understanding, evaluation and use of the invention submitted for a patent.

9. Summary. The summary shall include a synthesis of the information disclosed in the description, an outline of claims and drawings, and, if applicable, the chemical formula or drawing best characterizing the invention. The summary shall facilitate the undestanding of the technical problem and solution contributed by the invention, as well as the principal use of the invention. The summary shall be for technical information and publication purposes, and shall not be used to determine or interpret the scope of the protection granted by the patent

10. Date, number and filing office of any patent application or of any other type of protection that has been filed, or of registration issued by another country which refers, in whole or in part, to the same invention claimed in an application filed in the Dominican Republic or abroad.

11. Certified copy of foreign applications for the same patent, authenticated at the nearest Dominican Consulate or apostilled, in case of claiming priority rights (PCT Applications).

12. Electronic copies of the description, abstract, claims, drawings, or nucleotide sequences that were provided on paper.

The above documents must be provided as originals, unless otherwise specfied, and translated into Spanish. English and Spanish versions must be authenticated or apostilled separately.

Taxation in the Dominican Republic

Legislation, Administration and Collection

Taxation in the Dominican Republic is governed by Law 11-92, commonly referred to as the Tax Code, and its corresponding regulations. The administration and collection of taxes are the responsibility of the Dominican Internal Revenue Agency (Dirección General de Impuestos Internos), known by its Spanish acronym, DGII.

Customs duties, established under separate legislation, are administered and collected by the Customs Agency (Dirección General de Aduanas).

Territoriality

Dominican tax law is primarily territorial, meaning taxes are generally collected only on income derived from Dominican sources. Consequently, all income from work or business activities conducted within the Dominican Republic is taxable, regardless of whether the individual or entity is Dominican, a resident or nonresident foreigner, or a foreign company operating with or without a local branch. Conversely, income generated from work performed outside the Dominican Republic is not subject to local taxation, even if received by Dominican nationals, resident foreigners, or foreign companies with Dominican branches.

The only exception to this territorial principle pertains to financial income earned abroad by Dominicans or residents of the Dominican Republic. Such income is taxable locally. Typical sources of foreign financial income include stocks, bonds, mutual funds, and certificates of deposit. Dominicans who return after residing abroad and foreigners who become Dominican residents are exempt from paying taxes on their foreign-sourced financial income for the first three years following their return or establishment of residency. Additionally, pensions, social security benefits, and income received by investors who obtained residency under the provisions of Law 171-07 are expressly exempted.

For tax purposes, individuals residing in the Dominican Republic for more than 182
days within any continuous 12-month period are considered residents.

All taxpayers are required to register with the Internal Revenue Agency and obtain a taxpayer identification number.

Main Taxes

The principal taxes affecting businesses in the Dominican Republic include:

Income tax
Capital gains tax
Goods and services tax (ITBIS)
Excise tax
Real estate tax
Tax on company assets

Income Tax

Both companies and individuals must pay taxes on their net taxable income.

Corporate Tax Rate

All business entities are subject to a flat tax rate of 27%. Unlike in the United States and other countries, the Dominican Republic applies identical tax treatment to corporations, LLCs, and partnerships.

Determination of Corporate Net Taxable Income

Net taxable income is calculated by subtracting legally allowed deductions from gross income. Permitted deductions include expenses directly related to business operations, interest payments on debt, depreciation, amortization of intangible assets, charitable donations (up to 5% of net taxable income for the fiscal period), and research and development expenses unrelated to mineral extraction. Only expenses and losses incurred to generate local taxable income can be deducted. Net operating losses from any fiscal year may be carried forward for up to five years but cannot be carried back.

Corporate Income Tax Returns

All companies, including those without income or business activity, must file annual income tax returns with the DGII.

For companies operating on a calendar year, returns must be filed by April 30. Companies with a non-calendar fiscal year must file returns within 120 days of their fiscal year-end. Returns must be accompanied by financial statements for the corresponding fiscal year.

