Tourism in the Dominican Republic - a legal guide - Pellerano ...

PELLERANO & HERRERA 

ATTORNEYS AT LAW 

Tourism Legal Guide 

Dominican Republic

SECRETARIAT OF STATE OF TOURISM 

Av. México esq. C/ 30 de Marzo, Oficinas Gubernamentales 

Bloque D, Santo Domingo, Rep. Dominicana 

Tel: (809) 221-4660 Fax: (809) 682-3806 

www.dominicana.com.do 



Av. John F. Kennedy No.10 

Santo Domingo, Dominican Republic 

Apartado Postal 20682 

Tel. (809) 541-5200 

Fax (809) 567-0773 

----------- 

Calle Paseo Oeste 

La Rosaleda, Edif. Bionuclear 

1er. Piso, Santiago 

Dominican Republic 

Tel.: (809) 580-1725 

Fax : (809) 582-2170 

----------- 

International Mailing Address: 

A-303 

P.O. Box 52-4121 

Miami, FL 33152-4121 

United States of America 

www.phlaw.com 

ph@phlaw.com

INDEX 

DOMINICAN REPUBLIC: CULTURAL, 

POLITICAL AND ECONOMIC PROFILE .........................................9 

General information ..............................................................9 

Political system .................................................................. 11 

Economy .......................................................................... 11 

Process of legal modernization and trade liberalization .............. 13 

TOURISM IN THE DOMINICAN REPUBLIC ................................. 15 

Tourist offer ...................................................................... 15 

Economic importance of the sector ...................................... 17 

GOVERNMENT POLICY IN TOURISM ......................................... 20 

Tourism as a priority sector of Dominican economy .................. 20 

Institutions of the tourist sector .......................................... 22 

REQUIREMENTS FOR TOURIST ACTIVITIES ............................. 24 

General requirements ......................................................... 24 

Approval of tourist projects ................................................. 24 

Regulation of tourist facilities and services .............................. 24 

FINANCIAL AND LEGAL FRAMEWORK OF TOURIST ACTIVITIES .. 29 

Sources of financing 

for tourist projects ............................................................. 29 

Regime of foreign investment .............................................. 30 

Relevant legal issues ........................................................... 30 

LAW 158-01 ON PROMOTION OF TOURIST DEVELOPMENT ........ 38 

Background and objectives .................................................. 38 

Scope of application ........................................................... 39 

Competent bodies ............................................................. 40 

Requirements and procedures ............................................. 41 

Incentives and benefits ...................................................... 41 

Safeguards of environmental protection ................................ 43 

APPENDIX 1 

STATISTICAL TABLES ............................................................ 44

FOREWORD 

The Dominican Republic is currently the major tourist attraction 

in the Caribbean. Beautiful beaches, impressive natural 

resources, a pleasant and consistent tropical climate, a large 

number of places of cultural, historical and ecological interest, 

together with the joy and hospitality of the Dominican people, 

as well as the safety and political stability prevailing since years, 

have turned the country into one of the preferred tourist 

destinations of several markets. 

Tourism development is a priority of the Dominican Government. 

Public initiatives intended to promote tourism and private 

participation in the sector, have enabled the Dominican Republic 

to benefit largely from its multiple tourist attractions, and to 

develop its tourist industry in such a manner that today tourism 

is one of the milestones of the Dominican economy, and one of 

the areas of greater potential for investors due to the diverse 

and interesting business opportunities that this sector has to 

offer. 

The country has an ample and competitive hotel offer, an adequate 

infrastructure to meet the needs of tourist services, sufficient 

qualified labor force to satisfy market requirements, and a legal 

and institutional framework that ensures the quality of tourism, 

the competitiveness of the sector and the security of tourism 

investments. 

The Secretariat of State of Tourism is pleased to present 

individuals and companies with this Legal Guide, with the aim to 

support potential investors interested in the tourism sector in 

materializing and developing their projects in the country. Here 

the reader will find useful information regarding the performance 

and significance of tourism in Dominican Republic; the role of 

the various public entities related to tourism; the available sources 

of financing; the legal requirements applicable to investments 

in the tourist sector, the development of tourist projects, the 

installation of tourist facilities and the provision of tourist services; 

as well as a detailed description of the wide incentives granted 

to tourist enterprises that carry out their activities in certain 

geographic areas of the country. 

The Secretariat of State of Tourism would like to acknowledge 

the assistance it has received from the law firm Pellerano & 

Herrera in the elaboration of this publication. 

Dr. Rafael Suberví Bonilla 

Secretariat of Tourism

Geography 

Dominican Republic: Cultural, 

Political and Economic Profile 

GENERAL INFORMATION 

The Dominican Republic is located in the Caribbean, 

between Cuba and Puerto Rico. It shares with Haiti the 

island of La Hispaniola, occupying its eastern two thirds. 

With an extension of 48,442 square kilometers, the 

country is, after Cuba, the second largest country in the 

Antilles. This strategic geographic position has turned it 

into the main tourist destination of the region and into 

an ideal place for business and trade. 

INFORMATION CHART 

Extension 48,442 km2 

Population 8.4 million 

Capital Santo Domingo 

Currency Dominican Peso (RD$) 

Oficial Exchange Rate 1US$ = RD$29.20 (June 2003) 

Chief of State President Hipolito Mejia 

Independence February 27, 1844 

Constitution November 28, 1966 

Official Language Spanish 

The climate is semitropical, with an average yearly 

temperature of 26°C (78°F). The air humidity goes 

from 65% to 80%, and there are two main rainy 

seasons: from May to July, and from October to 

November. 

The Dominican Republic has a great geographic 

diversity, having extensive beaches of white sand, 

fertile valleys with exuberant vegetation, desert zones 

with dune formations, mighty mountain chains where 

Pico Duarte, the highest peak in the Caribbean, is found 

(3,175 meters), as well as many natural parks and 

scientific reserves which are under protection. The 

lowest point in the Caribbean, which is Lake Enriquillo 

(44 meters below sea level), can also be found in the 

country. 

The capital of the Dominican Republic is Santo 

Domingo. Other important cities are Santiago de los 



Caballeros, San Pedro de Macoris, La Romana, Puerto 

Plata and Barahona. 

Historical overview 

When the Spaniards arrived on December 5, 1492, 

the island was inhabited by a group of Arauco Indians 

called "Tainos", but this population vanished in a 

relatively short time after the discovery, as a result of 

all the hard physical work they were forced to carry 

out. 

Named by its Spanish settlers "Hispaniola", the 

island became the basis for the expansion of the 

Spanish empire into the new world, and the main 

expeditions to the other American and Caribbean 

territories started from its shores. The city of Santo 

Domingo (originally named "La Isabela") was founded in 

1496, and soon became the seat of the first cathedral, 

the first hospital and the first university of America. 

The island felt the conflicts between the European 

nations for the new lands, staying as a Spanish colony 

until 1697, when its western third was transferred to 

France under the Ryswick Treaty. With the Basle Treaty 

in 1795 the whole island became a French possession. 

In 1804 the western part of the island gained its 

independence, becoming Haiti. The eastern part stayed 

under French domination until 1808, when it became a 

Spanish colony again. 

Only a year after gaining its independence from 

Spain in 1821, the eastern part of the island was 

occupied by Haiti. This occupation ended on February 

27, 1844 with the proclamation of the National 

Independence. In 1861 the country was again annexed 

to Spain, and recovered finally its independence in 1865 

through the Restoring Movement. 

From 1882 to 1889 the country was under the 

dictatorship of Ulises Hereaux. 

In 1916 the United States army occupied the 

country in order to ensure the payment of the public 

9

Legal Guide of Tourism in the Dominican Republic 

10 

debt, remaining for a period of eight years. In 1930 the 

dictator Rafael Leonidas Trujillo gained power, which he 

kept firmly for thirty years until his assassination in 

1961. 

Afterwards the country went through moments of 

political instability characterized by a succession of 

short lasting governments. In the year 1965 there were 

serious civil disturbances, which caused a military 

intervention of the United States. This occupation ended 

with the general elections of 1966. 

At that time started the process of democratic 

consolidation and development of the national economic 

structures, which has contributed to the current political 

and economic stability of the country. Since then nine 

democratic elections have been held, alternating in 

power the three main political parties: Partido 

Reformista Social Cristiano (PRSC), in 1966, 1970, 

1974, 1986, 1990 and 1994 (Joaquin Balaguer), Partido 

de la Liberación Dominicana (PLD) in 1996 (Leonel 

Fernández Reyna), and Partido Revolucionario 

Dominicano (PRD), in 1978 (Antonio Guzman), 1982 

(Salvador Jorge Blanco) and 2000 (Hipólito Mejía, who 

will be the President of the Republic until the year 

2004). 

Population and demography 

The Dominican Republic has approximately 8.4 

million inhabitants, with a density of 173.5 inhabitants 

per square kilometer. As a result of the strong 

urbanization process experienced by the country in the 

last years, more than two thirds of the population lives 

in the urban centers of the main cities of the nation. 

The capital city of Santo Domingo alone has a 

population of more than three million inhabitants. 

Most of the Dominican population is the result of a 

mestization process between the European and African 

races, and "mestizos" conform the largest ethnic group 

(74%), followed by 16% of white race and 11% of black 

race. Spanish is the official language, and most of the 

population is catholic, but there is also an important 

protestant community. 

The unemployment rate ranges between 15% and 

20% of the economically active population. The 

population growth rate is 2.7%, while life expectancy is 

71.1 years for men and 75.4 for women. Population is 

relatively young, being formed of 34.1% between 0-14 

years, 60.99% between 15-64 years and 4.9% of 65 

years and older. 

Workforce and infrastructure 

The country has a diverse workforce ranging from 

university graduates at manager level to technicians 

and workers with basic skills. The economically active 

population is estimated to be around 2.3 million, of 

which 49% are dedicated to agriculture, 33% to 

services and 18% to the industry. 

Apart from electricity, infrastructure is highly 

developed, and transport facilities, both at a local and 

international level, are very good. The domestic road 

network is one of the best in the region, and the 

maritime and air services include the main cargo lines 

and airlines worldwide. The three main airports receive 

cargo and passengers directly from North and South 

America, as well as from Europe. The country has also 

many important seaports, such as the Haina Port, which 

is located west of Santo Domingo and is one of the 

most modern in the Caribbean. 

The telecommunications system is one of the most 

advanced and efficient, not only within the Caribbean 

but also worldwide. 

The supply of energy continues to be far below the 

growing demand of the local population and industry, 

and all sectors suffer from electricity shortcuts. Most 

companies and many private homes have small 

generators that supply the energy they lack. Considered 

to be the main obstacle to the sustained development 

of the national economy, the situation is expected to 

improve with the restructuring of the sector that shall 

take place under the new General Electricity Law 

adopted in the year 2001, which will enable the sector 

to have access to significant international financing. 

Political and economic outlook 

The Dominican Republic is currently going through 

an important transition process that is both political and 

economic, and the results of the last presidential 

elections held in May 2000 reflect the growing 

democratic maturity of the nation. The traditional 

political leadership that had ruled the country since the 

beginning of the democratization process in the sixties 

is being replaced by a younger generation of leaders 

who are trying to achieve an economically feasible 

project comprising global competition, public sector 

responsibility and decentralization. 

While this process takes place, the country is 

experiencing the highest economic growth rates in Latin 

America, as a result of the permanent macroeconomic 

stability and the gradual increase of private sector

participation. All poverty indicators have likewise 

improved. 

The growth experienced by the Dominican economy 

during the year 2000 captured the attention of the 

international community, being praised by institutions 

such as the International Monetary Fund and the 

Economic Commission for Latin America and the 

Caribbean, which in its preliminary report for said year 

confirmed that the Dominican Republic showed the 

highest growth rate of all Latin American and Caribbean 

countries, and that this was the fifth consecutive year 

that the country had been breaking its annual growth 

record. Furthermore, during the year 2001, in spite of 

adverse external and internal factors, the economy 

grew by 2.7%, a rate that was five times higher than 

the average growth rate in Latin America. 

POLITICAL SYSTEM 

The Constitution of the Dominican Republic defines 

the government system as being democratic, republican 

and presidential. The exercise of power is divided 

among three independent branches: executive, 

legislative and judicial. 

Executive Branch 

The Executive Power is exercised by the President 

of the Republic, who is elected through direct vote, 

together with the Vice-president, for four-year-periods, 

but without possibility of re-election for consecutive 

periods since the last amendment to the Constitution in 

1994. The President is the Head of State, Government 

and Public Administration, as well as the Commander in 

Chief of the Armed Forces, and is assisted by a cabinet 

of ministers ("Secretarios de Estado") designated by 

him. 

Since August 2000 the President of the Republic is 

Mr. Hipolito Mejia, and the Vice-president is Mrs. 

Milagros Ortiz Bosch, of Partido Revolucionario 

Dominicano (PRD). Due to the results of the poll held in 

May 2000, which gave President Mejia and Vicepresident 

Ortiz Bosch a victory that was very short of 

reaching the required 50%, the opposition waived a 

second poll, and they were proclaimed winners of the 

2000 election. The next presidential elections will take 

place in May 2004. 

Legislative Branch 

The Legislative Power is invested in the National 

Congress, composed by two chambers: the Senate, 



composed of 32 members, and the Chamber of 

Deputies, which at the moment is composed of 150 

members. The Dominican Republic is politically divided 

into thirty-one provinces and the National District, 

where the capital is located, and each is entitled to 

elect one senator, and one deputy for every 50,000 

inhabitants plus fraction exceeding 25,000. 

The members of both chambers are elected by 

each province through direct majority vote for fouryear-periods. 

Since 1994 legislative elections take place 

separately from presidential elections. 

Since the last elections in May 2002, congressional 

representation of the different political parties is 

distributed as follows: at the Senate, thirty senators for 

Partido Revolucionario Dominicano (PRD), one senator 

for Partido de la Liberacion Dominicano (PLD), and one 

senator for Partido Reformista Social Cristiano (PRSC); 

at the Chamber of Deputies, 72 deputies for PRD, 40 

deputies for PLD and 38 deputies for PRSC. 

The next legislative elections will take place in the 

year 2006. 

Judicial Branch 

The Judicial Power is headed by the Supreme Court 

of Justice, which apart from working as an appeals 

court for all judgments rendered by judicial courts, 

supervises all judges in the Dominican territory. It is 

formed of nine judges designated by the National 

Council of Magistrates, an institution created by the 

Constitutional reform of 1994 to ensure the 

independence of the judicial branch. 

ECONOMY 

Economic evolution and prospects 

After the adjustment process initiated at the 

beginning of the nineties, the growth perspectives for 

the Dominican Republic are still strong. Between 1992- 

2000, the average annual growth was higher than 6%, 

and in the year 2001, the economy grew by 2.7% in 

spite of the adverse international environment. These 

numbers place the Dominican Republic as the fastest 

growing economy in Latin America. 

Free trade zones and sectors like tourism, 

telecommunications and construction, have been the 

main sources of economic development, with yearly 

growth rates higher than 10%. 

11


12 

Free Trade Zones and Tourism have developed 

independently from the general commercial 

environment of the country. Special legislation has 

protected the rights of foreign investors, particular tax 

structure has granted a fair treatment for new local and 

foreign participants, and a competitive environment has 

favored innovation. 

