DOMINICAN REPUBLIC Law and Practice Contributed by: Giselle Pérez Reyes and María Virginia Ditrén Báez, Guzmán Ariza Abogados
5. Mining Investment and Finance 5.1 Attracting Investment for Mining The Dominican Republic offers a combination of legal stability, mineral potential and investor-friendly poli - cies that make it an attractive destination for mining investment. Several key features contribute to this favourable environment. First, the country operates under a clear and struc - tured legal framework for mining, primarily governed by Mining Law No. 146-71, the Tax Code and Foreign Investment Law No. 16-95. These laws provide legal certainty, define concession rights, and ensure equal treatment of national and foreign investors. Mining concessions are granted on a first-come, first-served basis, and once awarded, they grant exclusive rights for exploration or exploitation, with long durations and renewal options. Second, the Dominican Republic offers fiscal and economic incentives that support investment across the project life cycle, including duty relief for explora - tion equipment, VAT credits, accelerated depreciation, exemptions from the 1% Assets Tax during construc - tion, and the possibility of negotiating tax stabilisation agreements for large-scale or strategic projects. The country also maintains transparency mechanisms and refund procedures administered by the DGII. Third, the regulatory environment provides investors with security of tenure and transparent procedures before the DGM, the MEM and the Ministry of Environ - ment. Although permitting is rigorous – especially for environmental authorisations – it is predictable and grounded in established norms, including Law 64-00 on Environment and Natural Resources. Fourth, the Dominican Republic promotes min - ing investment through its open foreign investment regime, which imposes no sector-specific ownership restrictions and allows 100% foreign participation. Investors enjoy protections under various international treaties, including DR-CAFTA and multiple bilateral investment treaties (BITs), as well as access to inter - national arbitration mechanisms.
established under Mining Law No. 146-71 and Reso - lution No. 035-2016. Although no transfer tax applies, the sale of a min - ing project may generate capital gains, which are taxable under the general regime of the Tax Code at the standard 27% corporate income tax rate. Capital gains taxation applies to the sale of the concession itself, shares of the local operating company, and related tangible or intangible assets. These rules apply equally to Dominican and foreign investors. Mining operators remain subject to sector-specific fis - cal obligations under the Mining Law, including the annual mining patent, the 5% royalty on exports of minerals in natural or concentrate form (creditable against income tax), and the general income tax. Additional charges include the DOP0.10 per cubic metre extraction tax under Law No. 123-71 and vari - ous environmental fees under Decree No. 145-03 and Resolution No. 0011-16, regardless of whether a transfer takes place. Importantly, capital gains rules also extend to indirect or offshore transfers. If a foreign entity sells shares in another foreign vehicle whose principal asset is a Dominican mining concession, the DGII may consider the gain Dominican-source income. The DGII relies on the source-of-income rules (Art. 269), the substance- over-form doctrine (Art. 2) and anti-avoidance princi - ples. Scrutiny increases where the Dominican asset represents a significant portion of the group’s value or where the holding company is a special-purpose vehicle. In short, while no transfer tax applies to mining con - cessions, the sale of mining projects – whether direct or through offshore structures – may be taxable, and the DGII has authority to assert taxing rights when Dominican mining assets are effectively transferred. Investors should anticipate regulatory approvals, doc - umentation requirements and potential DGII review when structuring these transactions.
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