DOMINICAN REPUBLIC Law and Practice Contributed by: Fabio Guzmán Ariza, Julio Brea Guzmán, Alfredo Guzmán Saladín and César Calderón, Guzmán Ariza
2.7 Soil Pollution or Environmental Contamination
property as determined by the tax authorities, which - ever is higher. A 1% annual tax is assessed on real estate property owned by individuals, based on the cumulative value of the properties owned by the same individual, as appraised by the government authorities. Properties are valued without taking into account any furniture or equipment to be found in them. For built lots, the 1% is calculated only for values exceeding approxi - mately USD150,000. For unbuilt lots, the 1% tax is calculated on the actual appraised value without the USD150,000 exemption. Individuals pay this tax every year on or before 11 March, or in two equal instal - ments: 50% on or before 11 March, and the remain - ing 50% on or before 11 September. This threshold is adjusted annually for inflation. The following properties are exempt from the property tax: • built properties valued at USD150,000 or less; • farms; and • houses inhabited by owners who are at least 65 years old and have no other property in their name. Properties held in the name of a corporation or other entity are not, at present, subject to a property tax per se; however, a 1% tax is levied on company assets, including real estate. There are also different tax treatments with regard to leasing to individuals or to corporate entities. Leases to entities are subject to value added tax and leases by individual landlords are subject to a 10% withhold - ing tax that is credited towards the landlord’s annual income tax. 2.11 Legal Restrictions on Foreign Investors There are no restrictions on foreign individuals or enti - ties owning or leasing real estate in the Dominican Republic. The process for purchasing or leasing real estate for foreigners is the same as for Dominicans; there are no national defence or security limitations. Foreign individuals and entities, and Dominicans, must register locally with the tax authorities before register - ing purchases of real estate. Individuals must submit their application directly at the Internal Revenue office,
Issues of environmental clean-ups in real estate trans - actions are still very rare in the Dominican Republic. So far, this has been a problem only in the mining sec - tor. Therefore, there are no general covenants in use. Of course, the parties to a contract are free to insert mutually agreed terms regarding long-term environ - mental liability and indemnity issues. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law All planning and land use matters are handled by municipalities, the Ministry of Tourism (in tourist areas) and the Ministry of Environment and Natural Resourc - es. The municipalities and the Ministry of Tourism establish the general rules regarding use (eg, residen - tial, commercial, industrial, mixed, density, maximum height). Any construction or development that may affect the environment must also be approved by the Ministry of Environment and Natural Resources. 2.9 Condemnation, Expropriation or Compulsory Purchase The Constitution and Law 344 of 1943 establish the legal regime for the government’s compulsory pur - chase or condemnation of real estate. The Dominican Constitution states: “No person shall be deprived of his or her property, except on justified grounds of pub - lic utility or social interest, for which a person shall be paid a fair value before expropriation, as determined by the mutual consent of the parties or by the judg - ment of a court of competent jurisdiction, pursuant to the law. In case of the declaration of a State of Emergency or Defence, compensation may not be paid before the expropriation.” Law 344 establishes the specific procedure that the government must follow in any case of expropria - tion. Because the provisions of this law are of public order, allocations cannot be modified by contractual arrangements between the parties. 2.10 Taxes Applicable to a Transaction A conveyance tax must be paid before registering the purchase of real estate. The conveyance tax amounts to 3% of the price of sale or the market value of the
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