As to the external sector, the increase of the trade 

balance deficit has been largely compensated by 

tourism earnings that now exceed US$4 billion per year, 

and by the growth of free trade zones that host more 

than 400 companies, employ around 200,000 people 

and export close to one billion dollars per year. 

Economic performance during the period 2000- 

2002 

The Dominican economy experienced an impressive 

evolution during the year 2000, reaching a GDP growth 

of 7.8%, which represents the highest growth rate in 

the region and one of the highest in the world. The 

most dynamic sectors in terms of growth rates were 

communications (15.7%), hotels, bars and restaurants 

(15.7%), transport (11.9%), electricity and water 

(11.9%), mining (9.2%), manufacture (9.0%) and 

commerce (8.4%). However, as to their influence in the 

overall economy, in terms of contribution to GDP 

growth, manufacture accounted for 19.5% of GDP 

increase, commerce for 14.1%, hotels, bars and 

restaurants for 12.9%, transport for 10.7%, 

communications for 10.1% and construction for 9.0%. 

In 2001 GDP grew by 2.7%, in spite of adverse 

external factors, such as economic deceleration and the 

events of 11 September, as well as internal factors, 

such as the fiscal reform and the readjustment of fuel 

prices during the first quarter of the year. After having 

decreased during the first quarter, the economy showed 

sustained growth during the last three quarters (April- 

June: 1.8%, July-September: 5.5% and October- 

December: 5.0%). 

In that year, the adverse international environment 

caused a major drawback on the sectors depending on 

the external market, namely tourism and free zones, 

which experienced a decrease of more than 4%, as 

well as traditional exports, which decreased around 

7%. However, a deliberate stimulation of the local 

market through the promotion of local interest rates 

reduction enabled the economy to still grow by 2.7%. 

The best performing economic sectors were 

communications (24.2%), agriculture (5.1%), electricity 

and water (18.4%) and government (8.8%). 

Inflation in the year 2001 was 4.38%, half the rate 

experienced in the year 2000, and the lowest in the last 

five years. The current account deficit was -3.9% of 

GDP, significantly lower than the -5.2% deficit of the 

previous years. While exports decreased by 7.0%, 

imports were reduced even more (7.3%), which caused 

an improvement of the commercial balance and the 

current account deficit. 

An important development in 2001 was the 

placement for the first time in international markets of 

sovereign bonds, with the aim of financing priority 

projects for national development and poverty 

reduction. The Dominican State issued bonds for 

US$500 million, which were successfully placed in the 

international market in October of that year and caused 

a significant increase of public investment during the 

last quarter of the year. 

During the period January-September 2002, the 

economy grew by 4.7%, thanks to the good 

performance of the sectors oriented to satisfy internal 

demand, such as communications (22.5%), 

manufacture (9.4%), commerce (6.7%), construction 

(7.1%), transport (4.4%) and electricity (10.6%), which 

compensated the drop of production oriented to the 

external market, such as tourism (-5.7%) and free 

zones (-9.3%). 

The adverse international context did not allow 

tourism and free zones to improve during the first nine 

months of the year. Tourism continued to be affected by 

the recession in the economies of source markets, 

while the performance of free zones was negatively 

influenced by the reduction of purchase orders from the 

United States, the main destination for the products of 

these companies. 

Taking into account the contraction experienced in 

the quarter July-September and assuming that the 

recession in the external sector will remain, the Central 

Bank still expects a moderate growth of economic 

activity for the quarter October-December, for a yearly 

growth of approximately 4.0%, which would be 

significantly above the average growth of the region. 

According to forecasts of the magazine The 

Economist, in the year 2003 the Dominican economy 

will experience a lower growth rate, due to the 

continuing depression in external markets. However, in 

2004, the recovery of the world economy will increase 

the demand in the sectors of tourism and free zones, 

which will be very positive for the national economy.

Foreign investment 

Net capital flows have increased from US$ 200 

million in 1996 to US$ 684 million in 1999, as a result of 

the growing trend of FDI flows into the economy that 

reduced the impact of the current account deficit and 

allowed the growth of international reserves. 

In 1998 FDI flows reached US$ 691 million, an 

increase of US$ 270 million in relation to the year 

before. In 1999 foreign investment reached the record 

amount of US$ 1.4 billion, as a result of the 

investments related to the privatization process, which 

represented a 99% increase in relation to 1998. For the 

year 2000, since the privatization rhythm had slowed 

down, FDI reached US$ 850 million. 

In 2001, a year when FDI flows in Latin America 

went down by 10%, FDI in Dominican Republic 

increased by 25.8%. 

10 

8 

6 

4 

2 

0 

8 7.8 

5.1 

3.9 

Sources: Central Bank / The Economist 

During the last years, FDI has been mainly directed 

to industrial sectors like free zones, as well as tourism. 

However, the privatization process attracted foreign 

investment to the energy, airport, sugar and domestic 

manufacture sectors. According to Central Bank data, 

during last the six years industrialists from Canada, the 

United States and Spain, have contributed 84% of the 

direct foreign investment made in the Dominican 

Republic. 

International trade 

GDP Growth 1999-2004 (%) 

2.7 

0.4 

4 

2.4 

International trade plays a key role in the Dominican 

economy. Imported components are estimated to 

account for 60% of the value of the goods consumed in 

the local market, while exports have increased 

considerably in the last years mainly through the 

development of free zones. 

4.3 

2.3 

1999 2000 2001 2002 2003 2004 

5 

3.8 

DR 

Latin 

America 



The country imports products from all over the 

world, but close to 40% comes from the United States. 

The most usual imports include gas, oil, wheat, soya 

beans, etc. Many raw materials are imported for 

assembly and then re-exported. These products include 

textiles, shoes, medical equipment, etc. 

As to exports, the preferential export rights enjoyed 

by the Dominican nation to enter the United States 

(CBPTA, GSP) and European (Cotonou Agreement) 

markets, together with the process of regional 

integration undertaken by the Dominican Republic, have 

largely contributed to the development of the external 

sector and offer a wide range of export opportunities. 

National and free zone exports have been a very 

important sector for the Dominican Republic. Traditional 

exports include sugar, molasses, syrup, green coffee, 

tobacco and cacao. However, free zones are the main 

source of exports such as garments, shoes, electrical 

components, medicines and foods. The country also 

exports minerals such as gold, tin, silver and copper. 

During the year 2000 exports increased by 14.3%. 

Traditional exports suffered a reduction of 18.75%, as a 

result of low international prices, while non-traditional 

exports increased by 10.10%. Mineral exports increased 

by 33.83% mainly resulting from the increasing 

international demand of ferronickel and limestone. 

In the year 2001, exports were affected by the 

international economic recession and decreased by 7%. 

Free zone exports went down by 4.9%, while other 

exports dropped by 17.7%. In this reduction had a big 

influence the reduction of ferronickel exports (38.8%) 

due to the drop in international prices. Coffee and 

tobacco exports went down by 12.6%. On the contrary, 

cacao exports increased by 63.6%, while sugar exports 

stayed at similar levels than the previous year. 

The main destinations for exports were United 

States of America, Puerto Rico, Haiti, Belgium and 

Luxembourg, South Korea, The Netherlands, Canada, 

United Kingdom, Spain, Italy and Cuba. 

PROCESS OF LEGAL MODERNIZATION 

AND TRADE LIBERALIZATION 

The Dominican Republic has not been left 

untouched by the globalization, and since the year 1991 

has been involved in a reform process oriented towards 

the modernization of the legal and economic framework 

under which businesses operate in the country, with the 

view of adapting its economy to the new competitive 

13


14 

standards, accelerating its insertion within global and 

regional economic groups, and promoting the flow of 

foreign capital. 

New tax, labor and customs code were adopted, 

but the turning legal point for the liberalization of the 

Dominican economy was undoubtedly the passing of 

Law 16-95 on Foreign Investment, which eliminated all 

restrictions to foreign investment, and marked the 

beginning of many other significant reforms. 

The Dominican Republic was behind schedule in 

implementing some important reforms, but during the 

last three years, the legislative train has accelerated 

and many areas have been subject to comprehensive or 

partial reforms that have enhanced the competitiveness 

of the Dominican economy, and provided the 

institutional basis for its development. 

The main comprehensive reforms carried out 

during the last three years include a 

telecommunications law, a stock market law, an 

industrial property law, a copyright law, a law for 

export promotion, an environmental law, a tax and 

customs reform, an electricity law and a monetary and 

banking reform. 

The liberalization trend has not however been the 

sole concern and, especially in the last two years, social 

reform has also had an important place in the 

legislative agenda, which has been involved in the 

passing of laws in the fields of education, civil rights 

protection and health. In this regard, one of the most 

important reforms was the new social security law, 

which modernized and expanded the social security 

system in the country. 

On the other hand, the Dominican Republic has 

been making efforts to widen its trade relations with, 

and join the different economic groups of the region, 

having become one of the most dynamic and innovative 

countries within the process of regional integration in 

the area. These efforts have already produced concrete 

results, mainly noticeable in the signature of free trade 

agreements with Central America and CARICOM, which 

entered into effect last year. 

Finally, it should be noted that as member of the 

World Trade Organization (WTO), one of the main 

objectives of the reform program executed by the 

country is to adapt its legal and economic framework to 

WTO postulates, so as to ensure its participation within 

the process of economic globalization that is taking 

place throughout the world.

Tourist attractions 

TOURIST OFFER 

The Dominican Republic has many natural, 

historical and cultural resources that make the country 

an ideal destination for tourism. The variety and quality 

of its beaches, to the North, South, East and West, the 

great geographical diversity of its territory, a rich 

historical and cultural heritage, as well as a wide range 

of complementary tourist services, such as golf 

courses, leisure parks and modern convention centers, 

enable the country to present a wide and diverse tourist 

offer. 

Santo Domingo 

The city of Santo Domingo, capital of the country, 

also called the "Athens of the New World", is the oldest 

city of the American continent. While being a modern 

and cosmopolite city, its Colonial Zone is home to more 

than 300 monuments that in the year 1990 UNESCO 

declared to be a part of the World Heritage. 

Cibao valley 

TOURISM IN THE DOMINICAN REPUBLIC 

The central part of the island is the most fertile and 

productive region of the country. It has seven provinces 

that produce food products for the whole country: 

Duarte, Espaillat, La Vega Real, Monseñor Nouel, 

Sanchez Ramirez and Santiago de los Caballeros. 

Furthermore, it has mines of iron, gold, nickel and 

other minerals. 

Cut through by the Central mountain chain, this 

region offers unique natural resources for ecological, 

mountain and adventure tourism. 

Here may be found the valley of Constanza and the 

city of Jarabacoa, where temperatures range between 

5° and 20°, which allows this region to grow products 

such as strawberries, apples and flowers. Activities 

such as river rafting, paragliding or mountain climbing, 

including Pico Duarte, the highest mountain in the 

Caribbean, may be undertaken in this area. 



Santiago de los Caballeros is the industrial center of 

the country and the second city in importance. It is 

known throughout the world for its tobacco plantations 

and its long tradition in the growing and trade of high 

quality tobacco, whose exports amount to more than 

two thirds of the quality cigars sold in the world. 

Amber Coast 

The waters of the Atlantic Ocean wash the Northern 

cost of the Dominican Republic. It comprises the 

provinces of Monte Cristi, Puerto Plata, Espaillat, Maria 

Trinidad Sanchez and Samana, which have great tourist 

potential and the ideal conditions to practice all kinds of 

aquatic sports. 

The Puerto Plata region has numerous amber 

mines, including one of the main amber deposits in the 

whole world. The province produces and exports 

coffee, cocoa and tobacco. Furthermore, it 

manufactures alcohol, milk products and pastries. 

Today, Puerto Plata lives for and from tourism, its main 

source of revenues. Its tourist zone has magnificent 

beaches of golden sand that include the tourist centers 

of Cofresi, Costambar, Long Beach, Playa Dorada, 

Sosua and Cabarete. Playa Dorada has more than 

4,500 rooms, apart from a complete infrastructure with 

seminar rooms, malls, etc. Cabarete is considered to 

be one of the best beaches worldwide to practice 

windsurfing, and there takes place every year the world 

competition of this sport. 

On the other side, the province of Samana, the 

peninsula and bay of the same name, its many lakes 

and beautiful landscapes, together with its neighboring 

areas El Portillo and Las Terrenas, constitute one of the 

most interesting and exotic places in the country. 

Southern Region 

The four provinces of the Southern region are San 

Cristobal, Peravia, Azua de Compostela and Barahona, 

which have beautiful beaches rich in sea life. In 

Barahona, the waves of the Caribbean Sea break upon 

the rocks of Sierra Bahoruco, and Enriquillo Lake can 

15


16 

also be found, the lowest point in the Caribbean, from 

where Cabritos Island emerges, a national park where 

the biggest reserve of American wild crocodiles may be 

found. 

Eastern region 

This region is divided into five provinces: San Pedro 

de Macoris, Hato Mayor, El Seibo, La Romana and La 

Altagracia. Its inhabitants work mainly in the sectors of 

sugar cane, pastures, industry and tourism. 

Between La Caleta and Punta Cana there are 

beautiful beaches of white sand and clear blue water, 

considered by UNESCO to be among the most beautiful 

in the world (Boca Chica, Playa Caribe, Juan Dolio, 

Guayacanes, Bayahibe, Dominicus, Macao, Bavaro, 

etc.). One of the main features of this region is that it 

20.3 

9.3 

26.4 

1.8 

0.5 

Tourist Arrivals 

per Airport 2002 (%) 

41.4 

Source: see Appendix 1 (Statistical Tables) 

Punta Cana 

Las Américas 

Puerto Plata 

La Romana 

Cibao 

Herrera 

has many caves, a number of which may be visited by 

tourists. Furthermore, important natural parks and 

scientific reserves are found here, such as Saona 

Island, Catalina Island and the national park Los 

Haitises. To complete the tourist offer, many museums 

and leisure parks such as the National Aquarium, 

Columbus Lighthouse and Manati Park have been built 

in this area. 

For these reasons, the Eastern region has turned 

into one the privileged destinations of the Caribbean, 

where the best hotel chains in the world are 

represented. 

Tourist poles 

With the purpose of promoting and programming 

the initiatives of tourist development in accordance with 

the respective needs and conditions of each particular 

region, the Government has identified the areas of 

greater tourist potential, defining them as "Tourist 

Poles". 

These poles are the following: 

1) Tourist pole of the Southern region, which includes 

Barahona, Bahoruco, Independencia and 

Pedernales (Decree 322-91). 

2) Tourist pole of the Caribbean Coast, from Santo 

Domingo to La Romana. 

3) Tourist pole of Puerto Plata or Amber Coast 

(Decree 2125 of 1972). 

4) Tourist pole of the Northwest region, which includes 

Montecristi, Dajabon, Santiago Rodriguez and 

Valverde (Decree 16-93). 

5) Tourist pole of Macao-Bavaro (Decree 1256 of 

1986). 

6) Tourist pole of Constanza and Jarabacoa (Decrees 

1157 of 1975 and 2729 of 1977) 

7) Tourist pole of the Samana Peninsula (Decree 91- 

94). 

8) Tourist pole of San Cristobal, Palenque, Peravia and 

Azua de Compostela. 

9) Tourist pole of Nagua and Cabrera (Decree 199- 

99). 

Tourist poles are priority areas for tourist 

development, and the Government thus promotes 

initiatives in these zones, granting priority to the 

construction of infrastructure works therein, channeling 

international financing to these projects and being able 

to sell or lease real property belonging to the State for 

such purposes. 

