DR Tourism Real Estate Tax Incentives Law

Dominican Tourism Sector Tax Incentives Law 195-13, amending DR Tourism Promotion Law 158-01 dated October 9th of 2001, was enacted on December 13th of 2013 (hereinafter “Law 195-13 of Tax Incentives for the Tourism Sector”).

The purpose of Law 195-13 of Tax Incentives for the Tourism Sector consists in adjusting the existing tax incentives in order to attract foreign and local investment and, therefore, achieving constant development in the tourism sector.

According to Law 195-13 of Tax Incentives for the Tourism Sector, the new tax incentives should apply as follows:

To tourism and ecotourism industries in the entire Dominican territory. In this sense, the prior provisions which limited the access for benefiting from the tax exemptions to certain Tourism Poles were annulled.

Investments that are made in the development of touristic activities, hotels and complementary offers, will benefit from the 100% exemption regime established in Section 4 of Law 158-01.

When investments are made in touristic activities regarding the existing structures of hotel facilities, resorts or hotel complex, with a minimum construction life of 5 years, they will benefit from 100% ITBIS (similar to VAT) exemption and other applicable taxes over machinery, equipment, materials and movable goods necessary for the renewal of said facilities.

If the investment is made for remodeling more that 50% of the hotel facilities, resorts, or hotel complex, with a minimum construction life of 15 years, they will benefit from the 100% exemption regime established in Article 4 of Law 158-01.

Legal entities or individuals who perform one or several investments directly with the promoters or developers in any of the activities established in Article 3 of Law 158-01, will benefit also from the 100% exemption regime set forth in Article 4 of Law 158-01.

The exemption period was increased from 10 to 15 years, counted from the date when the construction works and equipment of the project have finalized. Said period applies also for those projects already classified and in use of the tax incentives.

The deadline for starting to operate the project is 3 years, after which the acquired right to the exemption will be automatically lost.

Before executing the construction project, the same should have been submitted to the approval of the corresponding municipality and urban planning entities, and should hold the approval or authorization from the Council of Tourism Development (CONFOTUR).

ABOUT THE AUTHOR: Dra. Maria Arthur Rodger is a Partner, Head of Tax & Private Client at ACLAW, a law Firm in the Dominican Republic. She specializes in tax law (Tax LLM in Georgetown Law Center & Tax LLM in Universidad Pompeu Fabra in Spain) with more than 20 years of experience in tax advisory since the enactment of the Dominican Tax Code. Dra. Maria Arthur is also a CPA, Certified Bankruptcy Liquidator and Legal Interpreter.

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Disclaimer: This publication is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. For specific technical or legal advice on the information provided and related topics, please contact the author.