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Category: News

Flash Labor Alert: Employee Solidarity Assistance Fund (FASE) Begins Roll-out

With the recent declaration of a State of Emergency in the Dominican Republic decreed to curb the spread of COVID-19, labor relations have been and will be considerably affected, since part of the measures taken by the Dominican State include the temporary closure of public and private companies and entities, as well as the closure of all borders.

In order to reduce the impact of the current crisis on the country’s main productive sectors and their collaborators, the Dominican government recently created the Employee Solidarity Assistance Fund (FASE), which will basically provide for a subsidy for the payment of employees’ salaries in order to help companies with their April and May 2020 payroll obligations. The aid will cover monthly salaries of up to RD$8,500 per employee, on the condition that the employee is kept on the company’s payroll.

The FASE program will be rolled out next Thursday, April 2nd. On this date the Dominican Government will enable online access for all companies to submit their applications; therefore, we invite you to consider this opportunity promptly, so you are able to apply in time and benefit from the program.

For more information about the FASE program and other news related to the Dominican Government measures to counter the effects of the COVID-19 pandemic, please visit our COVID-19 Resource Center.

Should your company decide to apply for the FASE program, Guzmán Ariza is fully prepared to assist you with the required application process.

How Can a Company Qualify for the Employee Solidarity Assistance Fund (FASE)?

The FASE (Employee Solidarity Assistance Fund) program is part of the Government’s recently announced financial aid package. As part of this program, the Government has agreed to cover up to RD$8,500 per employee in companies who have had difficulties to maintain their operations. Businesses interested in applying for the FASE financial aid to cover part of their payroll obligations must follow the following steps starting April 2nd :

1) Fill the company’s contact information on the Ministry of Treasury’s website with the following information:

  • Company’s tax ID and name.
  • Name, ID, telephone number and position of the company’s contact person.

2) Complete the application form that could be downloaded from the Treasury’s website with the following information:

  • Company’s tax ID, name and number of employees.
  • ID, name and payroll account number of the employees who will benefit from FASE (must be under their names) and routing number of the banks, if the accounts are not in Banco de Reservas. Also, specify the bank where the payroll is located and the bank account’s type.
  • Send the completed application form to the Ministry of Treasury’s FASE email address.

Economic Measures Announced by the Executive Branch on March 25, 2020 

President Danilo Medina announced in his address to the nation on 3/25/2020 the following financial aid package for the next three months, aimed at lessening the impact of the COVID-19 pandemic on the Dominican Republic’s main productive sectors and its employees: 

  • Banks will eliminate monthly minimum payments for credit cards and late payment fees.  
  • Banco del Reservas (government-owned) decided to lower interest rates for credit cards to 1%. 
  • Employees in companies who have shut their operations and have been sent home on unpaid leaves will receive RD$8,500.  
  • Companies who are having difficulties to maintain their operations will be able to temporarily receive RD$8,500 per employee to help them meet their payroll obligations, on condition that employees are not terminated.  
  • Families with Solidaridad welfare cards will receive RD$5,000 per month on the “Eating is First” component. An additional RD$2,000 will be added to households with 70+ year-old residents.  

Measures Issued by the High-level Commission of the Executive Branch to Prevent the Spread of COVID-19 in the Dominican Republic

Measures Regarding Transportation and Transit

  • Public transportation remains up and running.
  • Full border closure for 15 days. Exceptions: Inbound and outbound Ferry flights to return foreigners to their countries of origin, as well as cargo ships with essential goods and fuel tankers.
  • The general population is discouraged from any non-essential transit.

Which Companies Can Remain Open During the Quarantine Period?

  • Only grocery shops, supermarkets, pharmacies, gas stations, hospitals and medical labs
    are allowed to remain open.
  • Telecommunications companies: radio, television and press may remain open during the state of emergency.
  • Industrial sector, free-trade zones and agricultural companies can continue their operations by applying distance rules in production areas and encouraging remote work and flexible hours.
  • Financial institutions will operate within the new schedule approved by the Monetary Board (8:30 am to 3:00 pm during the week; Saturdays from 9:00 am to 1:00 pm).
  • Funeral homes remain open as long as they comply with Public Health rules. Concentrations must be avoided, limiting the number of people who can attend services.
  • Security services will operate without schedule limitations.
  • All other businesses shall remain closed.

Updated on March 19

President Danilo Medina Declared a State of Emergency

Dominican Republic President Danilo Medina, Decreed on March 19th , 2020 a national state of emergency for a period of 25 days until April 13th , 2020. The state of emergency (Dominican Constitution Arts. 262, 265 and 266) grants the President extraordinary powers to implement the necessary measures to contain the spread of the COVID-19, including the option to subsequently limit the right to transit and gather.

Updated on March 23

Suspended operations:

  • Non-governmental entities that offer non-essential public services, such as the Santo Domingo Chamber of Commerce and other Chambers of Commerce in general.
  • Call center operations are suspended, except for those that can work remotely.

Priority categories were established for public institutions to close their operations, according to their activities:

Category 1: doors must be closed to the public.

Category 2: companies will work with minimum staff and must implement working remotely.

Category 3: health service companies, public security, civil protection, social services and programs, energy services and national defense should maintain only essential personnel to keep their operations running.

The Ministry of Culture and the Ministry of Sports were closed, along with approximately 60 other institutions.