With the enactment of Law 158-01, which offers 

wide incentives to tourist activities in certain parts of 

the country, the Government seeks to encourage in 

particular the development of poles of lesser 

development and of new poles in provinces of great 

potential (see Section VI). 

Types of tourism 

The main type of tourism developed in the 

Dominican Republic is by far recreational and vacation 

tourism, thus coinciding with the most used type of 

accommodation, hotels, which in 2001 accounted for 

the accommodation of 91.7% of all tourists. 

Traditionally, a substantial part of tourists visit the 

country based on "all-inclusive" tourist packages.

However, in the last years hotel offer has diversified so 

as to reach a type of tourist with more expenditure 

capacity and who is more interested in his surroundings 

and in other types of tourism such as ecological, sport, 

mountain, historical or cultural tourism. Therefore, 

every day grows the demand for a diversified tourist 

offer that allows the tourist to choose or to combine 

several options. 

Accommodation capacity 

The Dominican Republic has the largest 

accommodation capacity in the Caribbean region, since 

it has close to 54,000 rooms. The growth rate in the 

offer of rooms was very dynamic until the year 2001, 

when for the first time it started to increase at a lower 

rate than the previous years (3.9%). For the period 

January-September 2002 this rate was 2.1%. 

The country has a diverse hotel offer, ranging from 

small hotels to large beach resorts and metropolitan 

luxury hotels. However, the construction of hotels has 

concentrated in the regions of higher tourist 

development like the Eastern region and the Puerto 

Plata area, which accounts for more than 40% of all 

available rooms. 

42 

Tourist Arrivals per Nationality 2001 (%) 

7.6 

2.1 

48.3 

Source: see Appendix 1(Statistical Tables) 

Europe 

North 

America 

South 

America 

Rest of the 

World 

For such reasons, it has been deemed necessary to 

promote the construction of new hotels in less 

developed areas, and thus provide for a proportionate 

and adequate accommodation offer throughout the 

territory that enables to promote tourist development in 

such regions. With this aim, Law 158-01 grants 

incentives to companies that build tourist facilities such 

as hotels in these regions (see Section VI). 

Tourist infrastructure 



The Dominican Republic has six international 

airports that receive flights from the main airlines 

worldwide. These are the following: 

• International Airport Las Americas (Santo Domingo) 

• International Airport Puerto Plata 

• International Airport Punta Cana 

• International Airport La Romana 

• International Airport Cibao 

• International Airport Herrera (Santo Domingo) 

Most of the tourists travel through the airports of 

Las Americas, Punta Cana and Puerto Plata. 

The country has four modern ports: Santo 

Domingo, Haina, Boca Chica and San Pedro de Macoris, 

as well as tourist ports for the anchoring of cruises. 

Furthermore, the Dominican Republic has 12,600 

kilometers of highways and roads that interconnect the 

different cities and tourist destinations of the country, 

which makes it easy to travel by land to the different 

points of the territory. 

Main tourism generating countries 

The main tourism-generating region for the country 

is Europe. In the year 2001, European visitors 

accounted for 48.3% of all tourists that visited the 

country, followed by North America (United States and 

Canada) with 42.0%, and South America, with 7.6%, 

while the nations of Central America, the Caribbean 

and others accounted for the remaining 2.1%. 

United States is the main individual source, with 

29.0%, followed by Germany (14.5%), Canada 

(12.4%), France (8.5%), United Kingdom (6.1%) and 

Spain (6.0%). Canada and United States in North 

America, as well as United Kingdom and France in 

Europe, showed the most dynamic growth rates during 

that year. 

ECONOMIC IMPORTANCE OF THE SECTOR 

Tourism in the Dominican Republic within the 

global context 

Tourism may be considered the biggest industry 

worldwide, since it is the sector that creates the highest 

amount of jobs and earnings, having furthermore a 

great influence in other productive activities. In 

17


18 

addition, it shows very stable growth rates when 

compared to other economic areas. Between 1980 and 

1999, tourist arrivals grew at an annual rate of 4.6%, 

while earnings increased by 9.1%. The year 2000 was 

an exceptional year for tourism, when tourist arrivals 

grew at unprecedented levels. 

Tourism is thus a highly significant economic sector 

for a large number of countries, and its perspectives of 

growth continue to be very promising, in spite of the 

negative circumstances that presently affect it, since 

statistics show that every day grows the quantity of 

people that travel from one place to another for tourist 

reasons. 

15 

10 

5 

0 

-5 

-10 

Growth Rate Tourist Arrivals 

2000-2001 (%) 

5.8 5 

12.1 

-0.6 

-6 -6.8 

2000 2001 

Source: see Appendix 1 (Statistical Tables) 

World 

America 

Therefore, tourism is a priority sector for many 

nations, particularly for developing countries, and there 

is currently a very strong competition in the 

international arena to attract tourists and investments 

to the area, which has lead countries to diversify their 

tourist offer and execute aggressive promotional 

campaigns. At the same time, these nations have been 

realizing the importance that the sustained 

development of the tourist industry has to play in the 

future of the industry itself and the welfare of their 

populations, especially when the expansion of tourism 

in developing countries almost inevitably entails the 

construction and/or modernization of infrastructure in 

order to adapt it to the needs of tourism. 

DR 

In the Dominican Republic, tourism has been a 

priority economic sector since 1968, when the 

Government declared the development of this industry 

to be of national interest. Since then, the Government 

has been concerned in promoting tourism through the 

construction of infrastructure, the execution of 

promotional campaigns, the granting of incentives and 

the encouragement of private sector participation. 

As a result of these efforts, in the eighties and 

nineties the sector showed dynamic and stable yearly 

growth rates, which in the year 2000 reached the level 

of 17.7%. 

In the year 2001, for the first time in almost two 

decades, tourism showed a decrease of -4.4%. This 

unsatisfactory performance mirrored the difficult 

situation of world tourism, since in that year, for the 

first time since 1982 tourist arrivals worldwide 

decreased by -0.6%. The confidence crisis of the year 

2001, which finds no comparison in the last decade, 

determined largely the results of international tourism 

in 2001. This recession affected more seriously the 

American continent, which showed a decrease of - 

6.0%. 

Faced with this challenge, and with the new trends 

of the sector, the Dominican Government has given a 

new impulse to its programs of tourist promotion, relaunching 

its tourist promotion campaigns in the 

generating markets and enacting incentive laws on 

behalf of the tourist industry that take into account the 

need to programs initiatives and to protect natural 

resources to ensure a sustainable development of the 

sector. 

These measures have already started to produce 

tangible positive results, for the tourist industry started 

to show signs of recovery during the last quarter of the 

year 2002. 

5 

0 

-5 

-10 

-15 

Growth Rate Tourism Sector 

January-September 2002 (%) 

-11.2 

Source: Central Bank of the Dominican Republic 

Evolution and prospects 

-4.8 

0.2 

1st quar. 2nd quar. 3rd quar. 

Since the beginning of the twentieth century, the 

sugar industry had been the main economic activity of 

the country. A substantial part of its earnings came 

from that sector, which together with other products 

such as bauxite, gold, nickel, tobacco, coffee and 

cacao, conform the so-called sector of traditional 

exports.

At the end of the sixties, the drop in international 

prices of these products led the Dominican Republic, 

like many other developing countries, to look for 

alternative sources of income. That is why the 

Dominican State decided to promote non-traditional 

sectors such as tourism by granting incentives and 

carrying out promotional activities. 

In this context, in the year 1968 the Government 

declared of national interest the development of 

tourism. At the beginning largely characterized by 

Government initiatives, the tourist sector started 

gradually to see more private sector participation, 

especially since the eighties, when international sources 

of financing became available under schemes such as 

the Lome Convention (today Cotonou Agreement). 

During the last twenty years, the tourist industry 

has developed at a great pace, increasing the 

accommodation capacity from 3,800 rooms in 1980 to 

24,400 in 1992 and almost 54,000 in 2002. 

100 

80 

60 

40 

20 

0 

Source: See Appendix 1 

Hotel Occupation Rate 

2000-2003 (%) 

2000 2001 2002 2003 

Annual 

Rate 

January 

Rate 

Today tourism is one of the milestones of the 

Dominican economy, contributing widely to the creation 

of jobs and the generation of income. In the year 2000, 

the sector experienced a growth of 15.7%, a significant 

increase in the hotel room offer, a hotel occupation rate 

of 70.2% and an average net profit of 15.5% of 

earnings. Another indicator of the expansion of the 

tourist sector is the growth in the collection of taxes 

related to tourism, such as the tax on hotel rooms 

(16.4%), tourist cards (16.6%) and ITBIS (1.2%). 



In the years 2001 and 2002, the adverse 

international context did not allow to repeat the growth 

level showed in the previous years. However, the 

special measures adopted by the Government to face 

this situation have enabled the sector to start 

recovering. Furthermore, public authorities have been 

working actively with the private sector in order to face 

the negative effects that the Iraq conflict may have on 

the sector. 

Economic performance during the period 2001- 

2002 

In the year 2001, for the first time in the last two 

decades, tourism experienced a reduction amounting to 

-4.4%, caused by external factors such as the 

deceleration of the world economy, euro depreciation 

and the events of 11 September. This influenced 

considerably the number of tourist arrivals, which 

dropped by -6.8%. 

The hotel occupation rate was reduced by 3.9%, 

going from 70.2% in 2000 to 66.3% in 2001, while the 

growth rate of hotel rooms went down from 4.6% in 

2000 to 3.9%. Tourism earnings showed a similar 

performance than the activity as a whole, experiencing 

a reduction of -6.0%, thus changing the trend of the 

last ten years. 

During the period January-September 2002, the 

sector experienced a -5.7% decrease, caused by a - 

7.0% reduction in hotels and a -4.2% decrease in 

restaurants. Furthermore, the hotel occupation rate 

went down by -6.2%. 

It should be noted however that tourist activity 

showed a clear tendency to recover, since it registered 

rates of -11.2% in January-March, -4.8% in April-June 

and a slight positive rate of 0.2% in July-September 

2002. 

Preliminary figures indicate that the strategic efforts 

undertaken by the public and private sector to promote 

the country in foreign markets enabled the sector to 

start improving the levels of tourist arrivals in the 

month of September 2002. Furthermore, during the last 

two months of the year occupation rates were higher 

than those of the previous year, while tourist arrivals 

grew more than 30.0%. In addition, in January 2003 

tourist arrivals grew by 35.9% when compared to 

January of the previous year. 

19


20 

TOURISM AS A PRIORITY SECTOR OF 

DOMINICAN ECONOMY 

Decree 2538 of 1968 declared of national interest 

the development of the tourist industry. Law 541 of 

1969 on Tourism reiterated this policy, and set out the 

general guidelines to organize tourist development in 

the country, created the National Direction of Tourism 

(today Secretariat of State of Tourism) as the 

regulatory and supervisory body of the sector and 

regulated tourist activities. 

Since then, the Government has granted priority to 

the adoption of strategies and mechanisms that enable 

to promote the sector and encourage private 

investment in tourism, such as construction of tourist 

infrastructure, promotional campaigns and training 

programs for human resources. 

It should be noted that the private sector has played 

a key role in the development of the sector, 

complementing effectively government efforts of tourist 

promotion. 

Tourism promotion 

GOVERNMENT POLICY IN TOURISM 

One of the main functions of the Secretariat of 

State of Tourism is to promote the Dominican Republic 

as a tourist destination abroad, for which it may open 

as many national and international offices as may be 

necessary. Currently, the Secretariat of State of 

Tourism has several Tourist Offices abroad (see 

Appendix 2), which are charged of providing all relevant 

information to tourists and promoting the country by 

distributing information material, carrying out 

promotional campaigns and participating in fairs and 

other events. 

Furthermore, the Secretariat of State of Tourism is 

charged of coordinating, programming and executing 

promotional campaigns made in tourism source 

markets, being assisted in those activities by the private 

sector. These joint campaigns of the public and private 

sector have been very effective and have played a 

crucial role in the development of tourism in the 

country. 

For such purposes, Decree 212-96 of 1996 created 

a mixed fund to finance campaigns of tourist promotion, 

which pursuant to Decree 575-96 of 1996 is managed 

by the Secretariat of State of Tourism, with the 

assistance of the Hotel and Restaurant National 

Association (ASONAHORES). 

Law 158-01 of Tourist Promotion (see Section VI), 

with the aim of mitigating the negative effects of the 

crisis that started to affect world tourism in the year 

2001, and promote more effectively the Dominican 

Republic in the international markets, as well as the 

new tourist poles created by that legislation, 

established the Official Fund of Tourist Promotion, 

managed by the Secretariat of State of Tourism with 

the assistance of the private sector, particularly of 

ASONAHORES. 

This fund is formed of the following contributions: 

• 50% of the funds collected through the application 

of the aviation rate charged for each transported 

passenger, upon entry and departure, in regular, 

irregular or charter international flights, by the 

General Civil Aviation Office. The remaining 50% 

will be allocated to the Operational Fund of that 

office in order to improve the safety of civil aviation 

in the country. 

• All of the income generated by the sale of tourist 

cards in all of the airports and seaports of the 

country. 

With this new fund, in the year 2002 the 

Government started an aggressive promotional 

campaign in foreign markets aimed at promoting the 

tourist image of the country and highlighting its 

comparative advantages as a tourist destination. At the 

end of the year, concrete positive results could be 

observed, since the sector started to show signs of 

recovery that point towards an improvement of the 

levels of performance of the sector for the year 2003.

Incentives 

An incentive policy adopted by the Government in 

order to promote the development of the tourist 

industry has encouraged private investment in tourism 

in the Dominican Republic. 

Law 153 of 1971 on Promotion and Incentive of 

Tourist Development was clearly the basis of the 

tremendous growth experienced by the sector during 

the last twenty years. This legislation had the purpose 

to promote a fast and rationalized process of 

development of all factors having an influence in the 

tourist industry, and granted tax incentives for a tenyear-period 

to persons or companies that invested 

national or foreign capital in tourism. This legislation 

was repealed with the passing of the Tax Code (Law 

11-92 of 1992). 

Today the Government has adopted again this 

policy, but concentrating its promotional efforts in less 

developed tourist zones, and making a particular 

emphasis in the sustained development of the sector. In 

this manner, Law 158-01 on Tourist Promotion grants 

tax incentives on behalf of persons or companies that 

undertake tourist activities in certain zones of the 

country, establishing the necessary safeguards to 

ensure the sustained development of such areas (see 

Section VI). 

Construction of infrastructure 

Aware of the crucial role that having an adequate 

infrastructure has to play in tourist development, the 

Government grants significant importance to the 

development of national infrastructure, particularly in 

areas of great tourist potential. 

In the Dominican Republic, as it is the case in many 

developing countries that just in a relatively recently 

started to develop their tourist industries, the process 

of improvement of infrastructure has gone hand-inhand 

with the expansion of tourism. 

Today the country has an efficient road network 

that interconnects the different regions, as well as the 

tourist zones with neighboring urban centers. 

Furthermore, it has six modern airports that receive 

international flights at the different tourist destinations, 

while three more are being built (in the Samana and 

Barahona regions) to meet the needs of the different 

tourist communities, which are connected to the main 

airports through local flights. In addition, in order to 

enable the country to benefit from the tourist activity 



generated by cruise ships, the State has built tourist 

ports or special zones in existing ports, authorizing 

ships to anchor in places previously forbidden, such as 

Catalina Island. 

