Freddy Miranda

TAX INCENTIVES TO COMPANIES BASED ON LAW OF COMPETITIVENESS AND INDUSTRIAL INNOVATION

2008-07-29T12:24:00.000-04:30

http://almomento.net/news/128/ARTICLE/14296/2008-07-22.html

Tuesday, July 22, 2008 14:39:00.

Directorate General of Internal Taxes (Dirección General de Impuestos Internos) (DGII) announces tax incentives to companies based on Law of Competitiveness and Industrial Innovation.

Santo Domingo .- The Dirección General de Impuestos Internos (DGII) (Directorate General of Internal Taxes) announced on Tuesday a series of tax incentives designed to benefit a set of professional companies.

These tax incentives include exemption from the obligation to withhold income tax (Impuesto Sobre la Renta) (ISR) to taxpayers, foreign natural or legal persons, that offer professional services related to development projects of products, materials, and production processes, research and development of technology, personnel training, innovation, research, training and environmental protection.

DGII points out through a document sent to ALMOMENTO.NET that the persons who offer any kind of consulting services and/or technical advice are also exempted from that obligation as stated under Articles 47 and 48 of Law 392-07, on Competitiveness and Industrial Innovation.

To comply with the new provision, the said taxpayers must have the Resolución de Calificación Definitiva (Resolution of Final Qualifying) of PROINDUSTRIA, and they have to formalize the request for exemption from the obligation to withhold income tax (Impuesto Sobre la Renta) (ISR) to the Directorate General of Internal Taxes (DGII), stating explicitly the kinds of services to be contracted abroad, the estimated amount and duration of them; attaching to that request the signed contract or the preliminary documents proving the intention of the parties for the contracting procedure.

Once the Tax Administration (DGII) has received the request for exemption, it will have 60 days from the date of receipt thereof to answer it.

Other benefits.

The new Standard, as the DGII document explains, also grants benefits for those industries with regard to the processes of renewal and modernization assumed on the five-year transitional regime, established under Article 50 of Law 392-07, on Competitiveness and Industrial Innovation .

The foreign natural or legal persons may depreciate at an accelerating rate, multiplying by two (2) the rates stipulated by the Tax Code for machinery, equipment and technologies acquired after being qualified.

They may also deduct from net taxable income of the fiscal year in which the investment in machinery, equipment and technology was made up to the amount of such investment not exceeding 50% of its net taxable income of the previous fiscal year.

TELEFONICA OF SPAIN INVESTING IN DOMINICAN REPUBLIC

2008-06-24T19:23:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=21540

(Summary).

June 24th, 2008.

Company Telefónica of Spain is going to settle in the country.

SANTO DOMINGO. Telefónica of Spain will be established in the country with large investments that include not only a wide-bandwidth communication network via submarine cables, but it will also offer telephone service.

The information was given yesterday to Diario Libre by José Rafael Vargas, chairman of Instituto Dominicano de las Telecomunicaciones (Dominican Institute of Telecommunications) (Indotel), who said that it is possible that Telefónica may "have an important negotiation with a company located here."

Telefónica of Spain was born in 1924, and after a career of 84 years, it has become the largest integrated operator in the world by number of accesses of customers, with 228 millions.

The multinational operates in 24 countries, which includes more than 12 in Latin America. It has a workforce of 248,000 employees, and the net profits reached 1,538 million euros in the first quarter of this year, representing a 22.4% growth.

Achievements:

Vargas, being interviewed about the ten years of telecommunications in the country, said that the Dominican Republic is one of the best serviced countries in the field of electronic communications and with greater capacity of bandwidth compared with Latin America countries such as Colombia, Chile, Mexico, Argentina and Brazil.

He gave as an example that the teledensity in the country reaches 70 in every hundred inhabitants, and a large part of the wireless and digital teledensity, with more than 90 percent of digital cellular phones, which represents a remarkable event in Latin America.

"A country that has over six millions of phones with a population of nearly nine millions of inhabitants; this is an achievement without any doubt," said Vargas.

"We are reaching around 20% of the Internet, some two millions of users, going from 8% in 2002 to nearly 20 percent. Out of 200 thousand users to nearly two millions, and the goal is to have 40% in 15 to 20 months, and to reach three millions of Internet users”, he said.

He remarked that this Government is ending this governing period with 938 digital centers of knowledge, virtual libraries, Internet centers and computer training centers.

He said that this is a step forward that any country in Latin America has. Only Brazil has a level of access as the Dominican Republic has, with 32 provinces and each one of them has more than 15 digital centers, and there are some provinces like San Cristóbal that has 36, in Santo Domingo there are over 70, in Distrito Nacional (National District) there are more than 200 digital centers .

Free competition:

The chairman of Indotel, José Rafael Vargas, warned yesterday that although the ten years of implementing Law No. 153-98 have strengthened the telecommunications in the country, there are still "concerns about many things," such as tariff, service quality and "to keep at all costs the free competition" in the sector.

Vargas explained his approach at the opening ceremony of the seminar "10 Years of Law 153-98. Challenges of the Telecommunication Regulation", which is taking place in Lounge Caonabo of Hotel Santo Domingo, in this capital city.

By José Javier.

EUROPEAN STYLE IN THE DOMINICAN REPUBLIC ALTA VISTA SAMANA

2008-06-24T18:44:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=21578

June 24th, 2008.

"Altavista", a sophisticated and modern project. A unique space created for the well-nurturing of the spirit.

The front of Casa Puerto Bahía, with an exquisite use of glass crystals and wood columns in its design.

SANTO DOMINGO. In an exquisite cocktail party held at Hotel El Embajador, Puerto Bahía launched its new stage: Altavista, strategically located in a paradise-like place, from where it always will be in front of us one of the most beautiful scenery in the Caribbean, Bahía de Samaná (Samaná Bay).

Puerto Bahía represents the union of the Caribbean warmth with the European sophistication, giving rise to a distinctive experience.

The first phase of the project, consisting of the villas of La Montaña (The Mountain), the apartments with ocean views of El Valle (The Valley) and Valle Alto (High Valley), the town houses of La Marina and La Playa, and the hotel suites, is under completion.

With private access, it has seven buildings of four levels overlooking the bay, apartments of two to four rooms with the finest finishing touches, large balconies and roofed parkings.

Altavista has concierge and room services, and a fitness center, in order to offer a complete experience to its owners.

Puerto Bahía has a marina with a capacity for 106 boats up to 85 feet and a special pier for mega yachts up to 150 feet, the perfect place for letting the sea to be the protagonist of great joys.

This incredible place will allow to live freely the passion for the sea by making available the most captivating nautical destinations in the country: Cayo Levantado, Los Haitises, Playa Rincón (Rincón Beach), Puerto Escondido (Hidden Port), Bahía de San Lorenzo (San Lorenzo Bay), Puerto de Samaná (Port of Samaná), Punta Icaco, and others.

By Diario Libre.

Freddy Miranda
Translated by Orlando Alcántara

SUPREME COURT OF JUSTICE ON "ADVANCE INCOME TAX DEPOSIT" ANTICIPO 1.5%

2008-06-19T10:39:00.001-04:30

The judgment of May 21st, 2008, by the Supreme Court of Justice, Chamber of Lands, Labor Matters, Administrative Contentious, and Tax Contentious.----------------------- -------------

The Supreme Court of the Dominican Republic seems to have set a precedent regarding the tax that some companies pay, called “advance income tax deposit”, whose rate is 1.5% of gross income.

The decision was issued after a process between a private company and the Dirección General de Impuestos Internos (Directorate General of Internal Taxes). The company proposed a deduction of losses suffered in three tax years, arguing that the tax of 1.5% did not constitute a tax without an advance value to the Directorate General of Internal Taxes, and that the law amending the Tax Code did not change the compensation regime of tax losses. These laws, for the Dominican readers, are Law No. 147-00 and Law No. 12-01.

The Directorate General of Internal Taxes, for its part, argued that the cited laws, No. 147-00 and 12-01, indeed changed the tax system of paying as a minimum of the gross income of a special category of companies, and, hence, there is no need to compensate for losses suffered by businesses that pay the 1.5% tax.

The Supreme Court accepted the reasoning of the Directorate General of Internal Taxes under the argument that, when the cited laws (147-00 and 12-01) established a tax on gross income with a standard minimum, they were establishing a presumption of income, whose defining characteristics were that such payment was final and not refundable. This presumption of income, according to the Supreme Court (accepting the arguments of the Tribunal Contencioso Tributario -Tax Contentious Court-), is considered to be irrefutable or lawfully "jure et jure"; meaning that it does not admit any evidence against it. Accordingly, in assuming that, when a company pays its advance of 1.5% on gross income, it means that this payment is like a minimum income produced by the company and, hence, the same cannot be interpreted otherwise since it is a legal presumption, and the direct consequence is that the losses of the tax year cannot be compensated.

The Supreme Court of Justice also based its decision on the fact that the settlement of this type of tax has been expressly ruled out of the traditional system of income or income tax. It is understood that, by establishing a special regime different from the traditional system of calculating income tax of the companies, the benefits thereof have been excluded, among them the compensation for financial losses.

Our opinion about this decision is quite good. We understand that the reasoning by which it has been completed this inquiry of the cited laws above is quite coherent, and it is well suited to the legal logic. However, we are not specialists in this field, and the opinion of income tax specialists should be sought in order to compare their opinions with the criteria of the Supreme Court of Justice.

These criteria should be compared and argued about for the benefit of free enterprise and good conduct of business. We understand that it must be so because, although we repeat that this is not our area of expertise, the treatment seems unfair and discriminatory to companies that pay this tax, since the logic of free enterprise is the payment on their income, and any advance tax deposit -although it may be called minimum tax- is generated through the income of any enterprise, not necessarily out of its gross income. It is therefore an iniquity to prevent a company that, after determining that during its tax period there was no taxable income, that it has to pay a minimum tax because a law has established arbitrarily (under the best intentions and purposes; in particular, to eliminate evasion) that its tax year must produce a minimum income and, hence, the Supreme Ruler State is entitled to this portion.

We expect further decisions on this point, although we believe that the precedent will remain as a constant and -although we repeat that from the legal standpoint it seems logical-, there is a contrast with the known principles of the tax law.

Freddy Miranda
Translated by Orlando Alcántara

THE LAND SURVEY AND ITS IMPORTANCE WITHIN THE DOMINICAN REAL ESTATE SYSTEM

2008-06-18T10:39:00.001-04:30

The land survey and its importance within the Dominican Real Estate System.
Due Diligence.
Advice for foreign investors.

In our long practice in the area of foreign investment and real estate investment we always advise foreign investors to undertake a thorough investigation before making decisions about their investments. This process of due diligence performed by a reputable professional can save effort, money and above all avoid a possible dispute or lawsuit, which is quite uncomfortable, and besides that, it is very costly.

One of the procedures that can lead to lawsuits in real estate property matters is the process of land survey of the portions of land acquired, either by individuals or companies. This procedure is usually quite complicated, and it requires the advice of an attorney specialized in the area.

Before proceeding to explain what the land survey is, we'd like to summarize for the foreign investors who are not used to the terminology or the procedures of our legal system the origin and the need for the land survey.

Our system of land is based on the division of land in the form of a puzzle where the larger pieces are called districts or cadastral demarcations. This system, before the amendment of Land Law No. 1542, replaced by Law No. 108-05, was essentially administrative. This means that the land surveyor carried out his/her work, the land survey was authorized, and the owners got their certificates of title. The current process is more complex.

This whole process of land survey occurs because in our country the possession of real estate property is properly protected by law. An owner of a piece of land was used to receiving what is called a record letter or document that gave testimony of his/her right of ownership over a portion of land, without stating the specific place where this portion of land was located. Today our system is in the process of eliminating this type of certificate of title.

This owner of a portion of land within an area was linked to the other owners, and they formed a sort of consortium of owners who are called joint owners. This joint owner was then obliged to segregate his/her specific part within a portion of land to ensure of having total control of it and for getting a certificate of title that is no longer a record letter, but a definite certificate. This procedure of segregation and individualization is called land survey.

The importance of this procedure is that, if it is done on a regular basis; that is, naming the joint owners, and as a result of it a certificate of title is ordered to be issued, this right becomes a guarantee against whom nobody can make any claim, but in the extreme case of fraud. In other words, the certificate of title obtained under this mode enjoys an absolute guarantee, and it protects our investors of the attempts of claiming the rights over a portion of land acquired for any purpose, especially for developing condominiums or hotels.

It is therefore of vital importance to conduct a thorough investigation on the processes of acquiring portions of land on which our valued foreign investors intend to build their projects. In this investigation it should be inquired about the chain of acquisition, and especially about any abnormality in the process of individualization of lands known as land survey.

The important point is to make sure that all of the joint owners have been properly cited or called to try of reaching an agreement on the rights of each one of them; that is, about the specific places of location of their portions of land. In the end, after the amendment to the Land Law, this process ends in a phase called jurisdictional. It's called jurisdictional because a court decides on the final approval of the works of individualization (land survey), and it gives the order to prepare the corresponding certificates of title that will ensure the right of ownership over a portion of land on which the real estate projects will be built.

The surveyors in the proceedings of the current law are required to notify all of the joint owners. Should they not do so, the land survey will be declared irregular, and it can be annulled by the courts. In this case, the surveyors are subject to sanctions that could lead to their dismissal and the beginning of actions through repressive or criminal proceedings.

