DOMINICAN REPUBLIC Law and Practice Contributed by: Alfredo Guzmán Saladín, Fabio Guzmán Ariza and Julio Brea Guzmán, Guzmán Ariza
5.6 Annual Entity Maintenance and Accounting Compliance All foreign and local entities are taxed equally regardless of structure – a flat 28% on net cor - porate profits and 10% tax on dividends or prof - its sent abroad. The Dominican Tax Code has a general anti-tax avoidance provision (a “substance over form” principle) and specific rules for the sale of shares of foreign entities that own assets in the Domini - can Republic. All companies registered in the Dominican Republic, regardless of whether they are local or foreign entities, including those with no income or operations, must file income tax returns with the Dominican Republic’s Tax Office every year. Aside from the penalties on overdue taxes, which amount to 11.1% for the first month and 5.1% for each additional month, entities that do not comply with the filings and subsequent pay - ments of both income and asset taxes run the risk of having the Tax Office begin a lien registra - tion process against the entity’s properties. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Leases are the most common arrangement that Dominican law recognises for a person, com - pany or other organisation to occupy and use real estate for a limited period of time without buying it outright. 6.2 Types of Commercial Leases Dominican law only considers leases in general terms.
6.3 Regulation of Rents or Lease Terms Rents or lease terms are freely negotiable for the most part, as general contract law applies to them. Provisions are, however, limited by vari - ous statutes that protect tenants. For example, if there is no escalating clause for rent in the lease, the landlord cannot raise it unilaterally without undertaking a lengthy administrative procedure. Also, evictions cannot occur unless a judicial eviction process is undertaken, regardless of what has been contractually agreed. Key lease provisions include: • a lease term; • tacit renewal clauses; • ownership of betterments (improvements) made by the tenant during the lease; • default clauses and waiver of certain tenant- friendly statutory provisions that are not a matter of public order; • a clear distinction between minor and major repairs and which party will be responsible for covering these; and • specific use of the property during the lease term (type of business or family residency). 6.4 Typical Terms of a Lease There is no typical lease term or restrictions on such a term. Tenants of business premises do not have security of occupation or rights to renew the lease. The law clearly assigns minor maintenance repairs to tenants, while major structural repairs are covered by landlords; all of which can be modified contractually between the parties. The rent is commonly paid monthly; however, the parties are free to agree otherwise.
238 CHAMBERS.COM
Powered by FlippingBook