In this regard, the Secretariat of State of Tourism 

has the function to "guide, according with the applicable 

regulations, the design and construction of all 

infrastructure works that may be required for the 

development of the different tourist projects". 

Law 158-01 on Tourist Promotion sets forth as a 

State obligation the execution of necessary 

infrastructure works in the areas whose development is 

being sought, in the understanding that this is an 

essential factor to promote their tourist development. 

Training of human resources 

With the participation of the Institute of Technical 

and Professional Training (INFOTEP), the Secretariat of 

State of Tourism organizes training courses in all 

tourist-related areas. The private sector participates 

with the payment of certain contributions to the 

financing of these programs. 

Furthermore, the country has Hotel and Tourism 

Schools at the different universities that offer first-class 

education. 

It should also be noted that the Dominican Republic 

has signed bilateral agreements with countries such as 

Colombia, Mexico, Spain and Italy in order to promote 

student exchange and professional training in the area 

of tourism and hotel management. 

In this manner, the Government seeks to ensure 

that the country has an adequate and capable labor 

force for the provision of tourist services, both at a 

managerial and a technical level. 

Quality of tourism 

The Secretariat of State of Tourism, through a 

constant supervision and inspection of tourist activities, 

as well as of the environment surrounding tourist 

centers and communities, ensures the quality of 

tourism and the welfare of the tourist in general. 

It also sees to the compliance of the relevant legal 

provisions by providers of tourist services and all who 

participate in the sector, in order to guarantee 

consumer protection and the quality of the tourist offer. 

21


22 

Tourism and multilateral organizations 

The Dominican Republic is a member of the World 

Tourism Organization and the World Trade Organization 

(WTO). 

Therefore, as a contracting party of the General 

Agreement on Trade of Services (GATS), it undertook 

the commitment of liberalizing tourist services, and of 

establishing the necessary measures to: (i) prevent 

anticompetitive practices in tourist industries, including 

those followed, individually or jointly, by providers of air 

transport services and of services related to tourism 

distribution networks; (ii) protect the consumer; and 

(iii) ensure that objective information is provided 

regarding tourist destinations. 

Tourism and sustainable development 

Today it is largely recognized that the sustainable 

development of tourism is the only way to ensure an 

efficient use of natural resources and a long-term 

generation of tourism earnings that indeed benefit the 

population. 

Pursuant to the World Ethic Code for Tourism 

adopted by the World Tourism Organization, 

"sustainable development of tourism" is the process of: 

• Participation of local communities in the 

elaboration, development, enrichment, 

management and preservation of all the resources 

of the destination place used for tourist projects, in 

particular cultural and environmental resources; 

• Application of the rules adopted by the relevant 

international organizations in relation to quality of 

environment in tourist projects; and 

• Allocation of income earned by tourism to prevent 

the degradation of the resources of the destination 

place and to satisfy the future needs of provision of 

tourist services. 

The Dominican legislator has acknowledged the 

importance of this notion, establishing in Law 158- 

01 of Tourist Promotion that "to ensure a 

sustainable tourist industry it is necessary to 

organize rationally and legally the use of natural 

resources", thus setting a number of safeguards of 

environmental protection to which shall be subject 

all tourist activities falling under the scope of the 

law. 

Furthermore, the Ministry of Tourism is currently 

elaborating a "National Plan for Sustainable 

Development of Tourism", which will provide the 

guidelines that will direct the tourist development in 

the country in order to ensure the sustainability of 

the sector. 

Private participation in public assets 

As we have seen, at the beginning tourist activity in 

the Dominican Republic was almost wholly in State 

hands, and the Government owned the few tourist 

facilities that then existed. At present, the Government 

is in the process of transferring its tourist-related 

assets to the private sector, as it is provided in Law 

141-97 on Reform of Public Enterprises regarding the 

hotels belonging to the State, as well as the national 

airline, the Dominican Aviation Company. 

Independently from this legislation, the State has 

already started to permit private participation in the 

administration of its hotels, through the execution of 

management agreements having in general a 35-yearsduration. 

INSTITUTIONS OF THE TOURIST SECTOR 

Ministry of Tourism ("Secretaria de Estado de 

Turismo-SECTUR") 

Law 84 of 26 December 1979 raised the regulatory 

body of the tourist sector to the rank of Ministry 

("Secretaria de Estado"), with the purpose of creating a 

body with sufficient resources to ensure that the public 

strategy for tourism development is put into effect in a 

coherent and harmonic manner. 

The attributions of the Ministry of Tourism are the 

following: 

a) To plan, organize, guide, promote, coordinate and 

evaluate tourist activities in the country, pursuant to 

the objectives, goals and national policies 

determined by the Executive Branch; 

b) To plan, promote and encourage the development 

of the tourist industry in the country; 

c) To organize, promote and encourage public and 

private investment in tourism; 

d) To determine and supervise poles of tourist 

development in the country, and to guide the 

projects to be executed in such poles; 

e) To guide, according to the relevant regulations, the 

design and construction of any infrastructure works

that may be needed for the development of tourist 

projects; 

f) To coordinate, through the Corporation for Hotel 

Industry Promotion and Tourist Development, 

national activities to promote hotel development 

and tourist promotion in the country, by purchasing, 

constructing, financing, improving and preserving 

hotel and tourist companies in general; 

g) To approve, regulate, supervise and control the 

functioning of tourist services, such as travel 

agencies, tourist guides, drivers, hotels, 

restaurants, bars, night clubs of tourist quality, 

tourist transportation, and any company or person 

that provide services to tourists and/or carry out 

tourist activities; 

h) To coordinate the activities of the different State 

agencies related to tourism in order to achieve the 

best possible results regarding services, protection 

and facilities; 

i) To carry out the official promotion campaign, and to 

promote and to guide private tourist campaigns, 

both in the country and abroad; 

j) To recommend to the Executive Branch the 

execution of bilateral conventions or treaties with 

other governments that may help to increase 

national and foreign tourism and to promote tourist 

services; 

k) To encourage the celebration of conventions, 

excursions, presentations and other cultural, sport, 

traditional and folkloric events that contribute to 

tourist promotion; 

l) To support the works and programs of the Office of 

Cultural Heritage, as well as to encourage private 

sector participation in projects, activities and 

measures intended to protect and preserve historic 

and artistic monuments and national parks of 

tourist interest; 

m) To prepare and to submit to the approval of the 

Executive Branch the tariffs for tourist services, 

such as transport, hotels, motels, guides, tours, 

shows and others, and to control their application; 

n) To create, with the approval of the Executive 

Branch, as many national and international offices 

as may be necessary in order to promote tourism 



and provide the information that tourists require; 

and 

o) To carry out any other activity in accordance with 

the national tourist policy. 

Other institutions 

Other important public and private entities that 

participate in the tourist sector are the following: 

• Corporation for Hotel Industry Promotion 

("Corporación de Fomento a la Industria Hotelera"). 

This entity is charged of managing the hotels 

belonging to the State. Law 141-97 on Reform of 

Public Companies mandates the partial privatization 

of these hotels, and the private national and 

international sector will thus be able to have access 

to the valuable assets of the State in the tourist 

sector. 

• Department of Development and Financing of 

Projects of the Central Bank ("Departamento de 

Desarrollo y Financiamiento de Proyectos del Banco 

Central - DEFINPRO"). This department is charged 

of channeling international financing to the tourist 

industry. It has also the function to execute, 

supervise and manage tourist works, and the role 

to authorize infrastructure projects in two tourist 

zones. 

• Hotel and Restaurant National Association 

("Asociación Nacional de Hoteles y Restaurantes - 

ASONAHORES"). Founded in 1962, it groups around 

120 members that represent close to 70% of all 

available rooms in the national territory. It 

represents the private sector at different public 

bodies, such as the Council for Tourist Promotion, 

the Civil Aviation Office, the Office for Investment 

Promotion, etc. 

• Council for Tourist Promotion ("Consejo de 

Promoción Turística - CPT"). This entity was 

created with the mission to promote the Dominican 

Republic as a tourist destination by promoting its 

tourist attractions and hotels, and projecting a good 

image of the country through advertisement and 

public relations campaigns, all of it with the 

purpose of increasing tourist arrivals to the 

Dominican Republic. 

23


24 

REQUIREMENTS FOR TOURIST ACTIVITIES 

GENERAL REQUIREMENTS 

Law 541 of 31 December 1969 on Tourism sets 

forth that any person or company that offers mainly 

tourist services and that may be considered as 

belonging to the national tourist organization, shall 

register with the Ministry of Tourism, being subject to 

its supervision. Therefore, any person or company that 

carries out activities such as transportation, 

accommodation, sale of food and beverages, gift shops, 

entertainment of any kind, guides, travel agencies, etc., 

have the obligation to register with the Ministry. 

This registration also grants them certain rights, 

such as the right to be included in the national and 

international publicity executed by the Government, as 

well as to receive technical advise during their process 

of establishment and organization. 

APPROVAL OF TOURIST PROJECTS 

Any tourist project of magnitude must have the 

prior approval of the Secretariat of State of Tourism. 

The Office of Planning and Programming is charged of 

evaluating the projects to be executed in the country. 

First, the promoter of the project must file a 

request for a "non-objection" letter with the Secretariat 

of State of Tourism. In this phase, the authorities 

determine whether the project may be placed within 

the strategies of tourist development of the respective 

regions, and whether it complies with the general 

requirements of financial feasibility, availability of 

infrastructure, environment protection, etc. 

This petition must contain the following documents: 

• Copy of the deed of property over the land. 

• Copy of the plan of the land at 1:10,000. 

• Aerial photograph at 1:10,000. 

• Topographic map of the land. 

• Location map in the respective tourist zone. 

• Plan of the complete parcel, with indication of 

treatment of all areas, landscapes and location of 

infrastructure elements. 

• Availability of water in the area. 

• Proposal of roads and their relation to the general 

feasibility of the area. 

• Non-objection letter from electricity and 

telecommunication companies. 

• Preliminary study on disposal of solid waste and 

sewage. 

After the non-objection letter has been obtained, 

the promoter must prepare a preliminary plan for the 

execution of the project, including the respective 

environmental studies. The project will also require the 

approval of the competent body for the respective zone. 

For instance, if the project is in the Northern Coast, it 

requires the authorization of DEFINPRO. 

Hotels 

REGULATION OF TOURIST 

FACILITIES AND SERVICES 

In general, accommodation establishments must 

register with the Ministry of Tourism, which classifies 

them within the respective category pursuant to the 

size and characteristics of the establishment. 

Among their obligations are the following: 

a) To fix on the most visible place of each room a 

printed specimen of their tariffs, indicating whether 

the price includes meals or not. 

b) To provide the Ministry of Tourism with information 

related to the movement of passengers, the 

quantity of available rooms and any other 

information related to tourism.

c) To comply strictly with the reservations that they 

accept. 

d) To keep a registry of guests with information 

identifying them, signature, date and time of arrival 

and departure. 

e) Hotels shall have safety boxes for their guests. 

If the guest does not comply with his payment 

obligation, the hotel management may seize its luggage 

and belongings, which serve as a security for the 

payments due to the hotel. 

Rule 2115 of the Ministry of Tourism establishes the 

classification rules for hotels. The Ministry determines 

the applicable tariffs for hotel services pursuant to the 

category of each establishment, and the infringement of 

these tariffs is subject to a fine and to prison of one to 

three months, applicable to the hotel manager. 

It should be noted that the renting of hotel rooms is 

subject to the following taxes: ITBIS (12%) and charge 

for services (10%). 

Restaurants 

Like hotels, establishments for the sale of food and 

beverages must be registered with the Ministry of 

Tourism. They also have to fix their price lists in visible 

places of their premises. Furthermore, their services 

are subject to the payment of ITBIS (12%) and a 

charge for service (10%). 

Rule 2116 of the Ministry of Tourism contains the 

classification rules for restaurants. 

Gift shops 

Decree 977-02 of 31 December 2002 complements 

and modernizes the legal provisions that regulated 

"Commercial Free zones", which were until then 

governed by Law 4315 of 22 October 1955 and subject 

to the supervision of the Customs Office ("Dirección 

General de Aduanas"), and "gift shops", governed 

mainly by Rule 2123 of 13 July 1984 and subject to the 

supervision of the Ministry of Tourism. 

Decree 977-02 places both systems under the same 

legal regime, considering that "...both commercial free 

zones established in tourist centers and gift shops have 

the same purpose, which is the promotion of tourist 

trade in the Dominican Republic by offering tourists the 

opportunity to purchase duty-free goods." 



The decree creates duty-free zones in hotels and 

tourist centers of the Dominican Republic, which will 

operate as shops for exhibiting and selling goods. 

Furthermore, extensions of these zones may be made 

to specially appointed areas. It allows the Ministry of 

Tourism to promote the establishment of this type of 

free zones in the tourist centers of the country, placing 

them under the supervision of the Customs Office. 

The establishment of duty-free zones and their 

respective extensions has to be evaluated by both the 

Ministry of Tourism and the Customs Office. 

For the sale of goods, when these are imported or 

purchased in the local market, the shop must ask 

foreign buyers to provide a copy of their passport and 

air ticket, and a copy of the identity card to Dominican 

citizens. 

Imported foreign goods shall be exempted from the 

payment of customs duties or any other charges related 

to the importation and sale of such goods. 

The taxes to be paid for the operations made in 

duty-free zones shall be the following, which substitute 

any other tax or charge: 

a) All sales of imported goods to foreign or national 

travelers shall be subject to the payment of a 

contribution amounting to 5% of gross sales. 

b) The sale of foreign goods in the local market shall 

be subject to the payment of custom duties. 

c) The sale of goods manufactured in the country and 

subject to ITBIS shall be exempted from this tax if 

the goods are sold to foreigners. 

These contributions must be settled and paid 

monthly to the Customs Office by way of certified 

check, which must be delivered within the first five 

working days of the following month. 

Travel agencies 

Law 541 defines travel agencies as companies of a 

commercial nature created by private parties and 

organized with the purpose of providing services to 

tourists or travelers against remuneration. These are 

the only establishments authorized to carry out 

activities related to this type of tourist business. 

In order to operate, travel agencies must have the 

prior approval of the Ministry of Tourism. Some of their 

obligations are the following: 

25


28 

• To submit to the approval of the Ministry of Tourism 

the plans for the tours they offer; and 

• To comply with the agreements executed in relation 

to tourist activities, being subject to having their 

permit revoked in the event of non-compliance. 

The sale of air tickets, as well as entertainment 

services in general, are subject to the payment of ITBIS 

(12%). 

Casinos 

Law 351 of 6 August 1964 on Gambling Halls, 

amended by Law 102 of 9 February 1965 and by Law 

24-98 of 15 January 1998, regulates the issue of 

licenses for the establishment of casinos and gambling 

halls. 

This legislation allows the realization of such 

activities under the requirements and procedures set 

forth therein, in the understanding that these activities 

contribute to promote tourism by conforming an 

important tourist attraction that strengthens the integral 

offer of Dominican tourism and enables to have access 

to additional funds that may be used for the same 

purpose. 

The gambling capacity of casinos was enlarged by 

Law 96 of 1988, which allows the installation of slot 

machines. Furthermore, pursuant to Decree 3326 of 

1978, all bets made in casinos must be placed and 

settled in dollars, and the amounts thus collected must 

be exchanged through the Central Bank. 