It is of vital importance to know this procedure, since if a project is built on a portion of land previously segregated or separated through a land survey on the basis of an irregular procedure, the act or resolution that authorizes it may be annulled and the occupants of those portions of land may be evicted under the provisions of Article 49 of the amended Land Registry Law, No. 108-05. In this case, as a standard procedure, the authorization of eviction is given at a court following a lawsuit that on the matter of real estate properties is known as lawsuit on registered lands. In addition, the parties that have proceeded to get an authorization of land survey works on an irregular manner could be subject to lawsuits for damages.

Finally, the guidance of the Supreme Court of Justice regarding the respect or possibility of cancelling the works of land survey is that unless the land survey was performed on an irregular manner, it must be respected, and the rights covered by the certificates of title that had been issued must be respected, even by the Dominican State. The irregularities, in particular, are the lack of notification or information to the other joint owners or fraud.

Summing up everything for our valued foreign investors, it is imperative before investing to conduct always an investigation about the chain of acquisitions or previous owners, and how the property right was generated, in order to avoid putting our money on a possible legal contingency or lawsuit.

Freddy Miranda
Translated by Orlando Alcántara

TOURISM INVESTMENTS-US OPEN AT TORRYE PINES - MISCELLANY

2008-06-10T10:48:00.001-04:30

Miscellany.

1 .- http://www3.diariolibre.com/noticias_det.php?id=19556

Leonel Fernández announces tourism investments; subway. He plans a train from SD-Santiago, and he attracts tourism funds for $3,750 million euros from Balearic Islands.

BARCELONA, SPAIN. President Leonel Fernández announced here yesterday that a group of businessmen in the Balearic Islands that already have resorts in the Dominican Republic seeks to invest $3,750 million euros in the tourism sector over the next four years.

The President, who returns today to the country after more than a week stay in Europe, shared the information with members of the community of Dominicans living in Catalonia.

In addition, Fernández reported its intention to build a train similar to the AVE (Alta Velocidad Española) (Spaniard High Speed Spanish) to connect the Capital city with Santiago. "We will make a little AVE from Santiago to Santo Domingo," said the governing official, who spoke also of the second line of the Metro (subway) of Santo Domingo, according to the news agency EFE.

The Government awaits for the return of Fernández at 4:00 pm at Aeropuerto Internacional de Las Américas (International Airport of the Americas), on a commercial flight of Iberia.

In Diario Libre.
June 9, 2008.

2 .- Law on Protected Areas; Foreign Investment - Protection of Foreign Investment in the real estate area. The lawsuit brought by the State against various investors in the area known as the Reserva Natural (Nature Reserve), of the so-called Parque del Este (Park of the East), will soon be in a state of being ruled. The case is in a state of being ruled when the parties present their closing arguments and the deadlines given by the court have passed so those arguments can be changed, clarified or supplemented. For those deadlines, usually, the parties come through with writings using quotes from doctrine, ie from specialists and specialized books in the area, as well as jurisprudence on the subject. We hope to keep our readers informed about this case, especially commenting on the verdict of the Court in charge when it has been rendered.

3.- Will or formation of joint stock company in the purchase of properties by foreigners? This is an issue that occurs frequently in cases involving foreign investors with the awarding of their property by a will in their home country. It is an interesting dilemma from the legal standpoint, because it raises the question for resolving the distribution of property in the event of death.

In our practice we always advise to find the correct answer to avoid lab or routine solutions, because they generally are impractical. The legal practice usually dictates the way forward. In other words, "the tactic dictates the strategy."

One of the solutions we give to this case, far from the traditional solution of drawing up a will, is considering to constitute a joint stock company. This is a practical solution and quite adequate for the planning or disposition or transfer of real estate property due to death.

It's a good solution, because in our country one who dies and leaves testamentary dispositions is obliged to receive a sanction or resolution of the court (Tribunal de Tierras) (Lands Court) for ordering the execution of the act, and to provide for the issue of a new certificate of title. This is a tedious process, and it requires the payment of the required taxes.

In the case of a company, if it is provided that either the real estate property can be transferred to the company and its governing board is organized with due care, the successors/inheritors/heirs -in the event of death- can take control of the company and, hence, of the real estate property, avoiding legally, in most cases, the complicated legal procedures and the payment of transfer taxes. This is an issue that requires an extreme care and an legal engineering reserved for highly-experienced lawyers in the area, and therefore, we recommend to consult these options with a lawyer of prestige before making a decision.

4.- As you know, our blog is about matters of legal interest, but in the global world of today the lawyers enjoy life, and we do things common to ordinary people. In our case, we are quite fond of golf and movies. So we would like to comment on some news of both worlds.

5 .- In the realm of golf, as in most sports, the primacy belongs to the professionals and the young athletes. However, in the PGA Tour there has happened a very interesting phenomenon, and that is that after the victories of Trevor Immelman at Augusta and Adam Scott and Boo Weekly and Sergio García, the tour has been dominated in the past three weeks by veteran players such as left-handed Phil Mickelson at the Colonnial, finishing dramatically, as the saying goes, with the Mickelson style. Then Kenny Perry, nearly 48-year-old, won the prestigious Memorial, and this week we have a veteran like Justin Leonard winning the St. Jude. This is good for the world of golf since -as any discipline- it requires a good balance between the generations to make the competitions much more interesting. While some argue that the departure of Tiger due to his knee injury is what has made the competition more interesting. In our view, this is not true, as these veterans have enough quality to compete even with Tiger Woods on the battlefield.

6.- Numb and The Bucket List. Both films are very interesting, and they deal with two issues which human beings have to face inevitably: health and love. In the first film, Numb, we were really surprised with the acting of Mathew Perry beyond his traditional role as a comedy actor. A film that has a strong content on personality disorders, but it has a solid plot as its base: the triumph of will over adversity. It is interesting to see how the film suggests that not only to take medicines helps people with personality disorders to survive, but the will and, above all, love. Wonderful film.

7 .- The Bucket List was not a surprise, because from Nickolson and Morgan Freeman we always expect high-level films. However, the interesting thing about the film –much more than the outstanding performances- is the theme about the purpose of life. The fact that death clearly brings us closer to the things that we really want. It gives us the great lesson of whether we should wait until we are in danger of dying to find the things that we want from life.

We hope that you can enjoy these films if you have not seen them, and I also hope that anyone of you could further be encouraged to send me your comments on your favorites players to win the U.S. Open this week because, with Tiger coming back from a knee operation, the odds are against him. We believe that, with the quality of play of Sergio García, Mickelson, Perry and Trevor Inmelman, they should be among the favorites to win.

Superior Court of Lands Lawsuit on protected areas

2008-05-08T13:33:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=15109

May 6th, 2008.

Lands in the East on a lawsuit are protected area.
The High Court of Lands (Tribunal Superior de Tierras) will hear the case next Friday 30th at 10:00 A.M.

The lands, which have tourism potential, are worth more than RD$100 billion (Dominican pesos).

Santo Domingo. The scandal that was generated due to the sale of more than 35 million square meters in the tourist area of Higüey, and that led to a legal dispute, has taken a new direction, after it has been determined on a land inspection that they are within the protected area of National Park of the East (Parque Nacional del Este).

An inspection carried out by surveyors Enrique Arismendi and Ángel Manuel Hernández Ozuna reports that the transaction violates Article 33 of the Sector Law on Protected Areas (Ley Sectorial de Áreas Protegidas) No. 202-04, dated July 30th, 2004.

The lawsuit that involves Daniel Antonio Minaya Rodríguez, as owner of the lands, as well as Spaniard entrepreneurs Ignacio Coronado Ruiz, Carlos Sánchez, and Andrés Liétor Martínez, acquirers, will be held next Friday 30th at a hearing set for 10:00 A.M. at the High Court of Lands (Tribunal Superior de Tierras).

During the trial, the State Attorney for that jurisdiction, Fermín Casilla Minaya, will release the Surveying report (Mensura), which stipulates that the lands are a protected area, and other evidence to prove the illegality of the maneuver.

According to the legal file, the lands have a value that exceeds RD$100 billion (Dominican pesos) in the real estate market, and they are beaches that cannot be exploited by individuals because they are a Nature-reserved area.

"Once the High Court (Tribunal Superior) delivers its verdict, then we wil prosecute those who are involved in the case, whom we are very clear who they are," warned the State Attorney.

According to Article 33 of Law No. 202-04 "protected areas are inalienable patrimony of the State and, in that virtue, no one can enjoy or dispose of them, but as it is established in this Sector Law on Protected Areas (Ley Sectorial de Áreas Protegidas), its regulations and standards, as well as the existing provisions in the General Law on Environment and Natural Resources (Ley General sobre Medio Ambiente y Recursos Naturales) No. 64-00 from August 18th, 2000. "

According to Casilla Minaya, the High Court of Lands (Tribunal Superior de Tierras) will have no other alternative but to annul the first-degree verdict dictated by the judge of the original jurisdiction of Higüey, "and to return the property to the same position that it was before."

Contract.

The Spaniard Ignacio Coronado Ruiz acquired the property through a sales contract and the privilege of unpaid seller, dated November 2, 2005, by the sum of U.S.$19.8 million payable in three installments, on behalf of the company Inversiones Trubia, S. A. As a seller appears Daniel Antonio Minaya Rodríguez.

According to a certification from the General Directorate of Internal Taxes (Dirección General de Impuestos Internos), in the acquiring company are listed as shareholders Inversiones CCF, S. A., in addition to Coronado Ruiz, Carlos Sánchez Hernández, and Andrés Liétor Martínez. Coronado Ruiz is the president of the company, which has an authorized capital of RD$25,000 (Dominican pesos), and a subscribed and paid capital of RD$2,500, whose head office was registered in Avenida Independencia without number, in the sector of La Feria, National District (Distrito Nacional).

The sum of U.S.$19.8 million agreed to for the real estate property would be paid in installments of U.S.$6.6 million at the latest the first of August, 2006, a similar amount the first of November of that year, but never earlier than three months after the payment cited above. The remaining U.S.$6.6 million should be paid on the first day of October, 2006.

Minaya Rodriguez, seller, is listed as a transient resident on the street K No. 1, Preconca Nueva, La Romana, while Inversiones Trubia, S.A. is residing at Avenida Abraham Lincoln No. 403 at the corner of Avenida Bolívar.

The parties had a common agreement to set the selling price at U.S.$14 per square meter of land, which has a portion of one literal meter facing the sea per 1,060 linear meters of depth.

According to the contract of sale, that real estate property is located in an area suitable for the development of tourism projects and hotel infrastructures "and has no objection to the development of these ones within the parameters established by the National Parks Sector Law (Ley Sectorial de Parques Nacionales), established in the Law No. 202 of July 30th, 2004. "

Extension.

The lands in dispute are divided into the lots 6-006-837, 6-006-838, 6-006-839, 6-006-840, 6004-26982, 6-004-10866, and 6-005-49.

The area marked with the number 6-004-10866 covers an area of 154 hectares, 93 areas, 18 hundred-areas; lot 6004-26982 has 205 hectares, 25 areas, and 99.32 hundred-areas.

While the lot 6-005-49 covers an area allocated in the inspection of 1,562 hectares, 15 areas. All amount to 23 million 223 thousand 417 square meters.

The other inspection, which corresponds to the same lot, covers an area of 12 million 577 thousand square meters, completing the extension of 35 million 800 thousand 522 square meters.

Another case.

As for the lot marked with the number 6-004-10866, which covers an area of 154 hectares, according to the State Attorney, in that area it was planned to build a hotel of 40 plazas per hectare. The project would be built by Spaniard entrepreneurs Pablo Piñero Ibernon and Gustavo Montenegro, from Inversiones Coconut, S. A., whom the State Secretariat of Tourism gave the go-ahead with a "No Objection".

However, investors withdrew from the project unleashed by the scandal that it would be built in a protected area.

Into the criminal.

The State Attorney has announced that he has written testimony for use in its due opportunity in possible criminal proceedings.

He warned that several people will be prosecuted who has a great economic power, given that the case will move from the real estate law to the criminal law.

"The State Attorney can initiate prosecution in his own name because the Law establishes it that way, and therefore it is up to me," he said.

Without involvement.

During inspection done to the lands, Casilla Rodríguez argued that there were found no legislators involved in the case.

So far he said that only the names that have surfaced are the ones of those who have sought to get the lands allotted to them.

"In the process thus far there hasen’t been encountered the name of any legislator, or former legislator," he said.

By Niza Campos.

Freddy Miranda
freddymiranda.com
Translated by
Orlando Alcántara

REAL ESTATE LAWSUIT ON VIOLATION OF LAW ON PROTECTED AREAS

2008-05-08T12:21:00.002-04:30

http://www3.diariolibre.com/noticias_det.php?id=15109

REAL ESTATE LAWSUIT ON VIOLATION OF LAW ON PROTECTED AREAS.

May 6th, 2008.

Today journalist Niza Campos published an article in Diario Libre, one of the most respected newspapers and of higher circulation, on the subject of real estate investment in protected areas. This topic is very important for foreign investors, no matter whether they are small-scale investors as buyers of apartments or villas, or large investors such as construction companies or hotels.

The case.

