Law No. 158-01 on the Promotion of Tourism Development

Regardless of the natural attractions offered by the Dominican Republic, the development of the tourism industry has been largely promoted through legislative initiatives aimed at promoting tourism internationally and granting attractive tax benefits to investors in the sector.

In its original version, the Law No. 158-01 on the Promotion of Tourism Development for poles of low development and new poles in high potential provinces and localities, dated October 9^th 2001, and its amendments, constituted the legislative instrument adopted by the Dominican State to promote the granting of fiscal incentives to carry out tourist activities, mainly focused on certain areas of the country with great tourism potential not yet developed.

On December 2^nd, 2013, the Law No. 195-13 radically modified Law No. 158-01, expanding its benefits to “tourist poles located throughout the national territory, which may or may not have benefited from incentives in hotel facilities”. Another achievement of this modification is that it extended the tax exemption period granted to companies engaged in tourism activities to 15 years, “from the date of completion of construction work and equipment of the project subject to these incentives”.

At the same time and in the spirit of encouraging those complexes and hotel chains that have operated in the country for more than fifteen (15) years, the reformed legislation establishes that “hotel facilities, resorts and/or hotel complexes in existing structures that have a minimum of 15 years of built and undergoing a reconstruction or remodeling process that exceeds 50% of its facilities and whose final destination are hotel facilities, will benefit from 100% of the exemption regime established by law. ”

Law No. 158-01 and its amendments establish the specific tourist activities whose execution, by national companies or those domiciled in national territory, are of special interest to the Dominican State, namely:

• Hotels: hotel facilities, resorts or hotel complexes.
• Convention centers: facilities for conventions, fairs, international conferences, festivals, shows and concerts.
• Cruise promotion: companies dedicated to promoting cruise activities that establish, as the mother port for the origin and final destination of their vessels, any of the ports specified in the law.
• Parks: construction and operation of amusement, ecological or theme parks.
• Maritime infrastructure: construction and operation of port and maritime infrastructures serving tourism, such as sport ports and marinas.
• Tourism infrastructure: construction or operation of tourism infrastructure, such as aquariums, restaurants, golf courses, sports facilities, among others.
• Companies that depend on tourism: small and medium-sized companies whose market is mainly based on tourism (handicrafts, ornamental plants, tropical fish, breeding farms for endemic small reptiles and others of a similar nature).
• Basic services infrastructure: basic services infrastructure companies for the tourism industry, such as aqueducts, treatment plants, environmental sanitation, garbage collection and solid waste.

Incentives and benefits granted by Law No. 158-01 and its amendments.

It grants tax exemptions and tax deductions that guarantee strategic advantages for those who take advantage of it, stimulating sustainable development and diversifying the tourist offer in the different tourist poles of the country.

These benefits are 100% exemptions on:

• Income tax (ISR).
• Taxes for the constitution of companies and capital increases.
• Transfer taxes on real estate rights, such as sales, swaps or contributions in nature.
• Real estate property tax (IPI).
• Fees, rights and dues for drawing up the plans, studies, consultancies, supervision and construction of works to be executed in an approved project, in favor of the contractors in charge of executing the works.
• Tax on the Transfer of Industrialized Goods and Services (ITBIS) and other taxes that are applicable to machines, equipment, materials and personal property that are necessary for the modernization, improvement and renovation of facilities, as long they have a minimum of five (5) years of construction. The hotel facilities, resorts and/or hotel complexes in the existing structures that have a minimum of fifteen (15) years of construction that are in a process of reconstruction or remodeling that exceeds fifty percent (50%) of its facilities and whose final destination are hotel facilities, they also benefit from one hundred percent (100%) of the exemption regime established by Art. 4 of Law 158-01.