The law warrants the Executive Power to grant 

licenses for the establishment of casinos in first-class 

hotels. Requests are filed with the Ministry of Finance 

("Secretaria de Estado de Finanzas") and shall contain 

all relevant information regarding the nature and 

functioning of the games, the management conditions 

of the place, the top amount of bets that shall be 

admitted, the opening times, the attractions offered to 

tourists and any other relevant information. 

Requests shall be evaluated by the National 

Commission of Casinos, which shall issue its 

recommendations to the Executive Power. 

Casinos are not allowed to advertise in any manner 

whatsoever nor offer their services to the public within 

the national territory. In the event of non-compliance 

with the legal provisions, licenses may be partially or 

totally, temporarily or permanently revoked or 

amended. Furthermore, these violations may be subject 

to a fine of up to 10,000 pesos and/or prison of up to 

one year. 

The amounts collected by casinos are subject to a 

single tax based on their geographical location and the 

number of tables in operation. 

For casinos established in the city of Santo Domingo 

and urban zones, the following tax scale shall apply: 

• RD$16,000 monthly per table for casinos having 

between 31 and 60 tables in operation; 

• RD$14,000 monthly per table for casinos having 

between 16 and 30 tables in operation; and 

• RD$12,000 monthly per table for casinos having 15 

tables or less in operation. 

For casinos established in beach areas, the 

following tax scale shall apply: 

• RD$8,000 monthly per table for casinos located in 

the geographic zone of Juan Dolio, Boca Chica, Punta 

Cana and all the Eastern part of the country; and 

• RD$6,000 monthly per table for casinos located in 

the geographic zone of the Southern region, as well 

as those located in Puerto Plata, Rio San Juan and 

all the Northern part of the country. 

Prior notice of the withdrawal and addition of tables 

must be given to the tax office at least ten days in 

advance. 

Tourist guides 

The law defines tourist guides as persons who 

normally provide escort or information services to 

tourists against remuneration. In order to be able to 

practice this activity, the guide must have a credential 

issued by the Ministry of Tourism at the request of the 

interested party. The ministry will issue the credential 

after having verified the professional qualifications of 

the applicant and his knowledge of at least two 

languages. 

Guides cannot charge higher fees for their services 

than those fixed by the Ministry of Tourism for the zone 

where they have been registered. 

Other tourist facilities and services 

Any other type of facility that may be classified as a 

tourist establishment, such as car rentals, or the 

provision of any kind of tourist service, such as lease of 

boats or any other type of item at beaches or tourist 

centers, shops for sale of folkloric or handmade 

articles, whether ambulatory or not, are subject to 

registration with the Ministry of Tourism and fall under 

its supervision.

FINANCIAL AND LEGAL FRAMEWORK 

OF TOURIST ACTIVITIES 

SOURCES OF FINANCING 

FOR TOURIST PROJECTS 

Multilateral organizations 

The Dominican Republic is a member of many 

multilateral organizations. The investor that decides to 

execute a tourist project may thus benefit from the 

financing programs that are available under different 

schemes. Since tourism is a priority sector for the 

country, such financing programs are available for 

projects in these areas and, in fact, they have been a 

key factor in the development of tourism in the country. 

International organizations such as the World Bank 

and the Inter American Development Bank (IADB) grant 

credit facilities under good conditions for the realization 

of projects in sectors considered important for the 

development of the national economy, such as tourism. 

In this regard, in the year 2001 the International 

Financing Corporation (IFC), of the World Bank Group, 

opened a branch in the country in order to be able to 

provide direct financing to local companies in areas of 

strategic importance for development. Furthermore, 

also in that year the Dominican Republic became a 

member of the Multilateral Investment Fund (MIF), a 

fund managed by the IADB to provide financial 

resources for private sector development, particularly 

small enterprises. 

There are also sources of financing available 

through the European Investment Bank (EIB). This is an 

institution of the European Union that, under the 

framework of the Lome/Cotonou Convention, offers 

long-term and low-interest loans for the financing of 

projects in ACP countries. Among other sectors, the EIB 

grants loans to the Dominican Republic in the tourist 

sector, as well as transport and telecommunications 

when the project is related to tourism development. 

EIB loans are generally used for the application of 

the National and Regional Indicative Programs set forth 

by the Lome Convention, which are prepared jointly by 

each ACP country and the EU every five years, and 



contain, among other information, an indication of the 

economic areas that should benefit from the financial 

support and the projects to be executed for such 

purposes. These funds are channeled through the 

European Development Fund Office of the Government. 

Under the first financial protocol of the recently 

approved Cotonou Agreement, which substitutes and 

enlarges the benefits of the Lome Convention, a 

substantial amount of financial resources will be made 

available to ACP countries: more than 25 billion euros 

over the next seven years. 

For the period 2003-2008, the Dominican Republic 

will receive approximately 200 million euros, of which 

176 million will be for donations and the rest will be for 

regional projects and loans channeled through local 

banks. 

International loans 

International loans are not subject to any exchange 

restrictions. The foreign creditor needs only to register 

the loan at the Central Bank, and the debtor will then 

be able to pay in foreign currency obtained through the 

private exchange market any amounts due under the 

agreement. Since 1994, when the need of prior 

approval from the Central Bank was eliminated, this 

registration is a mere formality for statistical purposes. 

Under the Tax Code, interests on international loans 

were subject to a 15% withholding tax, payable by the 

local debtor. Law 147-00 on Tax Reform reduced this 

rate to 5%. It should be noted that loans granted to 

companies falling under the scope of Law 158-01 on 

Promotion of Tourist Development are exempted from 

the payment of this tax (see Section VI). 

Local Financing 

Financial institutions grant generally short or 

medium term loans, with periods of one to five years, 

but the financing of constructions and projects with 

government funding can be long term, with periods of 

ten to twenty years. 

29


30 

The average interest rate charged by commercial 

banks for 2001 was 21.2%, a substantial reduction 

when compared to the average rate of the previous 

year. 

REGIME OF FOREIGN INVESTMENT 

Law 16-95 on Foreign Investment of 20 November 

1995 regulates foreign investment. Its application 

regulations are contained in Presidential Decree 380- 

96, later amended by Presidential Decree 163-97. 

The adoption of these legal provisions was one of 

the most important steps taken within the process of 

liberalization of the national economy, since it created 

an attractive legal framework for foreign investors, by 

establishing the principle of equal treatment of national 

and foreign investment and liberalizing totally the flow 

of foreign investments and the repatriation of dividends 

and capital. Therefore, any foreign person or company 

may invest in any economic area, including tourism, 

without any kind of restriction whatsoever. 

Wide definition of foreign investment 

The foreign investment that can benefit from the 

provisions of Law 16-95 is largely defined as "any 

contribution coming from abroad, belonging to foreign 

persons or companies, or to Dominican persons 

residing abroad, to the capital of a company operating 

locally". 

Foreign investment can take the form of: (i) capital 

contributions, (ii) in-kind contributions, (iii) intangible 

technological contributions, such as trademarks, 

product models, industrial procedures, technical 

assistance and others, and (iv) financial instruments 

issued and traded abroad that have been authorized by 

the Monetary Board. 

Foreign investment can be destined to: (i) the 

capital of any type of business association, including 

branches of foreign companies, (ii) the purchase of real 

property, and (iii) the acquisition of shares or other 

financial instruments authorized by the Monetary Board. 

As to the sector where the investment is made, 

foreign investors may participate in any sector of the 

national economy, including tourism, without any 

limitation outside the minor restrictions set forth in Law 

16-95 itself. 

Simple registration procedure 

The investor must simply give notice of his 

investment to the Central Bank within 90 days after its 

placement in the country in order to obtain 

automatically a Certificate of Foreign Investment 

Registration. This notice is made through the 

presentation of the following documents: (i) registration 

request with indication of the amount and area of 

investment; (ii) proof evidencing the placement of the 

investment in the country; and (iii) corporate 

documents of the company receiving the contribution or 

the authorization to establish legal domicile if it is a 

branch. 

Free repatriation of dividends and capital 

The investor provided with a Certificate of Foreign 

Investment Registration has the right to remit abroad in 

foreign currency, through the private exchange market: 

(i) all the capital invested and all capital gains, and (ii) 

all dividends declared each fiscal year, after payment of 

the income tax. 

It should be pointed out that the lack of registration 

of foreign investments at the Central Bank does not 

affect in any way the validity of such investments. 

However the investor will have difficulty to freely 

repatriate its funds abroad, since without a Certificate 

of Foreign Investment he will not be able to go to the 

commercial banks in order to buy the foreign currency 

necessary to remit abroad the dividends obtained or the 

capital invested. 

RELEVANT LEGAL ISSUES 

Incorporation of companies 

The Commercial Code requires a minimum number 

of seven shareholders for the incorporation of a 

company, but the additional shareholders who 

participate to fulfill the legal requirement may have a 

symbolic participation of one share in the company's 

capital. 

The founding members sign the articles of 

incorporation (Estatutos Sociales), prepare the list of 

shareholders (Lista de Suscriptores), and declare 

before a Public Notary that the shares have been 

purchased and paid by the shareholders. After the 

General Incorporation Meeting has approved all these 

documents, the company is formally incorporated.

When all or part of the shares are paid through inkind 

contributions two General Incorporation Meetings 

are required. In the first meeting, an officer 

(Comisario) is appointed to value the contributed 

assets. This officer then makes a report to the second 

meeting, to be held at least five days after the report is 

made available to the shareholders, which approves the 

report and declares the company incorporated. 

Some registration and publicity formalities have to 

be complied with, namely filing copies of all 

incorporation documents at the Peace Court and the 

Court of First Instance of the legal seat of the company, 

and publishing a notice of the incorporation in a 

national newspaper. 

It should be noted that capital rules are very 

flexible. Apart from some highly regulated industries 

such as banking and insurance, there are no 

capitalization rules. No minimum capital is required and 

corporations may finance themselves on whatever debtequity 

ratio they might desire. There are no statutory 

limits, and the courts are not allowed to disregard the 

limited liability rule under any circumstances, nor 

subordinate credits of shareholders to those of third 

parties. 

Commercial registry 

Law 3-02 of 18 January 2002 created the obligation 

to obtain a Commercial Registry for any physical and 

legal person that carries out commercial activities in the 

Dominican Republic, with the aim to contribute to the 

formalization of business activities and enable the 

exchange of commercial information. 

The Commercial Registry has been placed under 

the jurisdiction of the Chambers of Commerce and 

Production, which are under the supervision of the 

Ministry of Commerce ("Secretaria de Estado de 

Industria y Comercio - SEIC"). 

For individuals, the Commercial Registry request 

must be filed within the month following the 

commencement of business activities or the opening of 

the commercial establishment. For companies, it must 

be filed within a month after the date of celebration of 

the General Incorporation Meeting. 

The Commercial Registry is made with the 

Chamber of Commerce and Production of the place of 

residence of the applicant, which will issue a Certificate 

of Commercial Registry that serves as proof of 

registration vis-à-vis third parties. Commercial Registry 

must be renewed every two years, and notice must be 



given of any changes in the business or in the articles 

of incorporation, as well as of annual ordinary 

meetings. 

Registration of these acts makes them enforceable 

to third parties, registries being public and available for 

any interested person. 

The lack of registration entails a fine of up to three 

minimum monthly wages, while the lack of registration 

of amendments entails a fine of 50% of a minimum 

monthly wage. 

Purchase of Real Estate 

The acquisition of real property rights by foreigners 

is not subject to any special condition, falling under the 

same legal regime applicable to Dominican nationals. 

Law 1542 of 1947 on Land Registration establishes 

the Torrens system of real property registration. Real 

property rights registered under this system are 

deemed to be known by, and thus binding upon, third 

parties. 

Therefore, the presentation by the seller of a 

Property Certificate issued on his behalf by the 

corresponding Registry of Titles should in principle be 

enough to prove that the seller is entitled to transfer 

the ownership rights of the property. Any mortgages or 

charges would also be mentioned in the certificate. 

However, it is always advisable to verify directly the 

status of the property at the Registrar's offices, whose 

records are open to any interested party, and even 

obtain a written confirmation on the result of these 

researches, before purchasing the property. This is 

usually achieved through the request of a certification 

on the status of the property to the Registry of Titles. 

This system protects the buyer against any sale or 

mortgage that, although previously signed, has not yet 

been registered when the buyer files his contract for 

registration. 

For these same reasons, the prompt registration of 

the sale is very important. In order to do so, the buyer 

must file at the Registry of Titles an original of the 

purchase agreement, which should be legalized by 

Public Notary, together with the Property Certificate 

issued on behalf of the seller, which will then be 

cancelled and exchanged for a new one on behalf of the 

buyer. 

The registration of real property transfers at the 

corresponding Registrar of Titles requires the payment 

31


32 

of the following taxes and duties: (i) 4% of the 

purchase price; (ii)12% of (i); (iii) in some cases, 2% 

of the purchase price on the seller's account; and (iv) 

stamps for purchase price/1,000 x 2. 

Custom duties 

The Customs Code, contained in Law 14-93 of 

August 28, 1993, harmonized customs tariffs, adopting 

the internationally recognized Harmonized System of 

Codification and Designation of Goods. The wide variety 

of categories and rates that previously existed was in 

this way eliminated, and only six tariffs were 

established. These amendments simplified considerably 

the procedure for the calculation and collection of 

custom duties. 

However, these amendments were still far behind 

the requirements of the GATT and this situation, 

together with the fact that custom authorities use very 

discretional valuation methods, resulted in the country 

having the highest custom duties of the region. 

That is the reason why a customs duties reform 

was passed by way of Law 146-00 of December 27, 

2000, which sets new duty rates of 0.3%, 8%, 14% and 

20%, thus reducing the top 35% existing before. 

Furthermore, duty exemptions for strategic economic 

sectors were maintained and reinforced. 

On the other hand, from July 2001, Article VII of the 

GATT as method of valuation of merchandises entered 

into effect. However, the WTO has authorized the 

Dominican Republic to exempt 24 items from being 

subject to the GATT valuation method for a transition 

period of two years. These include milk, milled rice, 

clinker, used tires, air conditioners, fridges, laundry 

machines, ceramic, used vehicles, tractors, etc. 

Custom duties are calculated and paid in Dominican 

pesos. The conversion into pesos of the value of the 

goods is made according to the official exchange rate 

applicable at the time of payment. 

In addition to custom duties, the importer has to 

pay (i) the selective consumption tax charged on certain 

products, which ranges from 10% to 80%, calculated 

on the CIF price of the good plus custom duties, and (ii) 

the tax on the transfer of industrialized goods and 

services (ITBIS), which accounts for 12% of the CIF 

price of the product plus duties and (i). 

In the tourist sector, the companies that comply 

with the provisions of Law 158-01 may benefit, as part 

of the incentives granted therein, from an exemption of 

custom duties in relation to the products that are 

necessary for the installation or construction of the 

tourist project or business (see Section VI). 

Taxation 

Law 11-92 of May 31, 1992 contains the Tax Code. 

This Code has four sections: (1) General Principles, 

Proceedings and Penalties, (2) Income Tax, (3) Tax on 

the Transfer of Industrialized Goods and Services 

(ITBIS), and (4) Selective Consumption Tax. The 

"Direccion General de Impuestos Internos (DGII)", an 

organ of the Ministry of Finance, is responsible for the 

collection of taxes and the enforcement of fiscal laws. 