According to the journalist, the scandal was unleashed with the claim that foreign investors through a Dominican company bought 35 million square meters located in the province of Higüey, one of the largest spots in tourism in the Dominican Republic. A portion of land like this one has a strategic and market value quite high. In the newspaper article it appears with a value in Dominican pesos that definitely must be much lower than the market value. Anyway, 100 billion Dominican pesos is a fairly substantial sum within the real estate market, whereas the supply of land with potential for investments in hotels or housing units is quite low, which definitely increases the demand and the impact on prices.

The conflict.

Journalist Niza Campos gives the account in her article that the State Attorney believes that the High Court of Lands (Tribunal Superior de Tierras) should override the decision of the Court of Original Jurisdiction (Tribunal de Jurisdicción Original) of Higüey, because the negotiations, through which there were purchased the 35 million square meters is illegal. In our judicial and real estate system the State Attorney is a special prosecutor, a defender of the civil rights and the State. His/Her role is defined in Article 12 of Law No. 51-07 of April 23rd, 2007, which amended Law No. 108-05, of March 23rde, 2005, on Real Estate Registry. Accordingly, this officer is responsible for bringing up the actions and prosecuting violators of the Law whom, according to his assertations, he is intended to indict before the criminal courts of the country. In any criminal proceedings the indicted parties could obviously be sentenced to imprisonment and fines as established by the Law on Environment and Natural Resources. However, it is not very clear about the mechanism whereby the State Attorney will initiate such prosecution because this function should be exercised by the Attorney General of the Republic according to the Law. Moreover, the evidence that, according to the State Attorney, he has for the case, which are written testimonies, is a means of evidence that it is discredited by the vulnerable witnesses of such proceedings, both in the case of any prosecution, as well of the parties involved on a private level if opting for this kind of evidence mechanism.

Under the terms of the Law, protected areas should be established by the State Secretariat of Environment and Natural Resources (Secretaría de Estado de Medio Ambiente y Recursos Naturales), which it is responsible according to the Law to administer these areas, to regulate the use of them, and everything that contributes to their preservation, according to article 6 of that Law.

Parque Nacional del Este (National Park of the East), which the majority of lands that are claimed allegedly belongs to the Dominican State, is considered as a protected area by this Law. Therefore, if this fact is proved in court, in this case the High Court of Lands (Tribunal Superior de Tierras), which is the appellate court or second instance court, because the Judge of Original Jurisdiction (Juez de Jurisdicción Original) of Higüey gave his verdict in first instance, the buyers would be violating Article 9 of the Law. This article is very precise regarding the fact that State land comprising the "national system of protected areas are imprescriptible (cannot be bought because they occupy the land) and inalienable, they cannot be bought.

Article 14 of this Law is devoted to the meaning of what are the national parks and nature reserves. As outlined in the article that appears on the lawsuit, Articles 25 and 33 of that law govern how those natural resources and areas can be used, and this is so with the corresponding authorizations and no objections from the State Secretariat of Tourism and the State Secretariat of Environment and Natural Resources.

In accordance with the newspaper article that it is been commented on, this agreement was made through a sales contract between the company Inversiones Trubia S.A. and Mr. Ignacio Coronado Ruiz. The company acquired the real estate property from Mr. Antonio Minaya Rodríguez. This newspaper article identifies other companies and individuals involved in the conflict. In our view, from a strictly legal standpoint, this is irrelevant, and the most important thing is that a consensual contract (signed and subscribed) at a time when a land has been declared as a protected area is a contract in which on the judiciary realm, according to the regulations of the Civil Law, would be voidable, because its purpose is illegal. In other words, something was bought that could not be in the market.

We hope to follow up on this interesting legal proceedings, and for sure this type of conflict will contribute to transparency and, above all, to help potential foreign investors to make a real due diligence at the time of investing in tourism lands in the Dominican Republic. We present the newspaper article in its entirety.

Freddy Miranda
freddymiranda.com
Translated by Orlando Alcántara

Freddy´s Guide- The Dominican Republic, Business Enviroment 2008

2008-04-28T14:50:00.004-04:30

The Dominican Republic:
Business Environment 2008.

Copyrights: Freddy Miranda Severino, Attorney At Law.
Researcher: Orlando Alcántara-Fernández (Cristorly).

The Dominican Republic is the second largest island in the Caribbean after Cuba. Some sources like The World Factbook (CIA, 2008), the Country Profile by the U. S. Department of State (2007) and the Guide for Foreigners Living in the Dominican Republic of the Organization of American States (OAS, 1993) provide an overview of the historical, social, political, and cultural aspects of the country. The Library of Congress (2006) has published a useful list of resources, especially about its business system and its economic situation. A Trade Policy Review by the World Trade Organization (2002) states the following about the country:

“Since its previous Trade Policy Review in 1996, the Dominican Republic has sustained a fast pace of economic growth driven in good part by continued efforts to open and restructure its economy. Its trade and investment regimes are largely liberal although issues remain in areas such as customs valuation, export subsidies, privatization, and domestic competition. Participation in the global economy is intense, and is reflected in high levels of trade in goods and services, investment flows, and remittances from nationals living abroad. Under the Free Trade Zone (FTZ) regime most merchandise trade is exempt from the general trade regime, in order to deal with its anti-export bias regime. Liberalization has been largely autonomous; preferential trade agreements and multilateral commitments have played complementary roles.” (2002).

Recently The Heritage Foundation (2008), sponsored by The Wall Street Journal, in the Index of Economic Freedom analyses the Dominican Republic economic environment as follows:
“The Dominican Republic's economy is 58.5 percent free, according to our 2008 assessment, which makes it the world's 87th freest economy. Its overall score is 0.9 percentage point higher than last year, partially reflecting improved business freedom, labor freedom, and monetary freedom. The Dominican Republic is ranked 20th out of 29 countries in the Americas, and its overall score is slightly lower than the regional average.

“The Dominican Republic is generally below average in half of the 10 economic freedoms. However, it does stand out in one area: government size, where its score is 21 percentage points above the world average because of relatively limited government expenditures. In addition, personal and corporate tax rates are moderate, and overall tax revenue is not particularly high as a percentage of GDP.

“The Dominican Republic scores poorly in financial freedom, property rights, and freedom from corruption. Failure to recover from scandals in the financial sector reflects the rudimentary level of banking operations. The weak application of commercial law means that private property is subject to adjudication based on political interference and corruption.

“Background:
“The Dominican Republic has held regular competitive elections since 1996. An economic boom in the 1990s, led by tourism and maquiladora manufacturing, slowed to negative growth by 2003. Elected in 2004, President Leonel Fernandez promised to reduce inflation, stabilize the exchange rate, and restore investor confidence. In 2007, the country ratified the Central America–Dominican Republic–United States Free Trade Agreement (CAFTA–DR), which the government hopes will revive sagging textile exports. The country's infrastructure has deteriorated, and its weak judicial system, starved of resources and personnel, lacks the ability to confront widespread corruption. Additionally the electricity sector is plagued by corruption, theft, seasonal drought, high oil prices, and frequent outages.

“Business Freedom - 62.2%
“The overall freedom to start, operate, and close a business is limited by the Dominican Republic's national regulatory environment. Starting a business takes an average of 22 days, compared to the world average of 43 days. Obtaining a business license requires less than the world average of 19 procedures and 234 days. Despite some improvement in the transparency and enforcement of commercial laws, regulations are burdensome, and interpretation of the commercial code is often arbitrary. Closing a business can be difficult.

“Trade Freedom - 73%
“The Dominican Republic's weighted average tariff rate was 8.5 percent in 2005. Customs valuation that is subject to reference pricing for many products, cumbersome and restrictive standards, frequent delays in clearing customs, corruption and a lack of transparency in most of the trade process, and problems involving the protection of intellectual property rights add to the cost of trade. An additional 10 percentage points is deducted from the Dominican Republic's trade freedom score to account for non-tariff barriers.

“Fiscal Freedom - 80.4%
“The Dominican Republic has moderate tax rates. Both the top income tax rate and the top corporate tax rate were reduced to 29 percent from 30 percent, effective in 2007. Other taxes include a value-added tax (VAT) and a tax on dividends. In the most recent year, overall tax revenue as a percentage of GDP was 16.8 percent.

“Freedom from Government - 88.8%
“Total government expenditures, including consumption and transfer payments, are low. In the most recent year, government spending equaled 19.3 percent of GDP. The government has been reviewing the system of transfers to local governments to ensure that the transfer of resources is consistent with expenditure responsibility.

“Monetary Freedom - 69.3%
“Inflation is high, averaging 10.7 percent between 2004 and 2006. Relatively unstable prices explain most of the monetary freedom score. The government applies price controls to electricity and fuel and subsidizes some agricultural products and electricity generation. An additional 10 percentage points is deducted from the Dominican Republic's monetary freedom score to account for policies that distort domestic prices.

“Investment Freedom - 50%
“Foreign investment is generally welcomed, but some laws discriminate between domestic and foreign investments. Investments must be registered with the Central Bank of the Dominican Republic. Foreign direct investment is not permitted in sectors involving the treatment of hazardous waste, public health, and national security. A weak legal and enforcement system, lack of contract sanctity, disregard of official rulings, and corruption deter investment. The law mandates that 80 percent of a company's non-management labor force must be Dominican. Residents and non-residents may hold foreign exchange accounts. Payments and transfers are subject to documentation requirements. Some capital transactions are subject to approval, documentation, or reporting requirements.

“Financial Freedom - 40%
“The small financial sector is poorly supervised and regulated. Confidence has been shaky since the crisis spurred by the 2003 collapse of Banco Intercontinental (Baninter), the country's second-largest bank. An attempt to create a new financial regulatory network was circumvented by a government bailout of several banks later in 2003. Skepticism was fueled by a 2005 revelation that the head of the fifth-largest bank's board of directors had misappropriated funds. Structural reforms suggested by the International Monetary Fund have been met with postponements of official reviews, though the IMF recognized Dominican financial policy as sound in 2006. Financial-sector assets are largely controlled by the 13 multiple service banks, including three foreign-owned banks, and five state-owned banks. Offshore banking is growing. Capital markets are small and underdeveloped.

“Property Rights - 30%
“The court system is inefficient, and red tape is common. The government can expropriate property arbitrarily. Most confiscated property has been used for infrastructure or commercial development. Although the government has slowly improved its patent and trademark laws, the enforcement of intellectual property rights remains poor.

“Freedom from Corruption - 28%
“Corruption is perceived as significant. The Dominican Republic ranks 99th out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. Official corruption is pervasive. Despite recent reforms, Dominican and foreign business leaders complain that judicial and administrative corruption affects the settlement of business disputes.

“Labor Freedom - 63.6%
“Relatively flexible employment regulations could be improved to enhance employment opportunities and productivity growth. The non-salary cost of employing a worker is moderate, but dismissing a redundant employee can be costly. Restrictions on working hours remain relatively rigid. Dominican Republic
• Rank: 87
• Regional Rank: 20 of 29” (2008).

