DOMINICAN REPUBLIC Trends and Developments Contributed by: Alexander D’Oleo Gabriel and Saymi Lahoz, DHOZ Abogados
Impact on economic development and the service sector Job creation occurs as a result of the acquisition of properties by foreigners boosting employment in construction, maintenance and services. The increase in residences intended for retire - ment and real estate tourism causes growth in the tourism and residential sector. Periodic review and loss of exemption It is important to note that the General Directo - rate of Internal Revenue (DGII) annually reviews compliance with the exemption requirements. If the beneficiary purchases another proper - ty, rents out the property or passes away, the exemption is automatically revoked. Comparison with other tax exemptions in the Dominican Republic While the Real Estate Property Tax (IPI) exemp - tion for individuals over 65 years old is a sig - nificant fiscal benefit, the Dominican tax sys - tem includes other tax incentives for different investment sectors. Below is a comparison of IPI exemption with other existing tax benefits. Law 158-01: Tourism Development Incentives This law promotes tourism development in des - ignated regions by granting tax incentives to investors and developers. The main benefits are as follows. • Real Estate Property Tax (IPI) exemption for approved tourism projects. • Income tax exemption for companies involved in tourism. • Tax deductions for tourism project investors. • Exemption from import taxes for tourism- related equipment and materials.
The differences from the Real Estate Property Tax (IPI) exemption for seniors are as follows. • Law 158-01 applies only to designated tour - ism zones, while the Real Estate Property Tax (IPI) exemption applies nationwide. • Tourism incentives last up to 15 years, while Real Estate Property Tax (IPI) exemption is permanent. • Tourism law benefits businesses and inves - tors, while the Real Estate Property Tax (IPI) exemption benefits individuals. Free Zone Regime The Free Zone Regime provides tax and cus - toms incentives to businesses operating within these zones. The main benefits are as follows. • Real Estate Property Tax (IPI) exemption for properties used in free zone operations. • Corporate income tax exemptions. • Import tax exemptions for machinery and raw materials. The differences from the Real Estate Property Tax (IPI) exemption for seniors are as follows. • Free zone incentives apply only to busi - nesses. • Real Estate Property Tax (IPI) exemption in free zones covers commercial properties, whereas the senior IPI exemption applies to primary residences. • Free zone incentives have a limited dura - tion, whereas Real Estate Property Tax (IPI) exemption for seniors is indefinite. Law No 171-07: Incentives for Foreign Pensioners and Rentiers This law provides tax incentives to foreign retir - ees with foreign income. The main benefits are as follows.
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