Relief Measures for Tax Compliance in the Face of the Economic Impact of COVID-19 in the Dominican Republic

Dominican Republic Tax Office (DGII) COVID-19 Tax Relief Update

  • Taxpayers may pay their February VAT (ITBIS) in up to 4 installments starting from the new 3/30/2020 extended deadline.
  • Installments of all tax debt payment agreements in force as of March 19, 2020, are reduced by 50%. Deadlines for these payments will be extended to double their term and taxpayers with overdue payments will benefit from other relief measures, without incurring in further penalties.
  • An extension is granted until 5/29/2020 to all taxpayers with Dec. 31st fiscal year closings, for the filing and payment of their Income Tax Returns.
  • DGII will temporarily cease to collect on payments derived from Advance Price Agreements (“APA”) in force with the hospitality industry.
  • An extension is granted until 4/30/2020 for the filing of the Related-Party Transfer Pricing Affidavit (DIOR) for taxpayers with fiscal year closing date of September 30th.

Tax Office (DGII) Operational Notices

Starting on Tuesday, March 24, 2020:

  • Tax Offices will be temporarily closed to the public. These will include Local Administrations, Service Centers, Tax Collecting Offices, Real Estate Operations and the Motor Vehicle Department.
  • All VAT and excise taxes exemption requests may be processed online through the Virtual Office. 

Income Tax Advance Exemptions and Deferral of both Payment Agreements and the entering into force of Law 46-20

  • Taxpayers, including corporate entities and sole proprietorship, with monthly obligation to pay Income Tax advances are exempt from payment of said advance for the March 2020 fiscal period. This provision does not apply for large taxpayers, except for those whose business have been ordered to shut down during the State of Emergency.
  • A three-month extension is granted for taxpayers with payment agreements in force as of 3/19/2020, applicable to installments with closing dates in April, May and June 2020.
  • Law 46-20 on Voluntary Wealth Disclosure is deferred until further notice. This statute establishes a special and transitory tax amnesty for taxpayers to voluntarily disclose or reassess all their movable and real estate properties located in the country or abroad.

Updates From Guzmán Ariza on Measures Taken by the Central Bank to Mitigate COVID-19 Pandemic Impact on the Dominican Republic Economy and Financial Sector

  • Reduce the Monetary Policy Rate by 100 points from 4.50% to 3.50% annually.
  • Authorize financial institutions to freeze debtors qualifications and provisions at their current level.
  • Decrease the interest rate of permanent liquidity adjustment facility (1-day repos) by 150 basis points, from 6 to 4.5%.
  • Reduce the interest rate on short-term paid deposits at the Central Bank to 2.50% per year.
  • Authorize credit restructurings entailing changes in payment terms, interest rate, time limits and fees.
  • Lighten coverage requirements of legal reserve in foreign currency.
  • Injecting liquidity into foreign currency for a sum of money up to US$ 300 million.
  • Ease the reserve coverage requirements for a sum of money up to RD$22,321 million.

Measures Issued by the Judiciary Branch in Response to the State of Emergency

  • All administrative and judicial dependencies have been closed, including all courts and registrar of titles nationwide.
  • Suspension of all procedural, registration and administrative deadlines, for all courts and judicial branch dependencies, which will resume 3 working days after the State of Emergency has passed.
  • The Criminal Jurisdiction’s Judicial Offices of Permanent Care Services will be the only judicial office allowed to remain open throughout the national territory.
  • In addition to their ordinary powers, these offices shall address urgent matters related to the protection of fundamental rights heard through habeas corpus and amparo actions.

Guzmán Ariza Attends the Cana Dorada International Film Festival

Guzmán Ariza attended the Cana Dorada International Film Festival, represented by the firm’s film and audiovisual team, consisting of Alfredo Guzmán Saladín, Alberto Reyes, Pamela Benzán and Leo Proaño.

The event, coordinated by businesswoman Raquel Flores and famous Mexican actor Fernando Colunga, co-founder of the festival, was attended by leading producers and local and international personalities of the industry.

The main goal of the festival was to generate dialogue and opportunities for new projects between producers and investors in music, television, film and streaming platforms.

The Dominican Republic Enacts a Bill on Public-Private Partnerships (PPP)

A public-private partnership (PPP) is a very particular type of contract through a bidding process whereby the public partner (a government entity) delegates some of its own responsibilities to a private partner under a long-term contract that defines the rights and obligations of each party during the term as well as the mechanisms for its financial rebalancing arising from unforeseen events or lack of compliance of the parties.

PPPs are an important tool for developing infrastructure and therefore fostering economic development. They are used with infrastructures like roads, airports, ports, power, water, and solid waste treatment and typically involve investment, operation and maintenance.

SCOPE

  • The Law establishes a regulatory framework beginning with the tender offering, selection, contract execution, and the complete process for the PPP to be successful.
  • It applies to the contracts on which the public agents outsource private agents, with the exception of PPPs developed previous to the enactment of the new law and other concessions for specific regulated industries such as the mining concessions.

Different Alternatives For The Implementation Of a PPP

Public initiative: originated by public agents with or without government funding.

Private initiative: originated by private agents that offer a long-term cooperative agreement between a private company and the national or local government.

Non-for-profit: nonprofit organizations are increasingly involved in the PPP model. Bringing together international organizations for cooperation agreements, other nonprofit organizations or local businesses.

General Aspects

  • For two years, projects similar to those already in the evaluation process or with no apparent public interest will not be accepted.
  • The government will only accept initiatives and give priority to those on areas and sectors that the Estate selected for PPPs projects.
  • PPP Concession Contracts will be for a maximum of 40 years. This could be extended to no more than half the originally contracted time.
  • The value of the PPP Contract will not exceed 25% of the original contract value.
  • Any changes to the PPP Contracts must be submitted to the PPP National Committee. The global risk matrix cannot be modified.