The real picture can be slightly different taking the perspective of any Dominican citizen living in the country. For example, according to The Heritage Foundation previous report electrical energy outages persist in the country, but its report doesn’t state that there has been a significant improvement in this area due to the fact of the implementation of 24-hour electrical circuits all along the country. At the present time many communities don’t experience any electrical energy outages, or at least they have been reduced to a minimum. Regarding the business system there have been meaningful improvements as it can be seen in the present report.
A very useful source of information online about doing business in the Dominican Republic is the website of the Cámara de Comercio y Producción de Santo Domingo (CCPSD) (Santo Domingo Chamber of Commerce and Production). It is not updated regarding the new procedure for constituting a company and the economic situation of the country at the present time, but it still remains as a valuable source of business information (CCPSD, 2006a, 2006b, 2006d, 2006e, 2006f, 2006g, 2006h, 2006j, 2006k, 2006m, 2006p, 2006q, 2006s). Some of the valid information deals with the frequent asked questions (CCPSDn), the Labour guide (CCPSDl), business laws (CCPSDi), and the regulations on Social Security (CCPSDr).
The official organisation for informing interested parties how to do business in the Dominican Republic is the Secretaría de Estado de Industria y Comercio (SEIC) (State Secretariat for Industry and Commerce) (SEIC, 2008), but foreign organisations like the World Bank (DoingBusiness.Org, 2008a, 2008b, 2008c, 2008d) and the U.S. Commercial Service (2001-2008) have valuable information about the business environment of the Dominican Republic.
It is very important to note that a new system for starting a company has been launched over the Internet (El Nuevo Diario, 2008), making the process faster and one of the best worldwide (Observatorio Competitividad, 2008). CreaTuEmpresa.Gob (2008a, 2008b, 2008c, 2008d) is the website where a new company can be constituted in a record time. One new feature for a Dominican company is related to the number of members required for creating a company. Dayana Acosta reporte on the newspaper El Nuevo Diario that Andrés Van Der Horst, Director of Consejo Nacional de Competitividad, is asking for a new law requiring only two or three persons to constitute a company instead of the seven persons required now (Acosta, 2008).
Regarding the issues of taxes the official organisation is the Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) where the Tax Code (Law No. 11-92) can be found (DGII, 2007a) and all the information about the new system of tax vouchers (Comprobantes Fiscales) (DGII, 2007b). These tax vouchers are used for most of the business transactions (parchase and sale). It is important to note that the international company Deloitte (2008) also provides tax and business information about the Dominican Republic. There is also an agreement between DGII and Consejo Nacional de Seguridad Social/Tesorería de la Seguridad Social (CNSS/TSS) about social security that can be accessed at the website of the State Secretariat of Labour (SET, 2006a).
An essential source for financial information is the Banco Central de la República Dominicana (Central Bank of the Dominican Republic) where an executive summary of the Dominican economic performance can be found (Banco Central, 2008a), as well as a regular report about the Labour market (Banco Central, 2008b). Regarding Business Law in the Dominican Republic the website of Guzmán Ariza, Atroneys At Law (1996-2008) provides a wide array of relevant information about doing business in the Dominican Republic.
The Dominican Labour Code (Law No. 16-92) is published online at the Secretaría de Estado de Trabajo) (SET) (State Secretariat of Labour) website (1992), as well as different laws like the law on domestic workers (SET, 1999) and the regulations on minimum wages (SET, 2007). When it comes to Labour issues there are reliable sources of data at ILO/NATLEX (2008), OIT/CINTERFOR (1996-2008), and Organización Internacional del Trabajo (ILO for its initials in English) (2007).
It is important to note that there was an extremely financial crisis during the ex – president Hipólito Mejía-Domínguez due mainly to several bank frauds and the inaccurate handling of those frauds by the governement officials in 2004. As a result of that enormous economic crisis in an election year Dr. Leonel A. Fernández-Reyna won overwhelmingly the elections bringing an immediate recovery of trust thanks to the much better governmental administration. Since then there has been a significant recovery of the Dominican economy and there has been a meaningful stabilisation process. The successful handling of the financial crisis has improved considerably the business climate, which has attracted a relevant flow of foreign investing. National and international organisations like CEPAL and the International Monetary Fund (IMF) have expressed their favourable opinions after the surprising economic recovery of the nation (El Caribe, 2007, 2008a, 2008b, 2008c; Listín Diario, 2007, 2008).
Regarding the subject of foreign investing and exports the official organisation is Centro de Exportación e Inversión de la República Dominicana (CEI) (Center for Exports and Investment of the Dominican Republic), which has a section about the most frequently asked questions online (CEI, 2004). On the other hand, ASIEX.Org provides timely information about foreing investment issues on its regularly updated website with frequent investment reports (ASIEX.Org, 2008).
In general, SEIC (2008b) has a section on foreign commerce dealing mainly with the international trade agreements and treaties of the Dominican Republic with other nations like the CAFTA-DR (USTR, 2007), among others. It is important to note that CCPSD also deals with the international trade agreements like CARICOM, CAFTA-DR, Central America and the Dominican Republic Free Trade Treaty, COTONOU Treaty, and Panamá and the Dominican Republic Treaty (2006c, 2006o, 2006t, 2006u, 2006v). It also gives information about the Consejo de Conciliación y Arbitraje (CCA) (Council of Conciliation and Arbitrage) (CCPSD, 2006e). A very important agreement is the Área de Libre Comercio de las Américas-Free Trade Area of the Americas (ALCA-FTAA) (ALCA-FTAA, 2008a, 2008b). SET (2006b) provides useful information about the international treaties and agreements related to labour and employment regulations and laws.

About the economic developments the WTO review remarks the following facts:

“SUMMARY OBSERVATIONS.
“(I) INTRODUCTION.
“1. Since its previous Trade Policy Review in 1996, the Dominican Republic has sustained a fast pace of economic growth driven in good part by continued efforts to open and restructure its economy. Its trade and investment regimes are largely liberal although issues remain in areas such as customs valuation, export subsidies, privatization, and domestic competition. Participation in the global economy is intense, and is reflected in high levels of trade in goods and services, investment flows, and remittances from nationals living abroad. Under the Free Trade Zone (FTZ) regime most merchandise trade is exempt from the general trade regime, in order to deal with its anti-export bias regime. Liberalization has been largely autonomous; preferential trade agreements and multilateral commitments have played complementary roles.

“2. The Dominican Republic is approaching a juncture where the duality and enclave features of its economy may have to be addressed. Activities in FTZs and tourism are responsible for the lion's share of Dominican exports, and are important generators of employment and investment, but their backward linkages to the rest of the economy remain weak. Moreover, the benefits granted in FTZs have made it more difficult for "domestic" sectors to attract resources, and several of these have stagnated, at best. The distortions associated with a narrowly focused, export-led growth strategy, and persistent inefficiencies in sectors like electricity, may well become obstacles for the further improvements in living standards coveted by the Dominican Republic.

“(2) ECONOMIC DEVELOPMENTS

“3. With a per capita GDP of some US$2,400 and a population of about 9 million, the Dominican Republic is the largest economy in the Central American-Caribbean region. Since the beginning of the 1990s, it has also been one of the world's fastest growing economies; its average real growth rate between 1996 and 2000 was 7.6%. Economic activity was particularly sustained by a boom in private investment. GDP growth dropped in 2001, to 2.7%, but picked up again in the first half of 2002. Despite the economy's strong growth performance, about a quarter of the Dominican population still lives below the national poverty line.

“4. Since 1995, the Dominican Republic has posted a fiscal deficit only twice. Fiscal reforms in 2000 have led to significantly reduced reliance on customs duties for government income and less distortionary resource allocation. As a result of the reform package, the share of customs duties in total government revenue decreased from about 26% in 2000 to 16% in 2001; reduced fiscal revenue from lower tariffs was compensated by increased income from internal taxes.

“5. The Dominican Republic has three principal foreign exchange markets (an official, market-based rate, a free exchange-house market, and a free commercial bank rate); the spread between the markets is very narrow. It maintains no controls on foreign exchange transactions but purchases of foreign exchange are subject to a fee set at 4.75%, which is under review. Real interest rates remain relatively high, having ranged between 13% and 21% since 1996. Inflation has been moderate; the average increase of the consumer price index is estimated at 6.9% during 1996-01.

“6. The Dominican Republic's current account has registered considerable deficits in recent years, due mainly to persistent and growing trade deficits. They have been financed largely by current transfers, most of which are remittances by Dominicans living abroad, and inflow of foreign investment capital. In contrast to merchandise trade, services have shown successive surpluses, largely due to income from the tourism sector.

“7. The Dominican Republic's main export products are clothing and electronic goods produced in the FTZs, agricultural goods and their related manufactures, and ferro-nickel. Despite a relatively limited contribution to GDP, FTZs remain crucial for the Dominican Republic's export performance. The United States is by far the Dominican Republic's most important trading partner, with an estimated share of 95% in FTZ trade and about 52% in "domestic" trade. Intermediate and capital goods dominate Dominican imports.

“(3) INSTITUTIONAL ENVIRONMENT

“8. The Ministry of Foreign Affairs is the lead agency for all issues related to foreign trade. The Dominican Republic became a WTO Member in March 1995; it has been active in the extended negotiations on telecommunications and financial services. As an international treaty, the WTO Agreements take precedence over domestic legislation.

“9. The Dominican Republic has increasingly sought to foster regional economic integration; in 1998 it concluded its first free-trade agreements, with the Caribbean Community (CARICOM) and the Central American Common Market (CACM). The Dominican Republic has formally asked to be part of the proposed U.S.-Central America Free Trade Agreement and attaches great importance to the ongoing negotiation for the Free Trade Area of the Americas.

“10. The Foreign Investment Law of 1995 accords national treatment to foreign investors. A privatization programme, initiated by the Public Enterprise Reform Law of 1997, has significantly reduced government involvement in economic activities. The principal mode of privatization chosen involves at least 50% of the newly created companies remaining government-owned but management control passing to private investors. State enterprises continue to operate in electricity generation and transmission, financial services, and maritime ports.

“(4) MARKET ACCESS FOR GOODS

“11. The Dominican Republic grants at least MFN treatment to all its trading partners. Tariffs are the Dominican Republic's main instrument of border protection; the average applied MFN tariff is 8.6%. Agricultural goods (WTO definition) are levied an average tariff of 12.9%, while non-agricultural products excluding petroleum face an average tariff of 7.9%. The Dominican Republic maintains tariff quotas on a number of agricultural products, with current out-of-quota rates of up to 118%.

“12. A wide gap exists between applied and bound rates, which somewhat undermines the predictability of market access conditions. In the Uruguay Round, the Dominican Republic bound all its tariffs. While non-agricultural goods were bound at a general ceiling rate of 40%, final bound rates for agricultural products, some of which were subject to renegotiations, range from 5% to 99%.

“13. Tariff reductions under preferential agreements have contributed to improved access to the Dominican market for some trading partners. Duty-free access is offered to most imports from the Central American Common Market and from CARICOM.

“14. The Dominican Republic obtained an extension until July 2001 on the application of the WTO Agreement on Customs Valuation. Since then, the Dominican Republic has been applying the Agreement with the exception of a list of 24 tariff subheadings, including used vehicles and sound reproducers, for which it obtained permission to use reference prices until July 2003. The provisions of the WTO Agreement on Customs Valuation are already applied for preferential imports.

“15. Irrespective of their origin and in accordance with the national treatment principle, imports are subject to domestic taxes, most notably a 12% tax on the transfer of industrialized goods and services. In addition, various goods such as alcoholic beverages, electric household goods, tobacco products, and vehicles are subject to specific consumption taxes ranging from 15% to 80%.

“16. The use of non-tariff trade barriers appears limited. The Dominican Republic maintains various import restrictions and prohibitions, which apply equally to all trading partners, for reasons of security, health, and environmental protection. The Dominican Republic has not made recourse to contingency measures. The Dominican Republic is not a party to the Plurilateral Agreement on Government Procurement; its regulations on public procurement grant preferences to local suppliers.

“(5) OTHER MEASURES AFFECTING TRADE IN GOODS

“17. The Dominican Republic has placed great emphasis on export promotion; FTZs constitute the most important instrument to this end. The Free-trade Zones Law of 1990 provides for substantial benefits to exporting enterprises located in FTZs, most notably wide-ranging tax and tariff exemptions. In 2001, more than 85% of the Dominican Republic's total exports came from FTZs, up from 52% in 1990. Since 1996, FTZs have also been increasingly used as an instrument of sectoral and regional policy. In 2001, the Dominican Republic notified the WTO that its FTZ regime provided export subsidies, and subsequently requested an extension of the transition period to eliminate them.

“18. Dominican exports benefit from preferential access to foreign markets under various unilateral schemes such as GSP schemes, the Lomé IV Convention, and the U.S. Caribbean Basin Initiative (CBI). The CBI, enhanced by the Caribbean Basin Trade Partnership Act, is by far the most important preferential scheme granted to the Dominican Republic; it covered Dominican exports valued at US$2.4 billion in 2001.

“19. Since 1996, efforts have been undertaken to streamline export procedures through the introduction of a single export form and the creation of a one-stop office for exporters, but certain procedures still appear cumbersome. To promote exports of non-traditional goods, two official export finance programmes were instituted in 1999; no government-supported export insurance programme is in place. As an additional tool for export promotion, a duty-drawback scheme for enterprises located outside FTZs was established in 1999, however, it has been used only to a limited extent. Other than the free-trade zone and rebate regimes, no fiscal incentives linked to export performance are in place. Export taxes are maintained for certain mineral products, live fish, and crustaceans.

“20. The Dominican Republic does not yet have a legal framework for competition policy, apart from sector-specific regulations. However, the authorities indicated that comprehensive legal provisions for competition policy were under preparation. In 2000, the Dominican Republic adopted new legislation to improve the protection of intellectual property rights; it has also strengthened enforcement measures.

“(6) SECTORAL POLICIES

“21. The economic importance of agriculture has been decreasing in recent years, although the sector still contributes about 11% to GDP, employs about 15% of the labour force and generates 10% of merchandise export earnings. The sector benefits from above-average border protection, but may have been penalized in relative terms by privileges granted to other producers, notably in FTZs. The Dominican Republic's main agricultural exports, sugar and coffee, have also come under considerable pressure in recent years from low world market prices and damage caused by Hurricane George in 1998.

“22. Manufacturing production, which contributes about 16% to GDP, has a strongly dual nature, defined by whether firms are located in FTZs or elsewhere. Investment in FTZs is largely made up of foreign firms producing textiles, jewellery or electronics for export, whereas non-FTZ enterprises, comprising mostly Dominican firms, engage mainly in food processing to supply the domestic market. The manufacturing sector, largely FTZ firms, generates the lion's share of Dominican exports. However, high reliance on imported inputs and weak backward linkages limit the sector's contribution to net exports and domestic welfare and make it highly dependent on foreign business cycles and, potentially, unilateral policy changes in trading partners.

“23. The services sector is the cornerstone of the Dominican economy, both in terms of value added and of employment. Since 1996, growth rates have been particularly high in communication and tourism-related services, such as transport and the hotel and restaurant industry. With international arrivals approaching three million, tourism also plays a key role for foreign earnings. However, inefficiencies and lack of competition persist in certain services activities; for example, chronic problems in the electricity industry are a handicap for the rest of the economy, and the cost of supplying financial services appears high.

“24. Since 1996, the legal and institutional framework for services has been reformed and the State has reduced its involvement in the sector to certain basic infrastructure, notably maritime ports; this infrastructure is being upgraded by granting concessions to private operators. Pursuant to the Foreign Investment Law, market access to most services is guaranteed to foreign investors on a non-discriminatory basis. Although market access in banking may be subject to a public interest test, access appears not to have been impaired in practice.

