DOMINICAN REPUBLIC Law and Practice Contributed by: Giselle Pérez Reyes and María Virginia Ditrén Báez, Guzmán Ariza Abogados
Congress. In practice, although the general rule is a revenue-based royalty, major mining projects often operate under a negotiated hybrid system designed to ensure long-term fiscal stability. Regarding income taxation, mining companies are subject to the standard corporate income tax rate of 27%, with no distinctions between domestic and for - eign companies. Dominican tax legislation does not differentiate based on the investor’s nationality. In addition to royalties and income tax, mining pro - jects are subject to several other significant fiscal obli - gations. These include the 1% Assets Tax, from which companies may benefit through exemptions during the construction phase or when the income tax pay - able exceeds the assets tax; the 18% ITBIS (VAT), for which credits may be claimed on capital goods and exploration-related expenditures; withholding taxes applicable to cross-border payments (including interest, services and dividends); and municipal taxes, such as municipal business licences. Finally, it is important to emphasise that the country guarantees equal treatment for national and foreign investors. This principle is upheld by the Constitu - tion (Article 221), Foreign Investment Law No. 16-95 and international commitments under the Dominican Republic–Central America–United States Free Trade Agreement (DR-CAFTA), all of which ensure non-dis - criminatory access and parity of conditions in the fis - cal and regulatory treatment of investors. 4.2 Tax Incentives for Mining Investors and Projects The Dominican Republic provides a range of tax incen - tives aimed at supporting mining investment, both during the exploration stage and throughout project development and extraction. These incentives seek to ease the financial burden of early-stage exploration, promote capital investment and ensure the long-term viability of mining operations in the country. During the exploration phase, investors benefit from several important fiscal advantages. Equipment, machinery, drilling tools, vehicles and exploration consumables can generally be brought into the coun - try under temporary import regimes with reduced or
exempted customs duties, significantly lowering upfront costs. Additionally, the ITBIS (VAT) paid dur - ing exploration activities may be accumulated as a credit, reducing future tax liabilities once the project begins generating income. Exploration expenditures may also be capitalised and amortised over a period of up to ten years, in line with the prevailing practice of the Dominican Tax Administration (DGII), allowing companies to match their deductions with the longer- term nature of mining investment. Once a project advances into development and extraction, the tax system continues to offer sup - portive measures. Companies may apply acceler - ated depreciation under Articles 289 and 290 of the Tax Code (Law No. 11-92), enabling them to recover capital costs more efficiently. Mining operators may also qualify for an exemption from the 1% Assets Tax during the construction and start-up periods – an important relief for capital-intensive projects. In cer - tain cases, mining or metallurgical activities that fall within the scope of non-traditional exports may also be eligible for special Free Zone regimes, which pro - vide additional tax benefits. The Dominican Republic also recognises the impor - tance of long-term fiscal predictability for large-scale projects. For this reason, tax stabilisation agree - ments are available, typically in the form of special contracts with the State. These agreements, which must be approved by Congress, may stabilise key fis - cal parameters – such as royalties, income tax rates and customs treatment – over the life of the project. In practice, stabilisation clauses are a central compo - nent of major metallic mining contracts, offering both investors and the State greater certainty and reducing exposure to regulatory or fiscal volatility. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects The Dominican Republic does not impose a specific transfer tax on the sale or assignment of a mining con - cession. Mining rights are administrative concessions, not real property, so their transfer does not trigger real estate transfer taxes or stamp duties. However, any change of ownership requires formal approval from the DGM and the MEM, and is subject to the fees
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