do business in the Dominican Republic - Pellerano & Herrera

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DOING BUSINESS INTHE DOMINICAN REPUBLICexports and imports has been positive and stable, as it may be appreciated in thefollowing table, expressed in US$ million.FREE ZONES EXPORTS-IMPORTSYear Exports Imports Balance2001 4,481.60 2,826.40 1,655.202002 4,317.30 2,600.30 1,717.002003 4,406.08 2,530.90 1,875.182004 4,685.20 2,519.90 2,165.302005 4,734.60 2,407.30 2,327.3038CUSTOM DUTIESThe Customs Code contained in Law 14-93 of 28 August 1993, harmonized customstariffs, adopting the internationally recognized Harmonized System ofCodification and Designation of Goods.The wide variety of categories and ratesthat previously existed was in this way eliminated,and only six tariffs were established.Theseamendments simplified considerably the procedure for the calculationand collection of custom duties.However, these amendments were still far behind the requirements of the GATTand this situation, together with the fact that custom authorities use very discretionalvaluation methods, resulted in the country having the highest customduties of the region.That is the reason why a customs duties reform was passed by way of Law 146-00 of 27 December 2000, which sets new duty rates of 0.3%, 8%, 14% and 20%,thus reducing the top 35% existing before. Furthermore, duty exemptions forstrategic economic sectors have been maintained and reinforced.In this regard, duties were reduced for a series of raw materials, equipment andhigh technology accessories used for these sectors, some of which are even subjectto a zero rate in order to make them more competitive.The Bill for CustomDuties Rectification submitted to Congress reinforces these measures, enlargingthe number of products that will benefit from reduced duties with the aim toimprove competitiveness of the national industry.On the other hand,from July 2001,Article VII of the GATT as method of valuationof merchandises entered into effect, as provided in Law 146-00 (as amended byLaw 12-01 of 17 January 2001).The WTO has authorized the Dominican Republicto exempt 24 items from being subject to the GATT valuation method for a tran-
Pellerano & HerreraAttorneys at lawsition period of two years.These include milk, milled rice, clinker, used tires, airconditioners, fridges, laundry machines, ceramic, used vehicles, tractors, etc.Custom duties are calculated and paid in Dominican pesos.The conversion intopesos of the value of the goods is made according to the official exchange rateapplicable at the time of payment. In addition to custom duties, the importer hasto pay the following:1. The selective consumption tax charged on certain products, which rangesfrom 10% to 80%, calculated on the CIF price of the good plus custom duties,and;2. The tax on the transfer of industrialized goods and services (ITBIS), whichaccounts for 16% of the CIF price of the product plus duties and selectiveconsumption tax if applicable.Apart from free zones, there are very few exemptions to the payment of importtaxes.These are limited to some basic products, agricultural products like insecticidesand herbicides, articles to be used by international organizations or thediplomatic corps, articles to be used for religious worship and samples for exhibitionat international fairs.IMPORT DOCUMENTSIn some cases, such as for chemical and pharmaceutical products, import licensesare required. Furthermore, certain permits are required for the import of agriculturalproducts. Some of these products, like rice, sugar, corn, onions, garlic andchicken parts, are subject to import quotas.On the other hand, a consular invoice that approves the transaction must accompanyall imports. It may be obtained at the Dominican consulate closest to theport of loading. Generally considered by exporters to the Dominican Republic asan unnecessary hindrance to trade, the possibility of its elimination and substitutionby a fixed value stamp has been the object of much debate.2EXPORTS39The preferential rights that the Dominican Republic enjoys in order to export itsproducts to the United States and Europe, together with the progress of trade liberalizationwith its neighbors of Latin America and the Caribbean, make exportsan attractive sector with good perspectives of growth. Furthermore, legal measuresare being taken in order to increase the competitiveness of the sector.In fact, according to a report of the Center for Central American Studies,Dominican exports to the United States during the year 2003 amounted to 45.5%of all of the country's exports, which reached around 473 billion pesos. Duringthe last years, exports to the United States have always kept a dynamic rhythm,growing at an average rate of 6.2%.An analysis of commercial flows between the United States and the DominicanRepublic shows that La Florida is the largest Importer State of Dominican prod-
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