“25. The Dominican Republic made commitments in seven of the twelve categories of services of the GATS. Policy changes since the end of the Uruguay Round have made conditions for foreign participation in Dominican services far more liberal than those implied by its GATS commitments. The Dominican Republic ratified the Fourth Protocol to the GATS (on telecommunications) but is still in the process of ratifying the Fifth Protocol (on financial services).

“I. ECONOMIC ENVIRONMENT

“(1) INTRODUCTION

“1. The Dominican Republic is the largest economy in the Central American-Caribbean region; its per capita GDP is some US$2,400 and its population about 9 million. Since its last Review, in 1996, the Dominican economy has experienced one of the fastest rates of growth in the world. This has been accompanied by macroeconomic stability, increased economic openness, including of the foreign trade regime, and a gradual shift towards private sector participation. Enabled by prudent macroeconomic management, high real growth rates were achieved with inflation averaging less than 7% a year, an increase of international reserves, and a relatively stable exchange rate. In line with the global economic downturn, the growth rate dropped sharply, to 2.7%, in 2001 but is expected to pick up again in 2002. Activities that contributed particularly to the high growth rates include construction, commerce, and communications, whereas the share of free-trade zones in GDP has declined, despite their continuing importance for the generation of export earnings.

“2. The Dominican Republic's current account balance posted a deficit with a widening trend between 1996 and 2000, mainly caused by an increasing deficit in the merchandise trade balance. The slowdown of economic activity led to a narrowing of the deficit in 2001. The current account deficits have been financed in part by inflows of foreign direct investment. In contrast to merchandise trade, services have shown successive surpluses, largely due to income from the booming tourism sector. Current transfers from Dominicans living abroad have also been rising and contributed to keeping the current account deficit under control. The Dominican Republic's main trading and investment partner is the United States.

“3. Per capita income has increased at a real annual average of 4.4% since 1996. This reflects the dampening effect on otherwise high GDP growth of the 1.8% average annual population growth although this has been falling. Although all living standards indicators have similarly improved, about 25% of the Dominican population remains below the poverty line, with resilient pockets of poverty concentrated mainly in rural areas, urban slums, and western border areas.

“(2) MAIN ECONOMIC DEVELOPMENTS

“(i) Output and employment

“4. Over the second half of the 1990s, the Dominican Republic has been one of the world's fastest growing economies, with an average growth rate of 7.6% between 1996 and 2000 (Table I.1). Economic activity was sustained by a boom in private investment spending, while the share of consumption and public expenditure in GDP have remained relatively stable since 1995. Preliminary figures for 2001 indicate a sharp deceleration in GDP growth, to 2.7%, as the boost in demand from a programme of public investment only partly offset the slowdown in tourism and the free-trade zones, and in remittances from family members living abroad. According to Central Bank estimates, Dominican GDP grew by 4.3% in the first quarter of 2002, indicating a continuation of the recovery process initiated in the second quarter of 2001.
(…)
“5. According to Central Bank statistics, agriculture contributes just over 11% to GDP, but in nominal value terms export earnings from agricultural goods, including their related manufactured products, have decreased significantly since 1996. Due to falling prices and shrinking quantities, traditional agricultural exports (coffee, sugar, tobacco and cacao,) fell to 3.2% of total exports in 2001. The services sector, contributing about 55% to GDP, constitutes the main pillar of the Dominican economy, with tourism being a major generator of foreign exchange.1 Construction, commerce, and communications have grown particularly fast and have thus contributed to the Dominican Republic's rapid growth since 1996. The share of manufacturing in GDP, despite growth in absolute terms, has been declining, amounting to 16% in 2001. Encouraged by a trade policy regime that grants extensive advantages to enterprises located in free-trade zones, the manufacturing sector continues to be characterized by a dual structure: while the domestically oriented sector concentrates on the processing and packaging of agricultural products, enterprises located in free-trade zones engage mostly in the production of textiles, electronic goods, and jewellery for export markets (see also Chapter IV).

“6. Against the background of high GDP growth rates and a rapidly growing labour force, total employment increased by more than 26% between 1996 and 2001 (Table I.2). Employment growth went hand in hand with a strong increase of female labour market participation. However, unemployment fell only slightly during the corresponding period. The authorities estimated that broad unemployment stood at 15.6% in 2001 while open unemployment, which they suggested was a better indicator for international comparisons, stood at 6.5%. While employment shifted away from agriculture and mining, growth was particularly high in activities such as commerce, transport, and communications. Some 175,000 jobs were located in the free-trade zones in 2001, up from 166,000 in 1995.

“7. As noted in the Secretariat Report for the Dominican Republic's previous Review, the informal sector is large: Central Bank estimates indicate that it accounts for just over half of total employment. In 2001, 70% or more of total employment was informal in agriculture, construction, and transport and communications.2

(…)
“8. Trade has an important role in the Dominican Republic's economy. Data provided by the Central Bank show that Dominican merchandise exports amounted to slightly over US$5.3 billion in 2001, whereas merchandise imports reached almost US$8.8 billion. According to the same source, the share of exports of goods and services in GDP (in current U.S. dollars) fell from 54.6% in 1996 to 39.4% in 2001, while the equivalent share of imports decreased from 60.4% to 47.6%.

“(ii) Fiscal policy

“9. The share of government spending in GDP increased from 13.3% in 1995 to 14.2% in 2001. While public investment showed a decreasing trend, public consumption has been constantly rising since 1996. The Government's Budget for 2002, approved in December 2001, provides for expenses of RD$74 billion.

“10. Between 1995 and 2001, the Dominican Republic posted a fiscal deficit only twice, in 1996 and 1999 (Table I.3). This reflects not only disciplined expenditure but also considerable efforts to boost public revenue. Between 1996 and 2001, particularly swift increases were recorded for income tax revenue, with significant growth also registered for indirect taxes; customs duty revenue also rose annually, but only until 2000. It should be taken into account, however, that quasi-fiscal losses of the Central Bank averaged about 0.39% of GDP during 1995 to 2001. These losses arise from several of the Bank's functions that fall outside the purview of a traditional central bank and include activities like developing and funding tourism projects as well as promoting technology and research. The authorities indicated that the relocation of these activities to other public institutions was under study.

“11. The formulation of fiscal policy is mainly under the responsibility of the Ministry of the Presidency. It has been noted in this context that an increase of transparency, especially of the execution and control of government expenditure, is crucial to enhance fiscal credibility and permit a comprehensive assessment of the Government's financial position.3 The authorities noted that, by law, the budget must be in balance and any deficit should be linked to priority projects financed by foreign loans.

“12. A set of laws to reform fiscal revenue, enacted in 2000, led to significantly reduced reliance on customs duties for government income and less distortionary resource allocation. As a result of the reforms, the share of customs duties in total government revenue decreased from more than 26% in 2000 to below 16% in 2001. The authorities noted that reduced fiscal revenue from lower tariffs has been compensated by increased internal taxes (ITBIS and ISC, see also Chapter III(2)(v)). The foreign exchange fee, which the authorities noted was the main charge affecting the final value of imports, should be eliminated with the adoption of the Monetary and Financial Law (section (iii) below).

“13. The Customs Reform Law (Law No. 146-00) of 27 December 2000 cut tariff peaks and substantially reduced MFN tariffs. The Tax Reform Law (Law No. 147-00) of 27 December 2000 raised the value-added tax (ITBIS) from 8% to 12% and enlarged its base to a number of services that had previously been subject to specific taxes; in addition, excise taxes on alcoholic beverages and cigarettes were increased and income tax brackets were adjusted (see also Chapter III(2)(v)).

“14. In September 2001, the Dominican Government issued a US$500 million international bond in order to expand expenditure for physical and social infrastructure. The bond resources are to be disbursed at the rate of around US$50 million per month in order to control the expansionary impact on the domestic economy. Transport infrastructure projects have so far been among the main beneficiaries of bond-related resources. The authorities indicated that, as at July 2002, US$120 million of bond resources had been spent.” (WTO, 2002).

On the other hand, there are relevant organisations in the business system in the Dominican Republic. The most influential is Consejo Nacional de la Empresa (CONEP) (National Council for the Enterprise) (2008). There is a new organisation online related to consumers’ affairs at the website ConsumidorDom.Com (2008). Regarding the trade unions, non-governmental organisations, and the like, Pimentel (1997) provides a comprehensive study. His research report deals with the organisations of the civil society, but it is not updated yet.

A step forward taken by the government of Dr. Leonel A. Fernández-Reyna has been the emphasis on integrating the country into the global economic scene. As a result of his vision, the Consejo Nacional de Competitividad (CNC) (National Council for Competitiveness), created in 2001 and ratified in 2006, has launched many valuable initiatives and has helped significantly in the process of creating new business legislation. (CNCa). The most important law in this context is the Law on Competitiveness, which has been received with a lot of optimism in the business sector (Hoy, 2007). CNC provides useful information and resources about the business climate and the benefits of doing business in the Dominican Republic (CNCb, CNCd, CNCe). CNC has launched an agressive initiative called Plan Nacional de la Competitividad Sistémica (CNC, 2007) (National Plan of Systemic Competitiveness). As a joint initiative between CNC and the Development Programme of the United Nations (PNUD) to reinforce the National Plan of Systemic Competitiveness, it was established the Observatorio de Competitividad de la República Dominicana (OCRD) (Competitiveness Observatory of the Dominican Republic), which has been praised by Mauricio Ramírez (CNC, 2008a), Representative of the PNUD in the Dominican Republic as a helpful information and competitiveness monitoring program. (CNCc). The Inter-American Development Bank (IBD) has been involved in the funding of the National Plan of Systemic Competitiveness (Listín Diario, 2007).
Dealing with the issue of the future of the Dominican business environment, many factors should be considered in order to have a realistic perspective. The topic of changing the economic model of the country has been reported on Listín Diario (2008a). Lately there have been published news about the growing trend of the services sector (Listín Diario, 2008b). At the same time there is no doubt of the immense potential of the tourism sector. Even the World Tourism Organization reported that the Dominican Republic achieved the highest rate of performance during 2007 in the Caribbean, and it also stated that the country has the best potential in the tourism business in the Caribbean basin (El Caribe, 2008a). In the area of Free Zones, Rodríguez (2004) considers that the Dominican Republica has also a great competitive edge compared with other countries in the present and in the future in order to compete in a global market.
On the other hand, Montás-Domínguez (2007a), the State Secretary of Economy, Planning and Development, holds an optimistic perspective about the business environment of the Dominican Republic. On a luncheon meeting at the American Chamber of Commerce, Montás-Domínguez (2007b) gave a speech entitled “República Dominicana: Construcción de un País Próspero, Equitativo y Gobernable” (“Dominican Republic: Construction of a Prosperous, Equitative, and Governable Country”).
Fundación Global Democracia y Desarrollo (FUNGLODE) (Global Foundation for Democracy and Development) (GFDD) (2005) in collaboration with Grupo de Tecnologías de Información (Information Technology Group) of Centro para el Desarrollo Internacional de la Universidad Harvard (Center for the International Development of Harvard University) published a book entitled “La República Dominicana: Preparación para el Mundo Interconectado” (The Dominican Republic: Preparation for an Interconnected World”) that reflects the vision of the President of the Dominican Republic, Dr. Leonel Antonio Fernández-Reyna, about the economic integration process of globalisation for the Dominican Republic. The same can be said about the book “República Dominicana: Estrategias Nacionales de Desarrollo y Competitividad” (“The Dominican Republic: National Strategies of Development and Competitiveness”) with a prologue by J. Sachs (2004), Director of the Earth Institute of Harvard University.
The Dominican Republic has been led by an international acknowledged president, Dr. Fernández-Reyna (2007), who presented the candidacy of the Dominican Republic for non-permanent member to the United Nations Security Council last October. Dr. Fernández-Reyna also achieved a tremendous success at the XX Summit of the Group of Río that took part in the Dominican Republic recently after solving peacefully a conflict among the nations of Ecuador, Colombia, Venezuela and Nicaragua. At that historic conciliation effort the city of Santo Domingo was nicknamed “The Capital of Peace”. Due to this fact, Raptapar (2008) asked at Yahoo! Answers if the President of the Dominican Republic should be considered to be awarded the Nobel Peace Prize. Currently, there is an election process in the nation, but there is no doubt that the business environment of the Dominican Republic is stable and its economic strength can be appraised as an emerging economy in the developing world with a lot of business potential now and in the near future.

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SET, 2006b, Convenios Internacionales, (online), Secretaría de Estado de Trabajo (SET), available from http://www.set.gov.do/legislacion/conv_internacionales.asp (accessed April 19, 2008).

SET, 2007, Salario Mínimo (Minimum Wages), (online), Secretaría de Estado de Trabajo (SET) (State Secretariat of Labor), available from http://www.set.gov.do/legislacion/salario/default.asp (accessed April 19, 2008).

The Heritage Foundation, 2008, Index of Economic Freedom: Dominican Republic, (online), The Wall Street Journal, available from http://www.heritage.org/index/country.cfm?id=DominicanRepublic (accessed April 20, 2008).

U.S. Commercial Service, 2001-2008, Doing Business in the Dominican Republic, (online), available from http://www.buyusa.gov/caribbean/en/doing_business_dr.html (accessed April 20, 2008).

U.S. Department of State, 2007, Nov., Background Note: Dominican Republic, (online), Bureau of Western Hemisphere Affairs, available from http://www.state.gov/r/pa/ei/bgn/35639.htm (accessed April 19, 2008).