In the year 2000 some important amendments 

were introduced to the fiscal system in order to (i) 

ensure an adequate level of tax income for the 

performance of effective government action, eliminate 

fiscal deficit, reduce poverty and improve the equitable 

distribution of income, and (ii) modify tax figures and 

institutions to reduce tax evasion. The main figures 

introduced by this reform to improve the collection of 

taxes by the administration are fiscal compensation, 

discounts, advance payments, fiscal amnesty and the 

simplified tax estimation system. 

This tax reform was effected by way of Law 147-00 

of 27 December 2000 on Tax Reform, Law 11-01 of 17 

January 2001 on Fiscal Amnesty, Law 12-01 of 17 

January 2001, which amended certain aspects of Law 

147-00, as well as Presidential Decrees Nos. 1199-00 of 

13 November 2000 on Simplified Tax Estimation 

System, 195-01 and 196-01 of 8 February 2001, on the 

application of the new income tax and ITBIS provisions. 

Income tax 

Dominican citizens and residents must pay taxes on 

the income they generate in the country and on income 

originating abroad. Foreigners must only pay taxes on 

income of Dominican origin, and after the third year of 

residence, also on income of foreign source. 

Any person or entity that pays taxable income has 

the duty to withhold the respective tax amount and pay 

it to the administration. These withholding agents are 

liable to the tax office for the payment of the respective 

taxes. 

The income tax rate for legal persons is 25% of the 

taxable income of each fiscal year. This tax must be 

withheld at a corporate level from the dividends paid by 

the company. The remaining balance is not subject to 

any other tax, whether it is paid to persons or

companies. Individuals benefit from an exemption for 

income of up to RD$125,256 per year. Above this 

amount the tax rate increases in proportion to the 

income, as follows: 15% for income from RD$125,256 

to RD$208,760, 20% for income from RD$208,760.01 to 

RD$313,140, and 25% for income exceeding 

RD$313,140 per year. The employer must withhold this 

tax from the salary paid to the employee. 

Tax on the Transfer of Industrialized Goods and 

Services (ITBIS) 

ITBIS applies to (i) the transfer of industrialized 

goods, calculated on the net transfer price plus 

accessory services, (ii) the import of industrialized 

goods, calculated on the CIF value of the goods plus 

custom duties, and (iii) the provision and lease of 

services, calculated on the value of service excluding 

mandatory tips. 

The tax reform increased the ITBIS rate from 8% to 

12%. Advertising services are taxed with a lower rate 

of 6%. 

A wide range of agricultural and livestock products 

have been exempted from the payment of ITBIS, such 

as living animals, meat, fishes for reproduction, milk 

products, plants to cultivate, vegetables and fruits for 

public consumption, coffee, corns, milled products, 

sugar, cacao, etc. Also exempted are fuel and energy, 

books and magazines, as well as personal computers 

and accessories. 

Services excluded are education, culture, health, 

financial (excluding insurance), pension plans, ground 

transportation, electricity, water and garbage collection, 

rent of houses, and personal care. Tourist services are 

subject to this tax. 

Selective Consumption Tax 

This tax applies to the transfer of certain goods 

manufactured in the country, to the import of certain 

products and to the provision of certain services. 

Examples of these goods and services are alcohol and 

tobacco derivatives, vehicles, jewelry, certain home 

appliances, etc. 

The tax rate ranges from 10% to 80%, being the 

higher rates those for vehicles and certain luxury items. 

Labor laws 

The Labor Code, contained in Law 16-92 of 17 June 

1992 regulates the relations between companies and 



their employees. The Ministry of Labor ("Secretaria de 

Estado de Trabajo - SET") sees to the compliance of 

these provisions, while Labor Courts have jurisdiction 

over labor disputes. 

Foreign workers 

At least 80% of the workers of a company should 

be Dominican citizens. Supervising officers should 

preferably be Dominicans, but there are no restrictions 

at manager level. When a Dominican citizen substitutes 

a foreigner in an employment position the Dominican 

employee will be entitled to the same salary, rights and 

conditions as the foreign employee. 

Working conditions 

The normal working week is 44 hours, with a 

working day of 8 hours. Mandatory paid leaves of 

absence are the following: 5 days in the event of 

marriage, 3 days in the event of death of a close family 

member, and 2 days for the worker whose wife gives 

birth. Furthermore, pursuant to Law 97-97, workers 

who have completed one year of employment are 

entitled to a paid vacation of 14 working days. 

Labor laws set out appropriate measures to protect 

employees against sexual harassment, and in the event 

of maternity. 

Dominican labor laws set forth a minimum wage for 

private sector employees, which is periodically fixed by 

the National Salaries Committee of the Ministry of 

Labor. The current monthly minimum wage is RD$3,416 

for companies with assets over RD$500,000. Other 

minimum wages are fixed for certain sectors. This is 

the case of the tourist sector (RD$3,030 for companies 

with assets over RD$500,000). 

In the event of overtime, night and holiday work, 

the premium to be paid by the employer over the basic 

wages of the employee is 35% for overtime, 15% for 

night work, and 100% for overtime implying an increase 

of more than 68 working hours per week, as well as for 

work on Sundays and holidays. 

All employees are entitled to receive, by December 

20 at the latest, an additional month's salary. They are 

also entitled to receive a 10% participation in the yearly 

net profits of the company. 

Dismissal of employees 

During the first three months of employment 

workers can be dismissed without the employer having 

33


34 

to make any severance payments. Afterwards 

employees can be dismissed in accordance with the 

provisions of the Labor Code. In the event of justified 

dismissal made pursuant to the causes and procedures 

set forth in the Labor Code, the employer does not have 

to pay any indemnity to the employee. In the event of 

unjustified dismissal, employees are entitled to 

severance payments calculated based on the duration 

of the work relation. The employer must also give prior 

notice of the dismissal to the employee. Prior notice is 

not necessary if the employer pays the worker the 

salary corresponding to such period. 

None of these payments is subject to income tax. If 

the employer does not make the payment on time, the 

worker will be entitled to receive an additional day's 

salary for each day of delay. 

Social security obligations 

On 10 May 2001, Law 87-01 on Social Security was 

enacted, which modifies completely the social security 

system in the country in order to provide mandatory 

and universal coverage under non-discriminatory 

conditions to all Dominican nationals and foreigners 

residing in the country against risks of old age, 

disability, old age unemployment, sickness, maternity, 

childhood and labor risks. 

The implementation of this new legal framework is 

a great challenge for the Government, employers, and 

the whole population, and it will signify a gradual 

process that will certainly require several years before 

it may be fully put into effect. The law provides a 

transitional period of ten years for the gradual 

construction of the new social security system. 

Law 87-01 sets forth three regimes for the payment 

of social security obligations, (i) contributive regime, 

which applies to workers in public bodies and private 

companies and shall be financed jointly by employers 

and workers; (ii) subsidized regime, which applies to 

unemployed or disabled persons and shall be financed 

by the State; and (iii) mixed regime, which applies to 

independent professionals, and shall be financed by the 

beneficiary and the State. 

Under the contributive regime, coverage is provided 

as follows: (i) Insurance of Old Age, Disability and 

Survival (Pensions), (ii) Health Insurance (for the 

worker and his family), and (iii) Labor Risks Insurance. 

The employer shall finance 70% of the cost of 

pensions and health insurances, while the worker will 

contribute the remaining 30%. The employer shall 

finance 100% of the insurance against labor risks. 

Furthermore, employers must pay 0.4% of salaries to 

contribute to the Fund of Social Solidarity established in 

the law. 

Pensions shall be financed with 10% of the worker's 

salary, as well as the health insurance. Labor Risk 

Insurance, which covers accidents at the place of work 

or work-related illnesses, shall be financed with 1% of 

the worker's salary, plus an additional contribution 

ranging up to 0.6% of the salary, depending on the type 

of activity and level of risk at work, all of it at the 

employer's charge. 

Employers are obliged to make the respective 

payments within the first three working days of each 

month. They are also obliged to register workers, and 

to give notice of the salaries and their amendments. 

They will be liable for the damages caused to the 

worker and his family for the failure to comply with 

their legal obligations. 

Environmental permits 

Law 64-00 of 18 August 2000 on Environment and 

Natural Resources recognizes the importance of the 

protection, preservation and sustainable use of natural 

resources, establishing measures to prevent, control 

and repair the degradation of the environment. 

For such purposes, it creates the Ministry of 

Environment ("Secretaria de Estado de Medio Ambiente 

y Recursos Naturales-SEMARN") and sets forth a 

number of instruments of environmental management 

through which the State exercises its function of 

regulating and supervising environment protection all 

throughout the national territory. 

An important part of these instruments are 

environmental licenses and permits, which must be 

obtained by companies interested in executing works or 

projects that may affect, in any manner whatsoever, 

natural resources, environmental quality or the health 

of the population, including its psychological and moral 

well-being. 

Resolution 05/2002 of the Ministry of Environment 

of 18 March 2002 creates the Regulations of 

Environmental Permits and Licenses, the Classification 

of Works, Activities and Projects, and the Procedures 

for Environmental Permits for Existing Establishments 

and for Studies of Environmental Impact.

Tourist projects that require environmental permits or 

licenses 

Article 41 of Law 64-00 designates the projects that 

have to be subject to the process of environmental 

impact evaluation. In general terms, there are for the 

purposes of the environmental administration four 

categories of projects: 

Category A Projects: These are projects, works or 

activities with complex environmental impact, which 

may have regional and even national effects. They are 

projects of great size having a strategic nature from the 

economic and social standpoint. Their promoter must 

file an environmental license request based on an 

exhaustive Study of Environmental Impact. Tourist 

projects included in this category are aquariums, golf 

courses, beach resorts, and plans of tourist 

development and recovery of beaches. 

Category B Projects: These have significant 

environmental impact, but limited to the area of the 

project and their zone of direct influence. Their 

promoter must file an environmental permit request 

based on a Declaration of Environmental Impact, but 

additional environmental studies may be required. 

Tourist projects included in this category are camping 

places, mountain hotels, aquatic parks in the coast and 

cable railways. 

Category C Projects: These have a limited potential 

environmental impact that may be easily identified and 

corrected. Their promoter must file an environmental 

permit request based only on a Declaration of 

Environmental Impact. Tourist projects included in this 

category are urban hotels and thematic parks. 

Excluded Projects: Projects, works or activities that 

are not expressly mentioned in Law 64-00 and that 

have not been included by the regulations in any of the 

above-mentioned categories, do not have to follow the 

environmental evaluation process. They do not require 

any environmental permit, but their promoter may 

request a Certification of Exclusion to the Ministry of 

Environment 

Procedures 

Requests are made in writing to the Ministry of 

Environment, and they have to be joined by the 

respective forms according to the category of the 

project (Form of Previous Analysis for Projects in 

category A and Form of Declaration of Environmental 

Impact for Projects in categories B and C) and by the 

documents required in the forms. 



This first stage may end with a Declaration of Non- 

Significant Environmental Impact, which recommends 

the issuance of the environmental permit. However, 

when Studies of Environmental Impact or Additional 

Environmental Studies are required, at the end of this 

phase SEMARN delivers to the promoter the terms of 

reference for the elaboration of such studies. 

Environmental studies must be made by an 

interdisciplinary group of specialists, whose 

professional qualifications will depend on the nature of 

the study. These consultants must be registered with 

SEMARN. 

SEMARN will decide on the granting of the permit or 

license based on the recommendation made by the 

Evaluation Committee pursuant to the Technical Report, 

which verifies whether the studies filed by the promoter 

comply with the terms of reference, and taking into 

account the comments of the interested parties and the 

public in general, as applicable. 

After the environmental license or permit has been 

granted, the promoter must comply with the program of 

environmental management set forth therein, being 

subject in the event of non-compliance to the sanctions 

provided in the law. 

The terms established for the different phases of 

the procedure are the following: (i) Previous analysis 

and review of the Declaration of Environmental Impact, 

21 days from the date of filing; (ii) Elaboration of the 

required environmental studies by the promoter, not 

more than one year after the date of delivery of the 

terms of reference; (iii) Review of the Study of 

Environmental Impact or Additional Environmental 

Studies and preparation of the Technical Report, 

including the stage of public consultation, 90 days after 

the date of filing of the studies; and (iv) Taking of 

decision, 15 days after the delivery of the Technical 

Report. 

Costs 

• Request of environmental permit or license: 1/3 of 

a monthly minimum wage. 

• Request of Certificate of Exclusion: one monthly 

minimum wage. 

• Issue of environmental license: 15 monthly 

minimum wages plus an amount calculated 

pursuant to the estimated initial investment of the 

project. 

• Issue of environmental permit: 5 monthly minimum 

wages plus an amount calculated pursuant to the 

estimated initial investment of the project. 

35


36 

Furthermore, the promoter is liable for all costs 

resulting from studies or reports, from the execution of 

mitigation measures and the environmental 

management program, and from any required 

publications, notifications and public hearings. 

In addition, in order to ensure that the 

environmental management program established in the 

environmental permit or license is put into effect, the 

promoter must provide a performance bond for a sum 

amounting to ten percent of the total costs of the works 

or investments required to comply with the program. 

Sanctions 

Law 64-00 provides administrative and criminal 

sanctions for those who violate its provisions. 

Administrative sanctions may be applied by SEMARN 

and include fines, as well as suspension or closure of 

operations. Law 64-00 creates the notion of 

"environmental crime", committed by any person who, 

knowingly or intentionally, violates its provisions and 

application rules. Environmental crimes may be 

punished with fines of up to 10,000 minimum salaries 

and prison of up to three years, as well as obligation to 

repair damages, closure of establishment, withdrawal 

of permits, etc. 

Entry and residence requirements 

Entry requirements 

In general, foreign citizens must obtain a Dominican 

visa in order to enter the country. Visas are classified in 

Diplomatic, Official, Courtesy, Business, Dependants, 

Tourism, Residence and Student. The Foreign Service 

of the Dominican Republic issues these visas abroad or 

by the Ministry of Foreign Relations ("Secretaria de 

Estado de Relaciones Exteriores-SEREX") in the country. 

Citizens of countries that have signed an agreement 

with the Dominican Republic for the exoneration of visa 

requirements may enter the country for a ninety-dayperiod, 

upon the purchase of a "tourist card" at the 

arrival port for the amount of US$10.00. 

Obtaining Dominican residence 

Foreigners may acquire the right to reside in the 

country by (i) obtaining a residence visa at the 

Dominican Consulates abroad, and (ii) obtaining a 

provisional and then permanent residence card at the 

Immigration Office ("Dirección General de Migración"). 

The applicant of a residence visa must file the 

following documents: (i) Letter of request, (ii) Duly 

completed Form 509-Ref., (iii) Letter of guarantee from 

a Dominican person or company, or a foreigner residing 

in the country, (iv) Police Record, (v) Health certificate, 

(vi) Work contract, bank letter or other proof of funds, 

(vii) Seven frontal photos 2" x 2" and three side photos, 

(viii) Copy of birth certificate, (ix) Passport photocopies, 

and (x) Certification from the Immigration Office of the 

applicant's last date of entry in the country. 

If the applicant wishes to obtain a residence visa for 

his/her spouse, the same documents must be 

presented in relation to the spouse, apart from those 

indicated in points (iii) and (vi). Furthermore, the 

applicant must file a copy of the marriage certificate. 

