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If you are planning to incorporate a company in the Dominican market, or are already doing business there, you will need to maintain financial regulatory compliance. Financial regulatory compliance is part of general corporate compliance and often falls within the provision of corporate secretarial services provided by third parties. If you don’t adhere to the financial regulations in the Dominican Republic, you may face legal issues or penalties that could adversely affect your business, and diminish your company’s standing in the eyes of local authorities.
For anyone interested in doing business in the Dominican Republic, this guide provides an overview of what your local corporate lawyer will be engaged in on your behalf. If you are interested in knowing more about how we can assist you doing business in the Caribbean’s largest economy, contact us today.
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The Dominican Republic Offers an Investment-Friendly Environment
Despite its small size, the Dominican Republic is the eighth-largest economy in the region by gross domestic product (GDP). It is also a popular destination for foreign investors looking to enter Latin America and the Caribbean.
That status has come on the back of decades of notable growth, especially after the country began to implement a slew of measures in the 1990s to open up the economy and encourage foreign direct investment (FDI). During this time period, financial regulatory compliance in the Dominican Republic also became more stringent.
Prior to the COVID-19 pandemic, which affected the Dominican economy, the country had experienced remarkable and nearly uninterrupted growth since the 1990s. Between 2004 and 2022, the GDP of the Dominican Republic saw a four-fold increase, reaching $101.65 billion in 2022 (all figures in USD). Over the same 18-year period, gross national income (GNI), a crucial indicator of overall prosperity, also exhibited dynamic change.
In 2021 GNI was $90.00 billion, a notable 14.18% increase from the previous year. And In 2022, GNI surged to $101.65 billion, growing by 12.95% from 2021 levels. This economic trajectory underscores the resilience and adaptability of the Dominican Republic’s economy, which observed strong growth despite facing challenges during the global pandemic.
Presently, the Dominican Republic has a harmonious blend of diverse industries and sectors, including agriculture, manufacturing, and services. It holds the sixth-highest per capita GDP in Latin America, and this becomes even more impressive when considering purchasing power. Taking purchasing power into account, the Dominican Republic’s per capita GDP positions it ahead of formidable regional counterparts such as Brazil and Mexico. The country’s economic landscape reflects a strategic approach to business, which has ensured Dominican companies are competitive in the Latin American market.
With a substantial influx of 782,000 visitors in August 2023, the Dominican Republic is poised to surpass a monumental milestone in its tourism industry: welcoming over 10 million tourists by the end of the current year. This remarkable achievement reflects a 33% increase in tourist numbers since 2019. As of September 25, 2023, the Dominican Republic is a vibrant and sought-after destination, and its tourism sector showcases an impressive growth trajectory.
The Dominican Republic’s business environment benefits from more than 75 free-trade zones (FTZs), which offer significant tax incentives and host companies from a wide range of sectors. In recent years, the tech and call center industries have seen major investment.
However, taking advantage of the opportunities on offer in the Dominican Republic requires adherence to the country’s financial regulations.
Entity Regulatory Compliance in the Dominican Republic: Key Responsibilities
The details surrounding financial regulatory compliance in the Dominican Republic depend on the type of company, but some aspects of corporate compliance are generally applicable.
Company Tax Registration
If you start a business or form a branch in the Dominican Republic, you must register with the local tax authority and obtain a tax ID number.
Upkeep of Company Books
All companies are obliged to maintain their company books as part of financial regulatory compliance in the Dominican Republic. This is something that a provider of corporate secretarial services will do on your behalf.
Provision of Registered Address
Having a registered address is a minimum statutory requirement for all legal entities in the Dominican Republic. This address will be used for all official communication and correspondence.
Holding an Annual General Meeting (AGM) of Shareholders
In keeping with the General Law of Companies and Limited Liability Individual Enterprises, every company or corporation registered in the Commercial Registry of the Chamber of Commerce and Production must hold at least one AGM between shareholders and managing executives. This meeting must be held within 90 days of the end of the fiscal year, which runs from 1 January to 31 December, meaning an AGM must be held no later than 31 March the following year.
Renewal of the Commercial Registry
The Commercial Registry of the Chamber of Commerce and Production charges a bi-annual registry fee, due on the date of the original registry. The payment of this fee is mandatory and is required before you can file or registry any commercial act or document. It is therefore an important aspect of financial regulatory compliance in the Dominican Republic.
Filing of Annual Corporate Income Tax Return (IR-2 Form)
The corporate income tax return (Form IR-2) must be filed and paid within 120 days of the end of the fiscal year, meaning that corporate income tax must be filed and paid by 30 April following the close of a given fiscal year.
Common FAQs on Entity Legal Compliance in the Dominican Republic
Based on our extensive experience these are the common questions and doubts of our clients on regulatory compliance in the Dominican Republic:
1. What are the common statutory appointments for a company in the Dominican Republic?
The following are the most common statutory appointments for Dominican legal entities:
– An appointed legal representative who will be personally liable, both legally and financially, for the good operation and standing of the company. This should be a local national or a foreigner with the right to live/work in the country.
2. Is a registered office address needed for a legal entity in the Dominican Republic?
Yes, a registered office address or fiscal address is required for all entities in the Dominican Republic for the receipt of legal correspondence and governmental visits.
3. What are some benefits of registering a subsidiary in the Dominican Republic?
Some benefits of registering a subsidiary in the Dominican Republic include the following:
A parent company can significantly reduce its tax liability
There are cases in which the parent company manages to increase the efficiency of its operations through one or more subsidiaries
Freedom to create its own corporate governance methods and adopt its own identity
Risk reduction
4. What is the deadline for companies to file their Annual Income Tax return in the Dominican Republic?
Companies have 120 days after the closing date to file the Annual Income Tax return by the deadline of April 29th in the Dominican Republic.
5. When must a General Shareholders Meeting be held in the Dominican Republic?
The Ordinary General Shareholders Meeting must be held within five months following the closure of the fiscal year and by the deadline of May 31st in the Dominican Republic.
Biz Latin Hub Can Assist With Financial Regulatory Compliance in the Dominican Republic
At Biz Latin Hub, our locally-based team of bilingual corporate legal and accounting experts is able to assist you with financial regulatory compliance in the Dominican Republic, as part of our portfolio of back-office services. We provide company formation, accounting & taxation, legal services, hiring & PEO, and visa processing, meaning that we can offer an individualized package of integrated back-office services in the Dominican Republic or any of the other 17 markets around Latin America and the Caribbean where we offer our services.
Contact us now for a free consultation or quote.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
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