Payment in Advance of Corporate Income Tax

Corporate income tax is paid monthly in advanced installments of 1/12th of the total amount paid for the previous fiscal year. These advance payments are later compensated against the taxes due for the current fiscal year.

Income Tax Rates for Individuals

Natural persons who receive income from a Dominican source or from financial investments will pay taxes as follows:

Taxable Income (in DOP) Tax (in DOP)
0 to 416,220.00 0
416,220.01 to 624,329.00 15% of taxable income over 416,220.01
624,329.01 to 867,123.00 31,216.00 plus 20% of taxable income over 624,329.01.
More than 867,123.01 79,776.00 plus 25% of taxable income over 867,123.01.

Taxable income brackets are adjusted annually for inflation.

Only educational expenses can be deducted for income tax purposes. Unlike in the United States, no deductions are allowed for dependents, mortgage interest or medical expenses. Married couples must file separate returns.

Individuals who receive an annual income of more than 416,220.00 DOP from non-wages sources must file a tax declaration every year, on or before March 31.

Capital Gains Tax

The Dominican Tax Code defines a capital gain as the difference between the sale price of a capital asset and its acquisition price or production cost, adjusted for inflation. For assets subject to depreciation, inflation adjustments are applied to the residual value. This adjustment prevents taxpayers from being unfairly taxed on price increases caused solely by inflation —a feature not typically available in the United States and many other countries. Unlike other jurisdictions, there are no exemptions from the payment of capital gains taxes, even if the proceeds of a sale are used for long-term investments.

Capital gains tax rates are identical to regular income tax rates: 27% for companies and a progressive scale ranging from 0% to 25% for individuals.

Capital gains calculations must be made exclusively in Dominican pesos.

Goods and Services Tax (ITBIS)

The Goods and Services Tax (GST), known locally by its Spanish acronym ITBIS, is a value-added tax of 18% applied to the sale and importation of most goods and services. For imports, the GST is calculated based on the CIF (cost, insurance, and freight) value plus any applicable customs duties. A reduced GST rate of 16% applies to specific food products.

The 18% GST must be explicitly added to each invoice issued for goods and services. Individuals or business entities that collect GST are required to remit it to the DGII within the first 20 days of the subsequent month. Noncompliance results in a 10% surcharge for the first month overdue, an additional 4% for each following month, and a monthly penalty of 1.1% for each month or fraction thereof.

Taxpayers may deduct from the total GST collected any GST amounts paid to suppliers, vendors, customs, and similar entities.

Certain goods and services are exempt from GST, including basic foodstuffs, medicines, fuels, fertilizers, books, magazines, educational materials, financial services, transportation, residential rentals, utilities, educational and cultural services, and goods intended for export.

Excise Tax

Excise taxes apply to the purchase or importation of certain goods and services, including motor vehicles, firearms, tobacco products, alcoholic beverages, jewelry, electronics, telecommunication services, insurance, and payments made by check. Rates vary depending on the item or service. For example, telecommunication services are taxed at 10%, insurance at 16%, and payments by check or wire transfers at 0.15%.

Real Estate Tax (IPI)

An annual real estate tax of 1% is imposed on properties owned by individuals and trusts, calculated based on the total value of all properties owned by each individual, as appraised by government authorities. The valuation excludes furniture and equipment.

For individuals, the tax applies only to values exceeding 10,190,833.00 DOP (approximately $160,000.00). For trusts, the tax is calculated based on the full appraised value, without any exemption.

Real estate tax payments are due annually by March 11 or can be divided into two equal installments, with the first due by March 11 and the second by September 11.

The exemption threshold is adjusted annually for inflation.

The following types of properties are exempt from real estate tax:

Agricultural properties.
Primary residences owned by individuals aged 65 or older who have no other property.
Properties owned by companies, as these entities pay a separate tax on company
assets.

Tax on Company Assets

Companies pay an annual tax equal to 1% of their total assets. This tax is credited against the company’s income tax obligations, provided such obligations exist due to profits earned.