USTR, 2007, CAFTA-DR Fact Sheets, (online), Office of the United States Trade Representative, available from http://www.ustr.gov/Trade_Agreements/Bilateral/CAFTA/Section_Index.html (accessed April 20, 2008).

WTO, 2002, September 9, Dominican Republic (Trade Policy Review Body by the WTO Secretariat, (online), World Trade Organization (WTO), available from http://docsonline.wto.org/imrd/gen_searchResult.asp?RN=0&searchtype=browse&q1=%28+%40meta%5FTitle+Dominican+Republic%29+and+%28+%28+%40meta%5FSymbol+WT%FCTPR%FCS%FC%2A+%29%29&language=1 (accessed April 19, 2008).

CLIMATE FOR BUSINESS IN THE DOMINICAN REPUBLIC

2008-04-24T13:40:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=13535

April 23, 2008.

Investors from Florida highlight the climate for business. They develop condominium projects in the north.
The tourist real estate investments grow in the Dominican Republic.

Santo Domingo. The businesses of Southwest Florida are crossing borders, moving into a new market: the Dominican Republic.

An engineering firm based in Fort Myers is celebrating the grand opening of its offices in Las Terrenas, and a developer based in Naples has given the inaugural ceremony in a condominium project in Cabrera.

Meanwhile, another businessman of Southwest Florida flew to the Dominican Republic to work on expanding its production and sales of Roman Rock, an alternative of rock paving on the island.

"It seems that (the Republic) will be the new boom in the Caribbean, similar to Costa Rica, fifteen years ago," says Dean Martin, owner of TDM Engineering, which opened an office in Las Terrenas in January, according to an article of Naples Daily News published under the signature of journalist Katy Bishop.

The publication states that "further to the West on the north coast of the island there will be another project by Southwestern Floridians."

The businessman from Naples, Brad Black, plans to develop 70 condominiums in the resort Crystal Beach in Cabrera, next to New York developer, Lawrence Citadelli.

The units of two and three bedrooms range from 1,671 to 2,156 square feet, and they have a cost from US$275,000 to US$675,000.

Black visited the island for the first time on vacation and fell in love with the people, the culture and the environment. "Among the people, sights, culture and price, I think it is a great place," said Black.

"It's a growing market and is more international than Florida. Black has sold 13 of the 70 units. Buyers and potential customers come from Sweden, Switzerland, England, Canada and Russia, as well as New York, New Jersey and Pennsylvania . "

The businessman from Fort Myers, Steven Russell, owner of Architectural Stone Solutions, was also in the Dominican Republic for the celebrations, but also went into business.

Russell’s company offers a product called Roman Rock.

Construction.

Steven Russell, from Roman Rock, met with the owner of a construction company to discuss the sale of his product in the country and move part of his production in the future toward over there.

Russell hopes that Dominicans begin to use Roman Rock around the third quarter of 2008 and move most of the production to the island by the end of the year.

By JJ

Freddy Miranda
Translated by
Orlando Alcántara

US FORECLOSURES

2008-04-17T13:34:00.000-04:30

U.S. Foreclosures Jump 57% as Homeowners Walk Away (Update4)
By Dan Levy April 15 (Bloomberg) -- U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners lost their homes to lenders. More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of default data, said today in a statement. Nevada, California and Florida had the highest foreclosure rates. Filings rose 5 percent from February. About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are ``simply walking away and deeding their properties back to the foreclosing lender'' rather than letting the home be auctioned, RealtyTrac Chief Executive Officer James Saccacio said in the statement. ``We're not near the bottom of this at all,'' said Kenneth Rosen, chairman of Rosen Real Estate Securities LLC, a hedge fund in Berkeley, California and chairman of the Fisher Center for Real Estate at the University of California at Berkeley. ``The foreclosure process will accelerate throughout the year.'' Rising foreclosures will add more inventory to an already glutted market, keep home prices down through at least next year and thwart efforts by Congress and President George W. Bush to help homeowners avoid default, Rosen said in an interview. Peak Levels The percentage of homes currently in foreclosure is similar to that of the early 1980s and early 1990s, Rosen said. ``It's comparable to the peak levels of those periods, but my guess it will be the worst since the 1930s when it's all over,'' he said. About 2.5 million foreclosed properties will be on the market this year and in 2009, Lehman Brothers Holdings Inc. analysts led by Michelle Meyer said in an April 10 report. U.S. home price declines will probably double to a national average of 20 percent by next year, with lower values most likely in metropolitan areas in California, Florida, Arizona and Nevada, mortgage insurer PMI Group Inc. said last week in a report. Borrowers who owe more on theirmortgages than their homes are worth may be buffeted by increasing job losses in a ``very substantial recession,'' Rosen said. About 8.8 million borrowers had home mortgages that exceeded the value of their property, Moody's Economy.com said last week. Subprime Defaults ``At least 2 million jobs will be lost because of this recession, so we'll get a cumulative negative spiral,'' Rosen said. ``A normal recession is 10 months. We think this one may be twice as long.'' Bank seizures climbed 129 percent in March from a year earlier to a U.S. total of 51,393, according to RealtyTrac, which has a database of more than 1 million properties and monitors foreclosure filings including defaults notices, auction sale notices and bank repossessions. March was the 27th consecutive month of year-on-year monthly foreclosure increases. In February, foreclosure filings rose 60 percent. A surge in defaults among subprime borrowers, those with poor or limited credit, spurred the collapse of the U.S. home loan market and has led more than 100 mortgage companies to stop lending, close or sell themselves. As the value of securities tied to mortgages plummeted, lenders and securities firms have reported writedowns and credit losses of at least $245 billion since the beginning of 2007, according to data compiled by Bloomberg. Nevada, California Nevada had the highest U.S. foreclosure rate in March at one for every 139 households, almost four times the national rate, RealtyTrac said. Filings there increased almost 62 percent from a year earlier to 7,659. California had the second-highest rate at one filing for every 204 households, and the most filings for the 15th consecutive month at 64,711. Foreclosure filings more than doubled from a year earlier and were up about 21 percent from February. Florida had the third-highest rate, one filing for every 282 households, and ranked second in total filings at 30,254. Foreclosures increased 112 percent from a year earlier and decreased almost 7 percent from February, RealtyTrac said. Ohio ranked third in filings at 11,273 and had the seventh- highest foreclosure rate, one for every 448 households. Georgia, Texas, Michigan, Arizona, Illinois, Nevada and Colorado also ranked among the top 10 states with the most filings, RealtyTrac said. Foreclosure filings in New York rose 37 percent in March from a year ago and fell 3 percent from February. The state ranked 30th with 5,088 filings. New Jersey's Declines In New Jersey, foreclosure filings fell 6.2 percent from a year ago and declined 20 percent from February. There were 4,482 filings in March. Connecticut foreclosures jumped 40 percent from a year ago and fell 3.3 percent from February. It had 2,126 filings. ``The continued increase in new foreclosures implies an even larger drag on prices in 2008,'' Goldman Sachs Chief U.S. Economist Jan Hatzius wrote April 8. Home prices fell 8.9 percent in the fourth quarter, the biggest decline in 20 years as measured by the S&P/Case-Shiller home price index. Some borrowers are ``hanging on at the margins'' in the face of resets, said Mark Goldman, a loan officer at Windsor Capital Mortgage Corp. in San Diego. Goldman said one of his clients is a self-employed contractor whose adjustable-rate mortgage rose by two percentage points two months ago. His mortgage payment has increased to $7,200 from $4,900. ``I've had people sitting in my office in tears because there are no loans available,'' said Goldman. ``There are no loans for someone who's upside down on their house.'' * Top Five States for Foreclosures State Rate Per Households Total Nevada 139 7,659 California 204 64,711 Florida 282 30,254 Arizona 283 9,199 Colorado 339 6,180 * To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net. Last Updated: April 15, 2008 14:23 EDT

ITALIAN INVESTMENT IN DOMINICAN REPUBLIC

2008-04-17T13:30:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=12549

April 16, 2008.

The Italian investment in the country in excess of US$ 1000 million dollars. The Cámara de Comercio (Chamber of Commerce) is available to investors.

Tourism is an attraction.

Santo Domingo. The president of the Cámara de Comercio Domínico-Italiana (CCDI) (Dominican-Italian Chamber of Commerce) Enrico Citati, said that because of the increasing promotion conducted by the organization that he presides, to the country has entered around one billion dollars.

He noted the good climate for foreign investment in the country, and at the same time he favors that other countries invest in the Dominican Republic.

Also, Citati said that he encourages other countries to invest in this country.

He said that the CCDI is the only organization that it is officially recognized by the Italian state in the Caribbean basin.

"Not only the current business climate, which the facts define as extremely favorable, but also the same statistics offered in the history of relations between the two countries," he said.

He indicated that the process of strengthening of the tools that will be available provides a strong push toward computerization, through an interactive website dedicated to providing and to gathering business and commercial information.

In that sense, it was announced the implementation of the tools of business services such as legal domiciliation of companies, the extra judiciary settlement of disputes through arbitration procedures, and the optimization for the partners of their business relationships through a reference information tool.

By Adonis Santiago Diaz

FREDDY MIRANDA
Translated by
Orlando Alcántara

De Niro The Good Sheperd is going to Invest in Dominican Republic

2008-04-17T13:29:00.000-04:30

http://www3.diariolibre.com/noticias_det.php?id=12543

April 16, 2008.

Robert De Niro has the country on his agenda.

George Nader asserts that he wants to invest in the tourist area.

De Niro filmed in the Dominican Republic part of his film "The Good Shepherd".

SANTO DOMINGO. The American film director and actor Robert De Niro revealed that has on his agenda to invest in the tourism sector of the Dominican Republic.

Thus it was revealed to Diario Libre by businessman George Nader, with whom he met recently in the United States. "We have talked several times, and he reiterated his firm decision to do business in the tourism sector," said Nader.

He explained that when the artist visited the country in 2005 for the shooting of his film "The Good Shepherd", he took him to Samaná, Miches and other locations. "In a recent conversation he dealt with the topic with me again," said the businessman.

He explained that in the coming days he will meet with the laurate American actor during the Tribeca Film Festival, which will take place from the 23rd of this month to May 4th.

"He sent me an invitation to participate in the 7th. Edition of the festival that he founded," he added.

George Nader said that with investors as De Niro, the Dominican Republic benefits positively due to the prestige of the artist.

In November 2005, Robert De Niro filmed here "The Good Shepherd", which included the performances of Matt Damon and Angelina Jolie, which tells the story of the CIA in the last 40 years. At least, the most important facts from the viewpoint of one of its founders, James Wilson.

During the shooting of the film, the Dominican Republic was the focus of national and foreign press thanks to the celebrities who stepped on the home soil.

By Severo Rivera

CELEBRITIES IN PUERTO PLATA DOMINICAN REPUBLIC, FIVE START BUNGALOWS

2008-04-07T11:10:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=10713

April 01 2008

A new haven for celebrities: Maxim Bungalows. This is a great place, still in pre-release, located in Cofresí, Puerto Plata.

Kim Kardashian next to her boyfriend Reggie Bush. Puerto Plata.

The exclusive five-star resort Maxim Bungalows, located on the beach of Cofresí, Puerto Plata, has received in recent weeks the visit of international celebrities seeking to move away from the city stress while enjoying the Caribbean luxury of these facilities.

Last week, the hotel was visited by the couple formed by Kim Kardashian, star of the reality show of E! Entertainment Television "Keeping up with the Kardashians" and her boyfriend Reggie Bush for a fun weekend of birthday, which, while enjoying the attentions of first class of the resort, they had fun to the maximun with with excursions in the zone that included extreme sports in nearby rivers.

The romantic getaway was a stop to the busy schedule of work for Kim before the premiere of the new season of her agenda at E!. The star coordinated a dinner with birthday cake included for Reggie Bush and spent the rest of the weekend enjoying refreshing dives in the pool and taking spa treatments.

On the other hand, the popular choreographer and judge of the program "Dancing With the Stars", Carrie Ann Inaba visited the Dominican Republic for a short holiday before starting the new season of her TV show.

Carrie stayed in a luxurious two-bedroom bungalow and spent her vacation swimming with the dolphins, lounging on the beach and enjoying spa treatments.

The five-star resort Maxim Bungalows arose as a result of the strategic alliance signed by the prestigious lifestyle magazine for gentlemen Maxim and Group Elliott, of Canadian capital.

Freddy Miranda
Translated by
Orlando Alcántara

REAL ESTATE GUIDE FOREIGN INVESTMENT IN DOMINICAN REPUBLIC

2008-04-07T11:04:00.001-04:30

http://www3.diariolibre.com/noticias_det.php?id=10770

April 01 2008

Tourism and real estate guide foreign investment in the Dominican Republic.
Last year, FDI grew by 43% in 2007.

