The Dominican Republic is a Latin American success story, with an economy that has enjoyed steady growth since 2005, and in 2013 GDP grew by 4.1%, making it the ninth successive year of growth, higher than the Latin American average.
Tourism is the country’s leading foreign exchange earner although agriculture, construction and mining all play an important part in keeping the country ticking over.
And its strategic geographical location means its ports and airports offer easy access to the rest of the Caribbean, the US and Latin America.
So if you want to add the Caribbean island to your list of trade destinations, here’s all you need to know about exporting to Dominican Republic…
The value of UK exports to the Dominican Republic were valued £78.9 million in 2014 – up from £70 million in 2013 – and the Top five exports were:
- beverages (mainly whisky)
- books, newspapers, pictures and other products of the printing industry
- road vehicles (including air cushion vehicles)
- boilers, machinery and mechanical appliances
- glass and glassware.
A range of UK businesses currently operate out of the Dominican, including AEI Energy, BT, Aggreko International, Bupa International, Diageo, Ernst & Young, Pinewood Studios and Unilever – if you want to set up out there, here are a few things you need to consider…
The pros and cons of doing business in the Dominican Republic
There are a number of UK businesses operating out of the Dominican Republic, including big names like BT, Diageo, Ernst & Young, Pinewood Studios and Unilever. The benefits of exporting to this part of the Caribbean include:
- low wage costs
- English widely spoken as a business language
- strong legal framework
- direct flights from UK to Punta Cana and routes via Paris, Madrid or the US into Santo Domingo
- free trade agreement with the European Union (EU)
- no exchange controls
- open economy with strong appetite for imported goods and technology
- stable political environment
- currency stability
- modern transportation infrastructure
- advanced and reliable telecommunications infrastructure
It’s not without it’s challenges though, including:
- scores 123rd on Transparency International’s Perceptions of Corruption Index
- bureaucracy
- energy crisis which could affect operations
The UK is currently the sixth largest foreign investor in the Dominican Republic, with exports worth almost £80 million in 2014, a year-on-year increase of £10 million.
The top five exports from the UK to the Dominican Republic are:
- beverages (mainly whisky)
- books, newspapers, pictures and other products of the printing industry
- road vehicles (including air cushion vehicles)
- boilers, machinery and mechanical appliances
- glass and glassware
And remember, you can now screen share and video conference, using Crankwheel.
Tax and customs
Tax
Taxes and other mandatory contributions in the Dominican Republic are applied equally and at the same rates to both local and foreign investors.
- VAT (known as ITBIS) – charged at 18%. Goods and services that are exempt from ITBIS include basic foods, medicines, fuel and books.
- Corporation tax – charged at 27% of taxable profit, and local corporations are also taxed on incomes from both the Dominican and abroad, including foreign investments and financial gains.
- Asset and withholding tax – If your assets amount to more than RD$ 700 million (about GBP 114) an annual tax of 1% of the total will be levied, but can be credited against corporation tax. Dividends are subject to 10% withholding tax.
- Selective consumption tax (ISC) – applied on the purchase price or import of certain goods. The rate of ISC tax varies according to the item being taxed.
Social Security must be paid for employees.
Customs
For countries belonging to the WTO, The customs office of the Dominican Republic uses the General Agreement on Tariffs and Trade (GATT) for any countries belonging to the World Trade Organisation, which uses the value of the goods including Insurance and Freight (CIF) listed on the commercial invoice. Find out more about import tariffs at Market Access Database (MADB).
There are currently 53 Industrial Parks, housing over 500 companies in the Dominican Republic, and a law encouraging the establishment and growth of free zones means they are exempt from various taxes. For more information, take a look at Law 8-90.