Tax Incentives

Various tax incentives are available for specific industries and investment scenarios, as outlined previously in the section “Investing in the Dominican Republic.” Please refer to that section for detailed information.

Withholdings at the Source

Companies must apply withholdings in the following scenarios:

Employee salaries. Employers must withhold income taxes from employees’ salaries and remit them to the DGII within the first ten days of the following month.
Payments abroad. Payments made to non-resident individuals or entities are generally subject to a 27% withholding tax, considered final and without deductions. Exceptions include payments to residents of Canada (18%) and interest payments to financial institutions or payments by Dominican branches to their foreign headquarters (10%).
Dividends. Companies must withhold 10% on dividends distributed to shareholders.
Rentals. Payments made to individuals (not companies) for rentals are subject to a 10% withholding tax.
Fees for services and commissions. Payments to individuals (not companies) for services or commissions incur a 10% withholding tax.

Anti Avoidance Rule

Based on the substance-over-form principle, the Dominican Tax Code contains a general anti-avoidance provision allowing the DGII to disregard certain legal entities or transactions intended primarily to secure unjustified tax advantages.

Transfer Pricing Rules

The Dominican Republic has implemented transfer pricing regulations aligned with OECD guidelines. These rules apply to transactions involving resident companies or individuals that engage commercially or financially with related entities or with parties domiciled in jurisdictions featuring preferential (low or zero) tax regimes or blacklisted territories, irrespective of their relationship status. Companies must file an annual transfer pricing information return with the DGII.

Double Taxation Treaties

The Dominican Republic has double taxation treaties in force with Canada (since 1977, covering only income taxes) and Spain (since March 2014, covering income and capital gains taxes).

Foreign Accounts Tax Compliance Act (FATCA)

The Dominican Republic’s DGII and the U.S. Internal Revenue Service (IRS) have established a bilateral financial and tax information exchange agreement under the Foreign Account Tax Compliance Act (FATCA) of 2010. FATCA mandates financial institutions in participating countries to provide information regarding the accounts of U.S. citizens, residents, corporations, estates, and trusts to ensure compliance with U.S. tax laws.

Under the intergovernmental agreement (IGA), Dominican financial institutions report FATCA-related data to the DGII, which subsequently transfers this information to the IRS. This reciprocal agreement also requires the United States to provide relevant financial information about Dominican residents to the DGII.

Registering a Trademark in the Dominican Republic

Trademark registration in the Dominican Republic is governed by Law 20-00 on Industrial Property.

The process to register a trademark is as follows:

(1) Preliminary searches are optional to determine if the mark requested is available for registration in the desired class, under the international classification of goods and services. The search may take up to 5 business days. If time is a factor, faster service is available for a higher fee.

(2) If the search results do not preclude the registration of the mark, the applicant may proceed to file a petition to record the mark. Government fees must be paid in full with the filing.

(3) If the application complies with the legal requirements, the National Office of Industrial Property (ONAPI) will allow the petitioner to pay for the publication of an excerpt of the application in its Journal. Third parties have 45 days from the date of publication in the Journal to file an opposition to the application. If the application is not opposed within 45 days, or if the opposition is rejected, the Office will issue the Certificate of Registration, which is valid for 10 years and may be renewed. The whole process, without opposition and including the search, takes approximately 4 to 5 months.

To proceed to file the petition for registration, the applicant must provide the following information and documents:

(1) Full name and address of the applicant.

(2) Power-of-attorney signed by the applicant, authenticated at the nearest Dominican Consulate or apostilled. The original copy of this document should be sent to us, since it is required to be filed jointly with the trademark application.

(3) Description of the goods and services covered by the mark, grouped by classes, according to the international classification of goods and services.

(4) If the application is to be based on a foreign registration, a certified copy of such registration, authenticated at the nearest Dominican Consulate.

(5) If a design is to be filed, 6 samples of the design of at least 6 in. x 6 in. (15 cm. x 15 cm.) in size.