For children, it is enough to comply with the 

requirements (vii), (viii) and (ix). 

The procedure takes from 10 to 12 weeks. The 

residence visa is valid for 60 days, and within this term 

the applicant must file a residence request with the 

Immigration Office. 

The request for a provisional residence must be 

joined by the following documents: (i) Request letter, 

(ii) Duly completed Form B-1-A, (iii) Photocopies of 

passport and residence visa, (iv) Certification of 

residence visa issued by the Ministry of Foreign Affairs, 

(v) Letter of guarantee from a Dominican citizen or 

resident legalized by Public Notary, (vi) Six 2" x 2" 

photos (four frontal and two side photos), and (vii) 

Police record issued by the National Police. 

The provisional residence card may be obtained 

within two months and is valid for one year. Upon its 

expiration, the applicant may request a permanent 

residence card, which is valid for renewable threeyear-periods. 

Residence program for investors 

The Office for Investment Promotion ("Oficina de 

Promoción de Inversiones - OPI-RD") has introduced a 

special program for foreign investors in order to 

accelerate the process of obtaining Dominican 

residence. 

This program applies to foreign investment made in 

the country, by a physical or legal person, in the form of 

a contribution to the capital of a company established in 

accordance with the laws of the Dominican Republic, 

for an amount of at least US$200,000.00 or its 

equivalent in local currency. The contribution may be 

made in capital, in kind, in financial instruments or

technology, as established in Law 16-95 of Foreign 

Investment (see Section 5.2). 

The beneficiaries of the program are the foreign 

investors and their employees (managers, technicians), 

as well as their families and economic dependants. 

The request must be filed with the Foreign 

Investment Desk of the Immigration Office, which shall 

issue the residence permit within 45 days at the latest. 

The documents to be filed with the application are the 

following: 

a) Form of request of residence for investors, which is 

available free of charge at the Foreign Investment 

Desk of the Immigration Office; 

b) Copy of complete original passport, valid for at 

least three months. If the last entry is not 

registered in the passport, a certification of the last 

entry issued by the Immigration Office must be also 

filed; 

c) Entry permit (visa or tourist card); 

d) Original birth certificate; 

e) Proof of Foreign Investment Registration or 

registration request, issued by the Central bank of 

the Dominican Republic; 

f) Police Record issued by the competent Dominican 

authorities or by the authorities of the country of 



origin if the applicant has been for less than 30 

days in the country; 

g) Receipt of payment of medical examinations issued 

by a physician certified by the Immigration Office; 

h) Eleven 2" x 2"photographs (seven frontal and four 

side) for persons older than 18 years. Seven (five 

frontal and two side) for applicants between 16 and 

18 years old, and five (three frontal and two side) 

for those less than 16 years old; 

i) If the applicant is a shareholder in the company, 

certified copy of Board Resolution stating his status 

in the company; 

j) If the applicant is a manager or technician, original 

work contract or letter of appointment; 

k) If the application includes the spouse and/or minor 

children, the following documents must be filed in 

addition: marriage certificate and the documents 

referred to in a), b), c), d), f), g) and h). For 

minors, requirement f) is not necessary; 

l) For applicants more than 16 years old four samples 

of each document must be filed (one original and 

three copies). Otherwise, it is sufficient to file two 

sets of each document; 

m) All of the documents issued abroad must be duly 

translated into Spanish and legalized by the 

respective Dominican Consulate. 

37


38 

LAW 158-01 ON PROMOTION 

OF TOURIST DEVELOPMENT 

BACKGROUND AND OBJECTIVES 

Law 158-01 of 9 October 2002 is the most recent 

legal instrument adopted by the Dominican Government 

to promote the growth of the tourist industry through 

the granting of wide tax incentives to tourist activities in 

certain areas, and the allocation of additional funds to 

the campaigns of tourist promotion carried out by the 

Government in generating markets. 

This is the "Law on tourist development for poles of 

scarce development and new poles in provinces and 

communities of great potential and creation of the 

official fund of tourist promotion", which offers a wide 

range of attractive opportunities for investors interested 

in the tourist sector in the Dominican Republic. 

With these tools, the Government has provided a 

response to the international situation in order to 

increase the competitiveness of the tourist industry in 

the country, which has been affected in its growth 

levels by the increasing competition in international 

markets, especially in the Caribbean region. 

Taking into account the crucial significance of 

tourism for the national economy and for the well-being 

of the population in general, the statute declares that 

any fiscal sacrifice that the granting of incentives may 

entail for the State shall be advantageously 

compensated with the investments channeled for tourist 

development in the respective poles, and the jobs and 

earnings thus generated. 

By way of Decrees 1125-01 of 20 November 2001 

and 74-02 of 29 January 2002, the Executive Power 

established the application regulations of Law 158-01. 

Furthermore, Law 184-02 of 23 November 2002 made 

some minor amendments to the legislation in order to 

ensure the proper interpretation and execution of Law 

158-01 and thus prevent conflicts of interpretation that 

might have prevented a just and equitable application 

of the legal provisions. 

Legal background 

Law 158-01 has taken into account the positive 

experience that in the eighties enabled the country to 

develop at such a grand scale its tourist industry, when 

a wide range of tax incentives and promotional 

activities undertaken jointly by the public and private 

sector favored the development of several tourist poles 

throughout the national territory. 

Law 153 on Promotion and Incentive of Tourist 

Development was passed in the year 1971, a statute 

that granted tax incentives to national and foreign 

investors who participated in the sector. This legislation 

was abrogated by the Tax Code adopted in 1992, which 

eliminated all existing incentives in the different 

economic areas, apart from those granted to free 

zones. 

Purpose of the law 

Law 158-01 focuses promotional activities towards 

less developed areas, recognizing that a clear policy of 

promotion and incentives is necessary in order to 

enable these regions to become dynamic tourist poles. 

This policy has the purpose of (i) channeling 

investments to less developed zones, thus favoring 

these populations, (ii) exploiting the natural resources 

of such areas, thus diversifying the tourist offer on 

behalf of the development of the tourist industry, and 

(iii) ensuring a balanced and organized exploitation of 

the different regions, in the understanding that in order 

to guarantee the sustainability of the tourist industry it 

is necessary to organize rationally and legally the use of 

natural resources. 

According to its Article 1, the main objective of the 

law is "..to accelerate a rationalized process of 

development of the tourist industry in regions of great 

potential or that have excellent natural conditions for 

their tourist exploitation that, having been declared as 

tourist poles or not, have not yet reached the expected 

degree of development."

SCOPE OF APPLICATION 

As it will be seen, Law 158-01 has a very large 

scope of application, since it may benefit any person or 

company that undertakes tourist activities, defined 

widely, in any of the tourist poles indicated in the law, 

which practically include all zones with tourist potential 

in the country, apart from those that are already highly 

developed. 

Demarcation of tourist zones 

Article 1 of the law, as amended by Law 184-02 in 

order to extend beneficiary areas, lists the tourist poles, 

provinces and municipalities that may benefit from the 

established incentives, as follows: 

1. Tourist Pole No. 4, Jarabacoa and Constanza. 

2. Tourist Pole IV, enlarged: Barahona, Bahoruco, 

Independencia and Pedernales 

3. Tourist Pole V, enlarged: Montecristi, Dajabon, 

Santiago Rodriguez and Valverde. 

4. Tourist Pole VIII, enlarged, comprising the province 

of San Cristobal and the municipality of Palenque, 

the province Peravia and the province Azua de 

Compostela. 

5. Province of Maria Trinidad Sanchez and all its 

municipalities. 

6. Tourist Pole of the Samana province. 

7. Province of Hato Mayor and its municipalities; 

province El Seibo and its municipalities; province of 

San Pedro de Macoris and its municipalities; 

province of Espaillat and its municipalities: Gaspar 

Hernandez, Higüerito, Jose Contreras, Villa Trina 

and Jamao al Norte; provinces of Sanchez Ramirez 

and Monseñor Nouel; province of Monte Plata; in 

the province of La Vega, the municipalities of 

Jarabacoa, Constanza and Guaigüí; the municipality 

of Luperon, as well as El Castillo y La Isabela 

Historica, in the province of Puerto Plata, and the 

Colonial Zone in Santo Domingo. 

8. Province of Santiago, and its municipalities. 

9. Municipality of Lagunas de Nisibon and sections El 

Macao, Uvero Alto and Juanillo, of La Altagracia 

province. 

Although the law refers to these regions as the 

main focal points of the promotional efforts, it still 

grants certain incentives of lesser scope to other zones. 

In this regard, it provides that the tourist poles of 

Puerto Plata or Amber Coast, Santo Domingo and 



others that have benefited from incentives in hotel 

installations, may benefit from incentives in respect of 

tourist activities, as long as they do not refer to the 

construction of hotels or resorts. This is due to the fact 

that the number of rooms has not been equally 

distributed among the various regions of the national 

territory, since the construction of hotel facilities has 

concentrated in such areas. 

It should be noted here that Law 184-02 added 

however certain areas of Puerto Plata (Luperon, El 

Castillo and La Isabela Historica) and Santo Domingo 

(Colonial Zone) as priority zones (numeral 7), which 

may thus benefit from all of the incentives established 

in Law 158-01. 

Furthermore, in relation to the province La 

Altagracia, apart from the municipalities and sections 

expressly mentioned in numeral 9 of the law (Gaspar 

Hernandez, Higüerito, Jose Contreras, Villa Trina and 

Jamao), as well as the Santiago province and its 

municipalities (numeral 8), the incentives granted to the 

installation of hotels have been limited, being provided 

that these activities will not benefit from the income tax 

exemption established for the other regions. However, 

any other tourist activity undertaken in such zones will 

benefit from all of the incentives provided in the law. 

Definition of tourist activities 

The law declares of national interest the 

establishment in the national territory of companies 

dedicated to tourist activities. 

These activities have been expressly listed in Article 

3 of Law 158-01 and include practically any type of 

tourist project, from infrastructure works to small 

enterprises that depend on tourism, as follows: 

1. Hotels: hotel facilities, resorts and/or hotel 

complexes. 

2. Convention centers: construction of facilities for 

conventions, fairs, international congresses, 

festivals, shows and concerts. 

3. Promotion of cruises: companies dedicated to the 

promotion of cruise activities that establish, as main 

port for the departure and final destination of their 

ships, any of the ports provided in the law. 

4. Parks: construction and operation of leisure, 

ecologic and/or theme parks. 

5. Maritime infrastructure: construction and operation 

of port and maritime infrastructure servicing 

tourism, such as ports for sports and marinas. 

39


40 

6. Tourist infrastructure: construction and/or 

operation of tourist infrastructure, such as 

aquariums, restaurants, golf courses, sport 

premises and any other that may be classified as 

an establishment belonging to tourist activities. 

7. Enterprises that rely on tourism: small and medium 

size enterprises whose market is drawn basically 

from tourism (handcraft, ornamental plants, 

tropical fishes, farms that grow small endemic 

reptiles and others of a similar nature). 

8. Infrastructure for basic services: companies of 

infrastructure for basic services, such as aqueducts, 

treatment plants, environmental cleansing, garbage 

and solid waste disposal. 

9. Complementary activities: Law 184-02 extends 

incentives to tourist accommodation or other 

facilities that complement the tourist activities 

mentioned in numerals 2-6, that are built or 

promoted to complement them, such as villas, lots, 

apartments, docks for ships, etc., whether they are 

intended to be operated by the promoters 

themselves or sold to other persons or companies, 

as long as they are a part of the project. 

Beneficiaries 

Any physical or legal person having its domicile in 

the country that undertakes, promotes, or invests 

capital in, any of the tourist activities previously 

mentioned may benefit from the incentives granted in 

the law, provided they are executed in the priority 

zones described therein. 

Therefore, the law benefits national and foreign 

promoters and investors, but in the case of foreigners 

the foreign person or company has to be established in 

the Dominican Republic, by obtaining a Dominican 

residence, incorporating a Dominican company or fixing 

its domicile in the country. 

COMPETENT BODIES 

Council of Tourist Promotion ("Consejo de 

Fomento Turístico - CONFOTUR") 

The Council of Tourist Promotion ("Consejo de 

Fomento Turístico - CONFOTUR") is charged with the 

application of Law 158-01. This body is composed of 

the following officials: 

• Minister of Tourism, who presides over it; 

• Minister of Environment; 

• Minister of Culture; 

• A representative of the Hotel and Restaurant 

National Association ("Asociación Nacional de 

Hoteles y Restaurantes - ASONAHORES"); 

• Director of the Technical Bureau of Planning and 

Programming, who acts as its Secretary; 

• A professional in environmental impact appointed 

by the Ministry of Environment; and 

• A representative of the Ministry of Culture. 

Its attributions are the following: 

• To decide on the requests for project classification 

and on the granting of incentives for classified 

projects. 

• To authorize or not the transfer of rights granted 

over classified projects. 

• To carry out investigations regarding requests or 

the execution of approved projects. 

• To decide on the withdrawal of benefits in the event 

of non-compliance. 

• To request the application of sanctions and fines 

provided in the law and bring the offenders to 

justice. 

Decree 1125-01 sets forth the rules pertaining to 

the celebration of meetings of CONFOTUR, quorum 

requirements, votes, as well as the drafting of 

resolutions taken by CONFOTUR for the exercise of its 

attributions. 

Technical Bureau for Planning and 

Programming 

The Technical Bureau for Planning and 

Programming is a department of the Ministry of 

Tourism. It has the purpose to establish the guidelines 

and priorities that shall guide the application of the law, 

to assist CONFOTUR in the processing of classification 

requests and in the exercise of its attributions in 

general, and to make the contacts and offer all the 

relevant information to investors. 

Its attributions are the following: 

• To prepare the plans and guidelines for the 

development of the sector pursuant to the priorities 

of tourist services with the view of approving the 

tourist projects that request the benefits of the law. 

• To receive, process and keep files of all of the 

requests made to CONFOTUR.

• To evaluate requests and issue its 

recommendations to CONFOTUR. 

• To carry out inspections to supervise the execution 

of approved projects. 

REQUIREMENTS AND PROCEDURES 

Requirements for filing requests 

Requests made under Law 158-01 must refer to 

new projects, excluding those that had been started 

before the adoption of the law. These must be 

addressed to the Minister of Tourism as President of 

CONFOTUR, and be sent via the Secretary of 

CONFOTUR, which is the Director of the Technical 

Bureau for Planning and Programming. Requests must 

contain the following information: 

• Letter of request; 

• Description of promoter or investor, or incorporation 

documents of the company, as applicable; 

• Study of economic and financial feasibility, which 

must contain a feasibility analysis, a marketing and 

promotion plan, and an assessment of the social 

benefits of the project, and must be prepared by 

consultants that have been duly registered with the 

Central Bank; 

• Architectural plans duly approved by the respective 

bodies, which are the municipal authorities, the 

Ministry of Public Works ("Secretaria de Estado de 

Obras Publicas y Comunicaciones - SEOPC"), as 

well as the electricity ("Corporacion Dominicana de 

Electricidad - CDE) and water ("Instituto Nacional 

de Agua Potable y Alcantarillados - INAPA") 

companies, if necessary; 

• Environmental permit or licenses, as applicable 

under the provisions of Law 64-00 on Environment 

and Natural Resources (see Section 5.3.7); and 

• Certificate of payment of income tax (to make sure 

that the applicant is up to date in the payment of 

taxes). 

