do business in the Dominican Republic - Pellerano & Herrera

Pellerano & HerreraAttorneys at lawCriminal sanctions include fines and prison of up to three years. Administrativemeasures may be applied by the ONDA and include warnings, fines, temporary orpermanent closure of establishments, seizure of illegal copies or machinery usedfor their production, destruction of illegal samples and others.5BUSINESSTRANSACTIONSPURCHASE OF REAL ESTATEThe acquisition of real property rights by foreigners is not subject to any specialcondition,falling under the same legal regime applicable to Dominican nationals.a) Registration SystemIt is always advisable to verify directly the status of the property at the Registrar'soffices, whose records are open to any interested party, and even obtain a writtenconfirmation on the result of these researches, before purchasing the property.Thisis usually achieved through the request of a certification on the statusof the property to the Registry of Titles.This system protects the buyer against any sale or mortgage that, although previouslysigned, has not yet been registered when the buyer files his contract forregistration.For these same reasons, the prompt registration of the sale is very important. Inorder to do so, the buyer must file at the Registry of Titles an original of the purchaseagreement, which should be legalised by Public Notary, together with theProperty Certificate issued on behalf of the seller, which will then be cancelledand exchanged for a new one on behalf of the buyer.b) Transfer DutiesThe registration of real property transfers at the corresponding Registrar of Titlesrequires the payment of the following taxes and duties:1. 3% of the market value of the property; and2. Stamps under Law 80-99, calculated as follows: market value minus 20,000,and the result/1,000 x 13 + 232.00.This value is subject to annual inflationadjustment.Another aspect to take into account is Law 18-88 of 5 February 1988 on Tax onLuxury Houses and Urban Lots, amended by Law 288-04 on Tax Reform, whichestablishes an annual tax on houses and apartments whose value exceeds fivemillion pesos amounting to 1% of the surplus of such sum. The amendmentenlarges the scope of this tax by including commercial properties and urban lotsthat were previously excluded. However, property owners older than 65 yearswho have owned the property for at least 15 years and who do not have anyother property are exempted from the payment of this tax. Furthermore, ruralland used in agriculture, as well as equipment, machinery, generators, goods andother personal property located in the properties, is also exempted.117