DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Foreign Investors The most common entity used by foreign inves - tors is a local limited liability company (LLC). Some investors, concerned by the complexities of reporting a foreign entity to the tax authori - ties in their home jurisdiction, prefer to register their domestic entity in the Dominican Repub - lic. Finally, high-income individuals with com - plex estate planning in place use the structures existing in their estate plan to acquire Dominican assets. There are no restrictions regarding the struc - ture or legal form of a foreign entity. If it is duly incorporated and recognised in the jurisdiction where it was formed, an entity can do business in the Dominican Republic upon registration at the Chamber of Commerce and Internal Rev - enue. However, trusts as they are known in most common law jurisdictions are not recognised as legal entities and cannot, therefore, directly hold property in the Dominican Republic. Dominican Entities As for Dominican entities, Dominican company law allows different types of commercial compa - nies (individually owned enterprises and LLCs) and corporations (regular or simplified stock corporations), all of which provide limited liabil - ity for their owners or shareholders. There are other investment entities recognised under the law, such as business partnerships, limited part - nerships and per-share limited partnerships, but they are seldom used because they do not offer full liability shields to their members and are sub- ject to the same tax treatment as the other enti - ties. In addition, in 2011, Law 189-11 introduced local fiduciary vehicles as a holding option.
The applicant can also have the case evaluat - ed directly by an administrative court judge by submitting its claim to the administrative court, bypassing the hierarchical appeal previously mentioned. 4.6 Agreements With Local or Governmental Authorities Agreements are usually signed with the corre - sponding city council so that the taxes collected from the developer are used for social improve - ment projects. Optional agreements can also be arranged with the Ministry of Environment and Natural Resources, by signing an environmental man - agement plan, which is compulsory for projects developed in protected areas. Large developments in the infrastructure indus - try can now enter into development agreements with the government through the Public-Private Partnerships Law No 47-20. 4.7 Enforcement of Restrictions on Development and Designated Use Restrictions are enforced on development and designated use by employing sanctions desig - nated by the state. These sanctions include fines and penalties, closing of operations, and/or removal of licences and permissions. New regulations on environ - mental licences and permissions include provi - sions on prison sentences for violations. The government also uses tax regulations to enforce restrictions.
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