Classification of projects 

The law refers to the act of approval of a project by 

CONFOTUR as "Classification", since its approval means 

that the project has been classified as complying with 

all the respective legal provisions. 

After the request has been filed, the Technical 

Bureau has a thirty-day-term to submit an evaluation 



report to CONFOTUR with its conclusions and 

recommendations regarding the project in general and 

each of its elements in particular. Requests must be 

approved or rejected by CONFOTUR, based on 

reasonable grounds, within a period that shall not 

exceed sixty days after the date of filing. 

The resolution granting the request shall contain a 

list of the technical and economic characteristics that 

serve as a basis for the decision. Requests that have 

been rejected may be filed again after the impediment 

that caused its refusal has ceased to exist or has been 

corrected. 

If the file is not complete, or if the applicant is in 

the process of establishment in the country, CONFOTUR 

may grant a "provisional classification" that entails 

solely the exoneration of incorporation taxes for 

companies. 

Approval of exonerations 

The Technical Bureau is charged of recommending 

to CONFOTUR the appropriate exonerations for each 

request. Incentive requests may be filed after the 

classification request and be treated by special 

resolutions, as it may be required for the operational 

needs of the approved project. Resolutions granting 

exonerations of custom duties shall be valid for six 

months after the date of issue. 

INCENTIVES AND BENEFITS 

Projects approved by CONFOTUR benefit from a 

wide range of tax incentives. Furthermore, investors 

that put their capital in such projects will be entitled to 

make deductions on their taxable income. 

It should be noted that Law 184-02 amended the 

description of these incentives as it was contained in 

Law 158-01 in order to extend their scope and clarify 

certain aspects that may have been misleading. 

Scope of benefits 

Income tax 

Companies complying with the provisions of the law 

shall benefit from a 100% exoneration from the 

following taxes and charges: 

• Income tax. 

• Tax for incorporation of companies and increase of 

capital. 

41


42 

• Tax on the transfer of real property rights, such as 

purchase agreements or in-kind contributions. 

• Tax on luxury houses ("Impuesto sobre Viviendas 

Suntuarias y Solares No Edificados - IVSS"). 

• Charges, fees and quotas for the elaboration of 

plans, studies, consulting activities, supervision and 

construction of works to be executed in an 

approved project, on behalf of contactors charged 

of executing such works. 

• Taxes and withholdings applicable to national and 

international loans, or to the interests paid for 

such, granted to beneficiary companies. 

Exoneration of custom duties 

The law grants a 100% exoneration of all custom 

duties and any other taxes, such as charges or fees, 

including ITBIS, that may be applicable to the import of 

machinery, equipment, materials and personal property 

that may be necessary for the construction and for the 

first equipment and starting of operations of the tourist 

facility. 

However, it should be noted that the exoneration 

refers only to machinery and equipment that is 

necessary to achieve a high profile in the quality of the 

products. For the purposes of exclusion from 

exoneration, the Technical Bureau shall submit to 

CONFOTUR a list of all the goods and services produced 

in the country whose quality is good enough for the 

construction, equipment and operation of tourist 

projects and that do not need to be imported. 

Deductions 

Individuals and companies may deduct from their 

net taxable income the amount of their investments in 

approved tourist projects, and are entitled to apply 

every year up to 20% of their net taxable income to the 

amortization of such investments. However, the 

amortization period shall not exceed five years. 

Prohibition of new charges 

Finally, the law sets forth a general prohibition to 

the establishment of new taxes, charges, fees, etc, 

during the period of duration of the fiscal benefits. 

Duration of benefits 

The duration period of the tax exemption granted to 

each tourist project, business or company shall be ten 

years after the date of termination of the construction 

works and the equipment of the project. 

Assignment of benefits 

No assignment of benefits granted by the law may 

be made without the prior consent of CONFOTUR. Both 

the holder of the benefits and the future assignee must 

request its approval in writing to CONFOTUR. 

CONFOTUR shall decide on the assignment request 

within sixty days after the date of filing. 

On the other hand, only in exceptional cases may 

CONFOTUR give its consent to the transfer of goods or 

articles imported under the law, and that after having 

verified that such goods or articles are no longer 

required by the respective tourist project, and provided 

all applicable import taxes are paid. 

Revocation of benefits 

The promoter or investor that does not comply with 

the legal provisions or the terms approved for the 

project looses automatically the benefits of the law, 

being furthermore liable to the administration for all the 

taxes and charged that were not paid as a result of 

such benefits. 

CONFOTUR decides on the withdrawal of benefits, 

which may be total or partial, provisional or final, 

pursuant to the level of non-compliance. 

Withdrawal of benefits may arise in the first place 

when the promoter has not started with the sustained 

and continuing operation of the project within the term 

provided in the law, which is a maximum period of 

three years. However, authorities may take into account 

the special circumstances of each project when taking a 

decision in this regard. 

Furthermore, the suspension or revocation of 

benefits may also follow when the project is not being 

executed according to the approved terms and 

conditions. The Technical Bureau is charged of 

supervising that projects are carried out in the manner 

approved by CONFOTUR. 

Finally, the loss of benefits may arise when the 

promoter has undertaken activities that are harmful to 

the environment and that conform an environmental 

crime, or in the event of non-compliance with 

environmental provisions, pursuant to the relevant laws 

and regulations. This measure is independent from any 

civil or criminal sanctions that may be applied in 

accordance with such laws.

SAFEGUARDS OF ENVIRONMENTAL PROTECTION 

Law 158-01 grants crucial importance to the 

protection of the environment and natural resources 

within the process of tourism development, in the 

understanding that the preservation of these resources 

is essential for the sustained development of the tourist 

industry. For such reasons, it sets out a number of 

safeguards to ensure environmental protection and 

grants a very direct and active participation to the 

Ministry of Environment throughout the whole process 

of evaluation, approval and supervision of tourist 

projects. These safeguards include the following: 

• The Minister of Environment is a member of 

CONFOTUR. 

• Classification requests filed with CONFOTUR must 

have the prior authorization of the Ministry of 

Environment, pursuant to the relevant laws and 

regulations. 



• Companies established in accordance with the law 

must ensure the protection of the environment and 

natural resources, pursuant to the relevant laws 

and regulations. Otherwise, they may be subject to 

loosing the benefits granted by the law, and the 

Ministry of Environment is charged of supervising 

the compliance with this obligation. 

• The projects that intend to work with large 

amounts of fuel and/or entail an intensive traffic of 

ships shall include a contingency plan to prevent 

and control fuel spilling. 

• No infrastructure project may be approved inside 

protected areas or national parks, unless it is 

provided with a study of environmental impact 

approved by the Ministry of Environment pursuant 

to the guidelines, rules and procedures set forth in 

the special regulations that the Ministry of 

Environment shall issue to that effect. 

43


44 

APPENDIX 1 

STATISTICAL TABLES

Gross Domestic Product (in million RD$) 

Growth Rate GDP (%) 

Real GDP per capita (RD$) 

Inflation Rate (%) 

Official Exchange Rate (US$1.00=RD$) 

Private Exchange Rate (US$1.00=RD$) 

Average Loan Interest Rate (%) 

Average Deposit Interest Rate (%) 

Unemployment Rate (%) 

Fiscal Income (in million RD$) 

Public Expenditure (in million RD$) 

Commercial Balance (in million US$) 

Current Account (in million US$) 

TABLE 1 

DOMINICAN REPUBLIC 

ECONOMIC INDICATORS 1999-2001 

1999 

278,908.00 

8.0 

743.7 

5.1 

15.92 

16.02 

26.15 

15.60 

13.8 

43,483.90 

45,164.60 

-4,507.40 

-499.8 

International Gross Reserves (million US$) 

881.3 

External Debt (in million US$) 

3,635.90 


AGGREGATED VALUE (in million RD$) 

Number of rooms 

Earnings (million US$) 

Hotel Occupation Rate (%) 

Income Hotel Room Tax (mill.RD$) 

Income Tourist Card (million RD$) 

Income ITBIS (million RD$) 

TOURIST ARRIVALS 

TABLE 2 


TOURISM INDICATORS 

1999-2001 

1999 

329.3 

49,623 

2,483.3 

66.9 

163.7 

330.6 

445.0 

3,015,079 

2000 

450.0 

51,916 

2,860.2 

70.2 

190.5 

385.6 

448.8 

3,314,063 




2000 

321,516.0 

7.8 

N/A 

9.2 

16.53 

16.63 

27.62 

17.23 

13.9 

51,271.40 

2001 

48,202.5 

-3,741.8 

-1,026.5 

818.2 

3,675.50 

430.4 

53,964 

2,689.8 

66.3 

19.7 

366.2 

633.6 

3,088,548 

G.R.% 

00/99 

14.7 

4.6 

15.2 

3.4 

16.4 

16.6 

0.9 

9.9 

2001 

359,560.2 

2.7 

N/A 

4.3 

16.66 

16.80 

21.21 

12.37 

15.6 

59,885.5 

58,863.4 

-3,451.3 

-838.9 

1,340.8 

4,137.3 

G.R.% 

01/00 

-4.4 

3.9 

-6.0 

-3.9 

-89.7 

-5.0 

41.2 

-6.8 

45


46 

TOTAL 

Punta Cana 

Las Américas 

Puerto Plata 

La Romana 

Cibao 

Herrera 

WORLD 

AMERICA 

United States 

Mexico 

Canada 

Brazil 

Puerto Rico 

Dom. Rep. 

Argentina 

Uruguay 

TABLE 3 


TOURIST ARRIVALS PER AIRPORT 

2001-2002 

2000 

2,394,823 

911,048 

677,820 

609,752 

172,360 

13,969 

9,874 

2001 

2,309,241 

956,153 

610,335 

471,085 

215,139 

43,290 

13,239 

G.R.% 

01/00 

-3.57 

4.95 

-9.96 

-22.7 

38.8 

209.9 

34.08 

Source: National Hotel and Restaurant Association (ASONAHORES) 

TABLE 4 

TOURISM IN AMERICA 

TOURIST ARRIVALS AND TOURISM EARNINGS 

2000-2001 

Part.% 

2001 

100 

41.4 

26.4 

20.3 

9.3 

1.8 

0.5 

Tourist Arrivals (million) Tourism Earnings (US$ million) 

2000 

696.8 

128.4 

50.9 

20.6 

19.6 

5.31 

3.34 

2.97 

2.90 

1.96 

G.R.% 

99/00 

5.8 

5.0 

8.4 

1.5 

1.5 

4.0 

10.5 

12.1 

0.4 

-5.1 

2001 

692.5 

120.8 

45.4 

19.8 

19.6 

4.77 

3.55 

2.77 

2.62 

1.89 

G.R.% 

01/00 

-0.6 

-6.0 

-10.7 

-4.0 

0.2 

-10.2 

6.3 

-6.6 

-9.6 

-3.9 

2000 

477.0 

132.7 

82.0 

8.29 

10.7 

4.22 

2.38 

2.86 

2.81 

0.65 

Source: World Tourism Organization 

G.R.% 

99/00 

N/A 

8.8 

9.8 

14.8 

5.2 

5.9 

11.6 

15.2 

0.1 

-0.2 

2001 

463.6 

122.4 

72.2 

8.40 

10.7 

3.70 

2.72 

2.68 

2.53 

0.56 

G.R.% 

01/00 

-2.8 

-7.7 

-11.9 

1.3 

0.7 

-12.5 

14.2 

-6.0 

-10.0 

-14.0

NATIONALITY 

TOTAL 

NORTH AMERICA 

United States 

Canada 

Mexico 

CENTRAL AMERICA AND CARIBBEAN 

Costa Rica 

Panama 

Guatemala 

El Salvador 

Haiti 

Aruba 

Cuba 

St. Martin 

Honduras 

Puerto Rico 

Others 

SOUTH AMERICA 

Argentina 

Chile 

Peru 

Venezuela 

Colombia 

Ecuador 

Brazil 


EUROPE 

Germany 

Austria 

Belgium 

Spain 

England 

Italy 

France 

Finland 

Portugal 

Holland 

Switzerland 

Sweden 


REST OF THE WORLD 

Japan 


TABLE 5 


TOURIST ARRIVALS PER NATIONALITY 2001-2002 

2000 

2,459,586 

902,617 

643,748 

245,732 

13,137 

55,686 

3,215 

4,614 

2,418 

1,435 

1,119 

49 

11,323 

372 

542 

25,684 

4,915 

173,176 

74,659 

16,799 

9,747 

35,922 

23,986 

3,237 

3,683 

5,143 

1,301,563 

451,920 

23,463 

37,470 

150,188 

117,200 

135,295 

174,258 

9,098 

27,217 

28,842 

46,162 

48,424 

40,026 

26,544 

3,132 

23,412 



2001 

2,294,121 

963,521 

666,290 

283,490 

13,741 

40,922 

3,229 

3,860 

1,921 

1,924 

1,171 

86 

4,374 

403 

586 

18,651 

4,717 

175,069 

59,107 

15,552 

12,154 

48,712 

28,387 

4,727 

3,080 

3,350 

1,108,471 

333,559 

12,988 

26,840 

138,281 

139,582 

113,826 

194,090 

6,874 

22,424 

32,131 

40,007 

25,797 

22,072 

6,138 

2,123 

4,015 


G.R.% 

01/00 

-6.7 

6.7 

3.5 

15.4 

4.6 

-26.5 

0.4 

-16.3 

-20.6 

34.1 

4.6 

75.5 

-61.4 

8.3 

8.1 

-27.4 

-4.0 

1.1 

-20.8 

-7.4 

24.7 

35.6 

18.3 

46.0 

-16.4 

-34.9 

-14.8 

-26.2 

-44.6 

-28.4 

-7.9 

19.1 

-15.9 

11.4 

-24.4 

-17.6 

-17.3 

-13.3 

-46.7 

-47.5 

-76.9 

-32.2 

-82.9 

Part.% 

2001 

100.0 

42.0 

29.0 

12.4 

0.6 

1.8 

0.2 

0.2 

0.1 

0.1 

0.1 

0.0 

0.2 

0.0 

0.0 

0.8 

0.2 

7.6 

2.6 

0.7 

0.5 

2.1 

1.2 

0.2 

0.1 

0.2 

48.3 

14.5 

0.6 

1.2 

6.0 

6.1 

5.0 

8.5 

0.3 

1.0 

1.4 

1.7 

1.1 

1.0 

0.3 

0.1 

0.2 

47

SECRETARIAT OF STATE OF TOURISM 

Av. México esq. C/ 30 de Marzo, Oficinas Gubernamentales 

Bloque D Santo Domingo, República Dominicana 

Tel: (809) 221-4660 Fax: (809) 682-3806 

www.dominicana.com.do 



Av. John F. Kennedy No.10 

Santo Domingo, Dominican Republic 

Apartado Postal 20682 

Tel. (809) 541-5200 

Fax (809) 567-0773 

----------- 

Calle Paseo Oeste 

La Rosaleda, Edif. Bionuclear 

1er. Piso, Santiago 

Dominican Republic 

Tel.: (809) 580-1725 

Fax : (809) 582-2170 

----------- 

International Mailing Address: 

A-303 

P.O. Box 52-4121 

Miami, FL 33152-4121 

United States of America 

www.phlaw.com 

ph@phlaw.com

Tourism in the Dominican Republic - a legal guide - Pellerano ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?