(6) If the applicant is an individual copies of his/her passport’s first page and Identification Card. If the foreign applicants are companies, copies of the company’s incorporation certificate and passport of its signing legal representative (President, Vice President, etc…). (No authentication needed)

(7) Copy of the Trademark’s certificate of registration in the foreign country, even if the registration is not going to be based directly on a foreign registration. (No authentication needed).

Intellectual Property in the Dominican Republic

Constitutionally-Protected Intellectual Property Rights

Article 52 of the Constitution of the Dominican Republic recognizes and protects the exclusive property rights of authors and inventors over their work, trade names, trademarks, distinctive signs and any other creation of their intellect, as established by law.

Legislation

Inventions, utility models, industrial designs, trademarks, trade names, signs, logos, geographical indications and designations of origin are governed by Industrial Property Law 20-00 and its enabling regulations. Copyright protection is governed by Copyright Law 65-00 and its enabling regulations, which also protects the rights of performers, phonogram producers and broadcasters.

International Treaties on Intellectual Property Recognized in the Dominican Republic

The Dominican Republic is a party to and has ratified many international treaties related to intellectual property, including the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, and the World Intellectual Property Organization treaties on copyright, patent rights, and performances and recordings.

Administration of Industrial Property Rights

The National Agency for Industrial Property (known locally as ONAPI, its Spanish acronym), a dependency of the Ministry of Industry and Trade of the Dominican Republic, is in charge of the administration and registration of industrial property rights. Industrial property records are public and can be consulted free of charge at ONAPI.

Administration of Copyrights

The National Copyright Agency (known locally as ONDA, its Spanish acronym), a dependency of the Ministry of Culture of the Dominican Republic,is in charge of the administration and registration of copyrights. Copyright records are public and can be consulted free of charge at ONDA.

Protection and Registration of Industrial Property Rights

Inventions, utility models, industrial designs, trademarks, trade names, signs, logos, geographical indications and designations of origin must be registered at ONAPI in order to be protected. Nonetheless, priority rights are recognized for industrial property registered in other countries on the basis of international agreements ratified by the Dominican Republic.

Inventions

Patents are granted to protect the rights of inventors, giving them exclusive rights to exploit their inventions for a specific period of time. The law defines invention as any novel idea or creation of the human mind susceptible of industrial application. An invention is considered novel when it is not within the state of the art of the relevant industry. Certain matters such as scientific theories, business principles or methods, games, computer programs, medical treatment methods, and animals are not patentable.

ONAPI classifies patents for inventions in accordance with the Strasbourg Agreement Concerning the International Patent Classification of 1971, as amended in 1979.

Patents for inventions are granted for a period of twenty years from the application date, with a possible extension of up to three more years in case of unreasonable delay by ONAPI in the approval process.

Patent applicants in a country that grants reciprocity to patent applicants in the Dominican Republic benefit from priority rights for a period of twelve months from the date of their application abroad to apply for registration in the Dominican Republic.

Patent infringement is subject to penalties consisting of six months to three years in prison, fines ranging from 50 to 1000 times the legally-established minimum monthly salary, and civil damages.

Utility Models and Industrial Designs

Patents are also granted by ONAPI to protect utility models and industrial designs. Utility models are new forms of objects, tools, instruments or mechanisms that allow for its better or different industrial use. Industrial designs consist of the presentation or packaging of a product or object that gives it a unique appearance.

ONAPI classifies industrial designs according to the Locarno Agreement Establishing an International Classification for Industrial Designs of 1968, as amended in 1979.

Patents for utility models are granted for a period of fifteen years from the application date. Patents for industrial designs are granted for a period of five years from the application date, but can be extended for two additional periods of five years each.

Trademarks, Service Marks, Tradenames and Slogans

A mark is legally defined as any visible sign or combination of signs, susceptible of graphic representation, used to distinguish the products or services of a business from those of other businesses. Words (real or made-up), names, slogans, letters, numbers, monograms, figures, labels, coats-of-arm, pictures, trimmings, combinations of colors, shapes, among others, may be registered as marks. No registration is granted, however, to marks that may be confused with others already registered or pending registration, or consisting of just common words or geographical names, or of usual or necessary shapes of products, among others.