SANTO DOMINGO. Driven by tourism and real estate, foreign direct investment (FDI) last year grew 43%, from $1,183.4 million in 2006 to $1,698 million.
While in the past two years (2005 to 2007), foreign direct investment grew by 60% over the period 2002-2004, according to a report from the Center for Export and Investment of the Dominican Republic (Centro de Exportación e Inversión de República Dominicana) (CEI-RD).
Among the fastest growing sectors for foreign investment is tourism, with major projects such as Cap Cana, hotels Ritz Carlton, Four Seasons, Westin Rocco Ki, Macao Caribe Beach, among others.
Also FDI had in the telecommunications sector a good growth, being one of the most dynamic. Investments in this sector come from the companies Claro-Codetel, Orange Dominican, Tricom and Centennial. While the next sectors represent big business opportunities with great attraction of foreign direct investment, renewable energy, free-duty zones, mining, financial, commercial, construction, and and Call Centers.
The countries of origin of investments are the United States, the main trading partner of the Dominican Republic, with a share of $1,946.4 million from 2002 to 2006. Also, Spain, Canada, Grand Cayman, England, Switzerland, Holland and France, according to the report of CEI-RD.
In 2003 there was a decline in investment, but from 2005 trust returned to the American investors to the country.

By Jose Javier.

Foreign Direct Investment flow

MORE ABOUT REAL ESTATE AND TOURISM IN DOMINICAN REPUBLIC

2008-04-07T11:02:00.000-04:30

http://www3.diariolibre.com/noticias_det.php?id=10770

01 Abril 2008

Turismo y bienes raíces guían inversiones extranjeras en RD.
El año pasado la IED creció un 43% en el 2007.

SANTO DOMINGO. Motivada por el turismo y los bienes raíces, la inversión extranjera directa (IED) creció el año pasado un 43%, al pasar de US$1,183.4 millones en 2006 a US$1,698 millones.
Mientras que en los últimos dos años (2005 al 2007), la inversión extranjera directa creció un 60% con relación al período 2002-2004, de acuerdo a un informe del Centro de Exportación e Inversión de República Dominicana (CEI-RD).
Dentro de los sectores de mayor crecimiento para la inversión extranjera se encuentra el turismo, con proyectos importantes como el Cap Cana, hoteles Ritz Carlton, Four Seasons, Westin Rocco Ki, Macao Caribe Beach, entre otros.
También la inversión extranjera directa tuvo en el sector de las telecomunicaciones un buen crecimiento, siendo uno de los más dinámicos. Las inversiones en este sector corresponden a las empresas Claro-Codetel, Orange Dominicana, Tricom y Centennial. En tanto que representan grandes oportunidades de negocios con gran atracción de inversión extranjera directa, los sectores energía renovable, zonas francas, minería, financiero, comercial, construcción y centros de contactos o Call Centers.
Los países de origen de las inversiones son Estados Unidos, principal socio comercial de República Dominicana, con una participación de US$1,946.4 millones desde el 2002 al 2006. Asimismo, España, Canadá, Gran Caimán, Inglaterra, Suiza, Holanda y Francia, de acuerdo al informe del CEI-RD.
En el 2003 hubo un descenso de las inversiones, pero a partir del 2005 la confianza volvió a los inversionistas estadounidenses hacia el país.

De José Javier.

LEGAL FRAMEWORK FOR COMPANIES, LAW FOR INDUSTRIAL COMPETITIVENESS

2008-03-17T11:13:00.002-04:30

Competitiveness Council calls for enacting laws.

Dayana Acosta.
Santo Domingo.

The director of the National Council on Competitiveness, Andrés Van Der Horst, requested yesterday to the Executive Branch the enactment of more than 10 laws passed by Congress, which will foster the strengthening of the Dominican industrial sector. Van Der Horst explained that these legal regulations will strengthen the business climate, making the domestic companies more competitive. Among the laws being cited, there is the law for Industrial Competitiveness, which was approved.
The law of Companies, which eliminates the use of seven partners and can only be two or three people.
The other one is that of the Perishable Agricultural Products, which seeks to create a mechanism of protection for producers, with the goal that they can pay the loans within 90 days, instead of 60 established at the present time.
He argued that with such a law they are seeking that the production cycle which would be affected by the funding, there could be a mechanism that in 90 days, no more, they can pay to these farmers; it was approved by the Senate, waiting to be enacted.
In the legal framework for medium and small businesses, during the last 20 years there has been a cry that they do not have a legal framework governing the small traders.
He said that the important thing within the National Plan for Competitiveness is not just for the DR-CAFTA, but also for other free trade agreements, which seek to strengthen the part that has to do with the economic defense.
"While on one hand we must be proactive and boost productivity and exports, we also have to protect our market, and for that this year, through the Secretariat of Industry and Commerce and the National Competitiveness Council within the National Plan on Competitiveness have been issued regulations and laws that seek to strengthen the domestic industry," he said.

Freddy Miranda
Translated by Orlando Alcántara

FORMATION OF COMPANIES OVER INTERNET IN DOMINICAN REPUBLIC

2008-02-25T13:24:00.001-04:30

http://elnuevodiario.com.do/app/article.aspx?id=91358

February 18, 2008.

Dominican Republic starts a system for the constitution of companies over the Internet.

11:31 pm – Santo Domingo, February 18 (EFE) .- Today the Dominican Republic launched a system that allows the constitution of a company through the Internet in just three days, instead of the 22 days that to the present takes this proceeding.

The state-based Consejo Nacional de Competitividad (CNC) (National Competitiveness Council) reported that the portal www.creatuempresa.gob.do will allow to constitute a company in an easy and agile way, which will make "more competitive" the business climate in the Caribbean country.

Through the website it will be possible to complete securely, in a simplified and centralized way, the processes for the registration of name, business and taxpayer, as well as payments and transactions in a minimum period of time, asserted in a public activity the director of CNC, Andrés Vanderhorst Álvarez.

"With this initiative the Dominican Government seeks to create synergies between the Government and the private institutions to ensure that the constitution of a company is something easy and agile as a way that the task of doing business can be attractive to entrepreneurs and new investors," said the official.

Another advantage to be emphasized is that the system will allow payments by credit card or bank transfer, and it will give users the option to choose whether to make a single payment or partial payments in every step of the process.

The system specifications will allow to generate the documents, make and channel the related payments with high levels of privacy and security.

Vanderhorst asserted that the design of the new tool places the Dominican Republic among the leading countries on this line of activity in Latin America.

The security level of the webpage is "optimal," added the official, noting that the information is sent in an 'encrypted' format and based on digital certificates. EFE

Copyright 2008. El Nuevo Diario All rights reserved.

Freddy Miranda
freddymiranda.com
Translated by Orlando Alcántara

COPYRIGHT

2008-01-30T16:25:00.000-04:30

Source: Newspaper Diario Libre.
Website:
Http://www3.diariolibre.com/noticias_det.php?id=880
Date: Wednesday, January 9, 2008.

Economic interests are denounced in the case against Musicalia.
Mayra Tejada replied with a letter, which is reproduced in its essence. Edwin Espinal offers his views on the case.

A record of Juanes is the bone of contention.

Santo Domingo. "This case has no haze other than the interest of some people not to recognize the rights provided by the law in favor of the copyright holders and their legal representatives, and others, who are dedicated to defending the intellectual property rights, on the one hand, and, on the other hand, they are able to deny the territoriality of these rights and their principles, without more results than the liquidation of expenses and fees”, said yesterday in a letter sent via the Internet to this newspaper, Mayra Tejada, president of Clave Siete S. A., who represents in this country the music publisher Peermusic Colombia, which in turn has the rights of Juanes, in its dispute with the record store Musicalia.

Tejada reports that there are deposited in the proceedings file of the case the publishing contract signed between Juanes and Peermusic III, with their corresponding adendums; the agency agreement of representation between Peermusic of Colombia and Clave Siete; the power of legal representation provided by the Corporation Peer to Mayra Rosa Tejada as president of Clave Siete and under the contract of representation with Peermusic of Colombia; certification of the Corporation Peer where it is indicated in an enunciative way the entities that are part of the Corporation Peermusic.

The executive reiterates that the claim of Peermusic has been based on the provisions of Law No. 65-00 on copyrights and international treaties on the subject that have been signed by the country (DR-CAFTA, Bema, ADPIC (Trade-Related Aspects of Intellectual Property Rights of the World Trade Organization –TRIPS-), among others), in which texts it is enshrined the territoriality of the rights and exclusive authority of the titleholders to authorize or prohibit the distribution, and any other form of commercial explotation of them. "It is on this point that the debate must be based," she says.

She also notes that in Peermusic "have trusted other publishers like BMG, PMC (Gilberto Santa Rosa), V & V MUSIC (Víctor Manuel), Geminis Records, Editora Musulman, Strictly Confidential, Edimusic, Cherry Lane, Malaco, Orphon, Wranhr Chapell, Eman , Pham & Emmi, to name a few. "

An expert opinion.

A knowledgeable expert on the subject of copyrights in the country, Edwin Espinal, who was president of ONDA (Oficina Nacional de Derecho de Autor –National Office of Copyrights-) in the past Government, sent his opinion at the request of Diario Libre, in which he states that the lawsuit faced between Clave Siete and Musicalia "is attractive, since in our courts it is not common to find legal processes in the field of copyrights. Hence, the decisions coming out of the empowered courts will be of great interest, in order to know the criteria in the interpretation of Law No. 65-00, and the general principles about copyrights".

He argues that "it will be essential for the court to review the chain of contracts operated among the different rights holders."

Based on what it has been published, he understands "that Peermusic, on the basis of a publication contract, assured a percentage of revenue sharing that corresponds to Juanes from the exploitation of the musical works of his authorship, granting a license for mechanic rights to the records producer Universal for its inclusion in the above production. In practice, producers of phonograms are authorized to carry three specific rights: recording, at its own risk, works in phonograms of their production; make copies of these phonograms; and distribution to the public. Universal alleges that it cancelled these rights –which it should be established by the court taking into consideration the territorial nature of the license of mechanic rights-, which, if so, Musicalia would be exempt from any payment, being able to sell the product without inconveniences in its stores".

He adds: "We have to say that the international practice shows us that the liquidations or rights and royalty payments are made by producers under the licences granted to them, and never by distributors -as is Musicalia-, for whom it wouldn’t be a good business to incur in that obligation because it would have to charge its amount to the price of the records, making it difficult for sale. "

By Alfonso Quiñones.
freddy Miranda,
Translated by Orlando Alcántara

LABLES FOR IMPORTED GOODS

2007-12-03T16:32:00.000-04:00

Source: Diario Libre.

Website:
http://diariolibre.com/app/article.aspx?id=129299

November 27, 2007, 9:47 PM

More time to change the labels on Spanish language.

Last September, Digenor warned that from November it would withdraw from the market products that do not meet the standard Nordom 53.

SANTO DOMINGO. The Dirección General de Normas y Sistema de Calidad (Digenor) (General Directorate for Standards and Quality System) extended until February 29th, 2008, the deadline for companies to comply with the provision of tagging in Spanish prepackaged foods, especially those imported.

The information was offered yesterday by Julio Santana, director of DIGENOR, who explained that the milk products and all its derivatives processed or fermented, as well as meat products and cold cuts (deli meats), being highly perishable foods, were granted an additional period until January of the same year.

He said that there has been significant progress on the standards for the labeling of prepackaged foods, as Digenor has made more than four thousand products, which are marketed throughout the national territory, are complying with those requirements.

Santana announced that in agreement with the Dirección General de Salud Ambiental (DIGESA) (General Directorate of Environmental Health) and with the support of the main players in the market, will begin from next year the installation of the "Virtual Kiosk," through which you can read all information of a product in its barcode, and beginning from next year as a pilot plan in Santiago.

"In all business establishments consumers will be able to obtain basic information, mandatory labeling showing a reader automated barcode of the product they are buying and can read on the screen labeling in Spanish language, with the option to print if you want ," said Santana.

-Adonis Santiago Diaz.

Freddy Miranda
Translated by Orlando Alcántara

FAQ FOREIGN INVESTORS, CEI-DR

2007-10-24T12:03:00.000-04:00

Source: http://www.cedopex.gov.do/pdf/inversion/preguntas_sobre_INVERSION.pdf

CEI-RD (Centro de Exportación e Inversión de la República Dominicana) (Center for Export and Investment of the Dominican Republic).

Investors’ Frequently Asked Questions.

Investors Service Division.

November 2004.

1 .- What is the government's policy towards the private and public enterprises (national and foreign)?

The Dominican government encourages private investment both domestic and foreign. The State has been transferring into private hands the majority of the State-owned enterprises for the purpose of ensuring fair competition and to eliminate monopolies.

Are foreigners treated differently, compared with nationals? No. Article 6 of Law 16-95 establishes the principle of national treatment for foreign investors.

2 .- Does your country have an agreement regarding double taxation and a bilateral investment agreement with my country?

The Dominican Republic signed a Convention for Avoidance of Double Taxation with Canada in the year 1976, and we are currently under negotiation with the following countries: Chile, Trinidad and Tobago, Taiwan, Russia and Spain.

Bilateral Agreements for the Mutual Promotion and Protection of Investments, and Signed By the Dominican Republic.

Country / Regional Block: Spain.
Ratified by the National Congress: October 7, 1996.
Signed: March 16, 1995.
Comments: Approved September 9, 1996. In force.

Country / Regional Block: France.
Ratified by the National Congress: Adopted on June 3, 2000.
Signed: January 14, 1999.
Comments: Accepted by the National Congress. Resolution No. 177-02 of October 30, 2002.

Country / Regional Block: Republic of China (Taiwan).
Ratified by the National Congress: Message No. 4209 of March 30, 1999.
Signed: November 5, 1999.
Comments: Approved by Resolution No. 193-01 on November 27, 2001. In force.

Country / Regional Block: Chile.
Ratified by the National Congress: Approved on May 8, 2002.
Signed: November 28, 2000.
Comments: Approved by Resolution No. 63-02. In force.

