DOMINICAN REPUBLIC Law and Practice Contributed by: Sarah de León Perelló, Elizabeth Silfa Micheli and Naomi Rodríguez Manzueta, Headrick Rizik Álvarez & Fernández
• 10% on fees, commissions and other pay - ments for the provision of services in general. Custom duties and tariffs apply to the importa - tion of goods, with the exceptions and provi - sions established in different international trea - ties signed by the country. In connection to Pillar Two of the Global Anti- Base Erosion Model Rules (GloBE) published by the Organisation for Economic Co-operation and Development (OECD), the Dominican Republic’s income tax rate applicable to MNE (Multinational Enterprises) complies with the minimum global tax set forth by the OECD, ie, 15% (the Domini - can Republic’s current rate for corporate income tax is 27%). Likewise, the current rate for taxes over the payment of interests, dividends and royalties is 10% (higher than the 9% proposed by the OECD for the same concept). In this vein, since the Dominican Republic already complies with Pillar II of the GloBE rules, the introduction of domestic top-up tax is not required. Never - theless, as explained herein, there are certain special tax regimes that grant an exemption from corporate income tax, such as the free trade zones regime. 5.3 Available Tax Credits/Incentives Tax Incentives The main tax incentive regimes are for: • free trade zones; • comprehensive border development; • tourism development; and • renewable energy. Free Zones Free zones are granted the following tax incen - tives and exemptions for legal entities classified as free zone companies according to the proce - dure established by law:
• tax on the incorporation of companies and on capital increases; • income tax; • import duties, tariffs, custom rights and other taxes affecting raw materials, equipment, parts of buildings, etc, destined for construc - tion, preparation or operation within free zones; • all existing export and re-export taxes, with certain exceptions those regarding import tariffs; • construction taxes, taxes on loan agreements and on registration and transfer of real estate property from the date of formation of the free zone operator; • free zones are exempted from giving their employees a yearly company bonus; howev - er, free zones are still required to pay to their employees a Christmas bonus; • consular fees; and • taxes on assets and ITBIS. Comprehensive Border Development Law No 12-21 creates the special zone for com - prehensive border development (SBDZ) and an incentive regime, which covers the Dominican Republic provinces of Pedernales, Independen - cia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez and Bahoruco, providing the follow - ing tax incentives and exemptions for legal enti - ties classified according to the procedure estab - lished by law. • Selective tax on consumption, applicable to telecommunications and insurance services for the facilities of the project located in the SBDZ. • Tariffs and ITBIS on machinery and equip - ment imported or acquired in the local mar - ket, as applicable, required for the installation and start-up of the company.
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