ONAPI classifies marks according to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 1957, as revised and amended.

Registration of marks is granted by ONAPI for a period of ten years, renewable for additional periods if applied for within six months from its expiration date. Proof of use of the mark must be filed with the renewal application. Registration of a mark may be cancelled if it is not used for three consecutive years.

Infringement of a registered mark is subject to penalties consisting of six months to three years in prison, fines ranging from 50 to 1000 times the legally established minimum monthly salary, and civil damages.

Tradenames are words used to identify individuals or entities in connection with their business activity. Slogans are words used to supplement a trademark. To be protected, tradenames and slogans must be distinctive. The provisions regarding the registration of marks apply to tradenames and slogans.

Protection and Registration of Copyrights

Dominican Copyright Law 65-00 protects the rights and interests of authors of any intellectual work of a creative nature, whether literary, artistic, or scientific in character, including, among others, novels, short stories, plays, lectures, speeches, sermons, musical compositions, choreography, paintings, sculptures, drawings, illustrations, maps, architectural designs, photographs, computer programs, data bases, audiovisual works and phonograms. Ideas, processes and mathematical operations, however, are expressly excluded from copyright protection.

Protection without Registration

The author of an original work has, by the mere fact of its creation, exclusive rights over it, enforceable against third parties, without need of registration or any other formality. Unlike patents and trademarks, copyright will be automatically granted from the work’s creation without registration. Nonetheless, most authors voluntarily register their works with the competent authority for the purpose of providing preliminary evidence to resolve future copyright disputes. Copyright registration at the National Copyright Agency (ONDA) does not create the copyright; it only makes public its existence.

Nature and Extent of Copyright Protection

Authors have both property rights and moral rights over their work. Property rights entitle them to all economic benefits derived from their work, including rights of sale, usage or exploitation of any kind, rights of reproduction, translation, adaptation, performance and broadcasting. As a general rule, property rights are protected for the benefit of the author, his heirs and assignees during the life of the author plus 70 years. However, foreign authors who are not Dominican residents are protected for the period of time indicated by the copyright laws of the country where the work was first published or protected, or for the period applicable under Dominican law, whichever is shorter. At the expiration of the copyright, the work enters the public domain.

Moral rights entitle authors to make their work known publicly, to make public their name or to use a pen name, and to defend their work against plagiarism, defamation or mutilation. Moral rights are not subject to a time limit and cannot be assigned to a third party.

Works Produced under a Service Contract

Unless agreed otherwise, the copyright for works created under a service contract belong to the individual or entity that hired the author, and not to the latter. Authors are entitled only to the fee agreed for their service.

Translations, Adaptations and Arrangements

Translations, adaptations or arrangements of works done with the authorization of their original authors constitute personal creations and are deemed to be intellectual works distinct from their originals, and, as such, subject to copyright protection for the benefit of their translators, adapters and arrangers.

Copyright Infringement

Copyright infringement is subject to criminal and administrative penalties, as well as payment of damages to the copyright holder. Criminal penalties range from three months to three years imprisonment and fines from 50 to 1000 times the minimum monthly wage. Administrative penalties, enforced by ONDA, and in certain cases by the Customs Agency, may include temporary or permanent closing of the business infringing the copyright, confiscation of equipment, destruction of illegal reproductions, and fines.

New Free Zones to be Established in the DR

The Ministry of Industry and Commerce announced that they had approved permits for 15 new companies that applied to set up operations in the duty free manufacturing zones. They have also signed contracts to develop and open three new free zone parks.

These new companies will invest around RD$1.35 billion and create 1,766 direct jobs with an income of around US$21.7 million. The development and operation of the three new free zones parks is estimated to involve an investment of RD$1.74 billion, generate income around US$10.7 million and create 3,200 direct jobs.

[May 2016]