Country / Regional Block: Ecuador.
Ratified by the National Congress: Message No. 7122 of June 21, 1999.
Signed: June 26, 1998.
Comments: In force.

Country / Regional Block: Cuba.
Ratified by the National Congress: Approved on January 9, 2001 by the Senate and rejected by the Chamber of Deputies on August 15, 2002.
Signed: November 15, 1999.
Comments: It is not in force.

Country / Regional Block: CARICOM (through the Free Trade Agreement with the Caribbean Community consists of: Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, Saint Lucia, Saint Vincent and Grenadines, Suriname, and Trinidad and Tobago.)
Ratified by the National Congress: February 28, 2001.
Signed: August 22, 1998.
Comments: In force for all of the CARICOM countries, except Guyana and Suriname.

Country / Regional Block: Central MCCA (through Free Trade Agreement with the Central American Common Market (MCCA for its initials in Spanish), composed of the following countries: Costa Rica, El Salvador, Honduras, Guatemala and Nicaragua.)
Ratified by the National Congress: March, 2001.
Signed: April 16, 1998.
Comments: In force for all of the Central American countries.

Country / Regional Block: Argentina.
Ratified by the National Congress: Not available.
Signed: March 16, 2001.
Comments: In force.

Country / Regional Block: Finland.
Ratified by the National Congress: Not available.
Signed: November 27, 2001.
Comments: In the National Congress for ratification.

Country / Regional Block: Morocco.
Ratified by the National Congress: Not available.
Signed: May 23, 2002.
Comments: In the National Congress for ratification.

Country / Regional Block: United Kingdom of Great Britain and Northern Ireland.
Ratified by the National Congress: Not available.
Signed: July 11, 2002.
Comments: In the National Congress for ratification.

Country / Regional Block: Swiss Confederation.
Ratified by the National Congress: Not available.
Signed: January 27, 2004.
Comments: In the National Congress for ratification.

Country / Regional Block: Free Trade Agreement with the United States and Central America (DR-CAFTA).
Ratified by the National Congress: Not available.
Signed: August 5, 2004.
Comments: Pending ratification by the congresses of the signatory countries. (Translator's Note: In force today, October 20, 2007).

Under Negotiation: Colombia, Peru, Israel, Canada, Italy, Korea, Denmark, Norway, Sweden, Germany, Russian Federation, Czech Republic, Belgium, Austria, Venezuela, the Republic of Ukraine.

Agreement Negotiated definitely and pending of signature:
Kingdom of the Netherlands, dated October 11, 2002.

Trade Agreement of Partial Reach:
DR-Panama; it is in force at the moment.

3 .- What are the possible forms of corporate organizations?
In the Dominican Republic, the most widely used organizational form is the commercial joint stock company (compañía por acciones); this form of business organization can be called Compañía por Acciones (Stock Company) (C. A., or C. x A.), Compañía Anónima (Anonymous Company) (C.A.) or Sociedad Anónima (Anonymous Society) (S.A). It is the company of choice for carrying out acts of trade because of its limited liability.

By powers that the Law gives to it, the stock company is an entity that has its own legal personality, different from that of their partners. Therefore, it may be subject to exercise rights as well as duties, and like individuals it has a name, an address and a patrimony.

It is also possible to establish branches and subsidiaries of foreign companies in the country.

To open a branch, it is only needed to settle a home address in the Dominican Republic requesting that authorization to the Executive Power. The branch has no legal personality.

To establish a subsidiary with limited liability it is necessary to continue the process of establishing a company, which would require 7 partners, to pay its constitution taxes, to register a name, and to deposit the constituent documents in the Civil Registry and the corresponding Courts. The procedure costs about US$2,000.00 dollars.

4 .- Are there any special requirements or restrictions for a foreigner to acquire all the rights of ownership over his/her investment? Does he/she need to have a local partner?

Law 16-95, on Foreign Investment, gives investors and to the companies in which they take part, or which they are owners of, the same rights and duties that the laws give to Dominican domestic investors. It is not necessary to have a local partner, except for individual sectors such as Banking, Insurance and Air Transport, for which the laws require a Dominican shareholding of more than 50%.

5 .- Are there requirements for notification, registration, approval or authorization of foreign investment?

Any investor or foreign company, as soon as they have made their investment must register it with the Centro de Exportación e Inversión de la República Dominicana (Center for Export and Investment of the Dominican Republic (CEI-RD). For this purpose both individuals and corporations have to deposit the following documents:

A) Application for registration, specifying the name of the foreign investor, receiving local company, the amount of investment, RNC (Registro Nacional del Contribuyentes; National Registry of Taxpayers), sector of activity of the project, information on invested capital and the area where the investment has been made;

B) Proof of entry into the country of foreign currency or physical or tangible assets;

C) Documents establishing the commercial company or the authorization of the operation of branches by settling the home address.

6 .- How much complication are in the procedures? How long does they take?

This registration of the investment consists of a simplified procedure, where the investor deposits documents required by Law 16-95, on Foreign Investment, at the Centro de Exportación e Inversión de la República Dominicana (Center for Export and Investment of the Dominican Republic) (CEI-RD). After meeting these requirements it will immediately be issued to the applicant the Certificate of Registration of Foreign Direct Investment.

7 .- Is there a place where I can get help to fulfil these procedures?

There is the official help that the country gives to the investor; it can be gotten through the Centro de Exportación e Inversión de la República Dominicana (Center for Export and Investment of the Dominican Republic) (CEI-RD), established by Law 98-03 of June 17, 2003.

The Centro de Exportación e Inversión de la República Dominicana (Center for Export and Investment of the Dominican Republic) (CEI-RD) has as its main purpose the promotion and encouragement of the Dominican exports and investment, for the purpose of boosting the country's competitive insertion in the international markets for goods and services. Besides promoting the country as a very good place for investment; it helps the investor in streamlining government procedures for the placement of investment, as well as information on legal aspects, corporate, tax and other practical guidance that an investor of any area of the economy may require. CEI-RD has as a priority to ensure the entry and permanence of investors, as well as to encourage reinvestment of profits from these investments.

8 .- Are there special incentives available for investment?

Yes, there are special laws as well as tax laws that devote special incentives for foreign investment, as our legal framework gives the foreign investor an equal treatment to that given to the national investor. Therefore, there are special rules that benefit certain types of investment.

Firms producing goods and services for export established as Free Duty Zones (Law 80-90 of January 15, 1990 and the implementing regulation No.366-97 of August 29, 1997) will benefit from a special regime of customs controls and tax incentives of up to 100%.

The excellent business opportunities offered by this Law are available both for the domestic investor as well as for foreign investor.

Special Border Area Development, and it comprises the following provinces: Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodriguez, and Bahoruco.

Any company that is installed within any of the provinces cited above enjoys the following incentives and exemptions:

They are exempt from 100% of the payment of all internal taxes.

Exemption of Tariffs on raw materials, equipment and machinery, or any other type of tax for 20 years.

They are given, in addition, 50% exemption in the payment of free transit and use of ports and airports.

The reduction of fifty per cent (50%) of any tax, fee or contribution to the current date or to be established in the future, while they will have the 20-year exemption period in force under this Law.

They are given a period of five (5) years to any company that is established for the enjoyment of the full term of the exemption period. At the end of five (5) years, new businesses that are established only enjoy that part of the exemption period that it is in effect, counted from the day after the expiration of the five (5) years.

Promotion of Tourism Development for the tourist zones or hubs of low development and new tourist zones or hubs in the provinces and localities of great potential.

1 .- Tourist Zone No.4, Jarabacoa and Constanza;

2 .- Tourist Zone IV, expanded: Barahona, Bahoruco, Independencia, and Pedernales;

3.- Tourist Zone V, expanded: Montecristi, Dajabón, Santiago Rodríguez, and Valverde;

4 .- Tourist Zone VIII, expanded, covers the provinces of San Cristóbal and the Municipality of Palenque; The province of Peravia and Azua de Compostela:

5 .- Tourist Zone comprising the municipalities of Nagua and Cabrera;

6 .- Tourist Zone of the Province of Samaná;

7 .- The Province of Hato Mayor and its municipalities; the province of El Seybo and its municipalities; the Province of San Pedro de Macorís and its municipalities; the Province of Espaillat and the municipalities of: Higüerito, José Contreras, Villa Trina, and Jamao al Norte; the Provinces of Sánchez Ramírez and Monseñor Nouel; the municipality of San José de Las Matas; the Province of Monte Plata; and Guiguí, La Vega.

INCENTIVES GIVEN:

Companies based in the country which are benefiting from the incentives and benefits of this Law are exempt in a 100% of the tax on the following items:

A) National and municipal taxes that are levied to use and issuing building permits, including acts of purchase of the land, provided that they are within the purpose of this Law;

B) The import taxes and other taxes, such as rates, fees, surcharges, including the Impuesto Sobre las Transferencias de Bienes Industrializados y Servicios (Tax to the Transfers of Industrialized Goods and Services) (ITBIS), which was implemented on the equipment, materials and furniture necessary for the first equipment and putting into operation of the tourist facility in question;

C) National and international financings are exempt from paying taxes; they will be subjected of neither the withholdings nor the interests that they may generate;

D) The natural or legal persons may deduct up to 20% of their annual profits, if they are investing in a project within the scope of this Law;

E) All machinery and equipment needed to achieve a high quality of the products are exempted (ovens, incubators, treatment plants and laboratories for production control, among others), at the time of establishment;

F) There will not be new taxes, fees, charges, etc., within the period of tax exemption;

G) The benefits and incentives under this Law are limited to projects whose construction will begin after this Law is enacted;

Exemption Period.

These projects, businesses or tourism enterprises will have an exemption period of 10 years from the date of completion of construction work and equipping of the project under these incentives. It gives a period not exceeding in any case three years to start steadily and uninterrupted operation of the project approved.

9 .- Is there a package available that contains the laws applicable to foreign investors, written in the language of international business?

At the Centro de Exportación e Inversión de la República Dominicana (Center for Export and Investment of the Dominican Republic) (CEI-RD), we have developed the Investor's Guide, in CD-Card version, which is a complete collection of all procedures to which the potential investor will be subjected to successfully place his/her investment in the country.

Call to become the main tool for the guidance of the investor, their legal counsel, Dominican missions abroad and the business sector in general, the Investor's Guide of CEI-RD takes into account virtually all aspects of the legal landscape of the Dominican Republic, covering both regimes of general application such as immigration, taxes and the labor sector, companies, intellectual property and real estate; also, the areas of specific interest as Free Duty Zones, telecommunications, tourism and energy, with the inclusion of relevant laws and copies of the forms required in each case.

10 .- Are there conditions, restrictions or requirements regarding the use of foreign personnel in the workplace?

The labor law in the Dominican Republic provides that at least 80% of the total number of workers must be Dominicans. This provision does not apply, however, to officials with managerial or executive positions in the company.

In the Dominican labor law there are no restrictions on nationality to work in the country. For its part, Article 8, Section 12, of the Constitution establishes freedom of work.

11 .- Does the foreign investor have access to the same procedural remedies that has the local investor? Are there any special recourses for foreign investment? How do the courts function? Does the legal system is efficient and independent?

The foreign investor has access to local courts.

A) Law 16-95, on Foreign Investment, does not provide directly any special recourse. However, in negotiating our agreements there is a framework on Mutual Promotion and Protection of Investments. It sets apart from the local courts other alternatives, such as the CNUDMI (Comisión de las Naciones Unidas para el Derecho Mercantil Internacional) (United Nations Commission on International Trade Law) (UNCITRAL) and the additional mechanism of the CIADI (Centro Internacional de Arreglo de Diferencias Relativas a Inversiones) (International Centre for Settlement of Investment Disputes) (ICSID) for the solution of disputes between an investor and the Contracting State.

B) The Dominican Republic has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. (Arbitration)

C) From 1994 there have been made constitutional reforms to establish the Judiciary Power as a truly independent branch of Government; today the Dominican Republic enjoys a healthy and efficient Judiciary System.

12 .- What is the real rate of growth of the economy?

The Dominican Republic experienced the highest economic growth in the Latin American region in the period of 1996-2000. The average rate for the period was about 7.7%, and in the year 2002 the growth of the economy was around 4.3%, after recovering from the events in the international arena in 2001.

The Dominican economy as measured by the real Gross Domestic Product has maintained that level thanks to the dynamics of the sectors targeted to meet domestic demand, such as communications; manufacturing excluding local mills; trade; construction; transportation; among other economic sectors .

13 .- How much does it cost to do business in the Dominican Republic?

COST OF MAJOR FACTORS OF PRODUCTION IN THE DOMINICAN REPUBLIC, 2003.

Category: I. Wages:
1.1 .- Minimum Wage Private Sector. Cost in US$: 99.40.
1.2 .- Minimum Wage in Free Duty Zones. Cost in US$: 71.94.

Category: II .- Fuels:
2.1 .- Gasoline.
2.1.1 .- Premium Gasoline. Cost US$: 1.99/galon.
2.1.2 .- Regular Gasoline. Cost US$: 1.81/galon.

2.2 .- Gas Oil (Diesel).
2.2.1 .- Premium Diesel (Gas Oil). Cost US$: 1.47/galon.
2.2.2 .- Regular Diesel (Gas Oil). Cost US$: 1.37/galon.

2.3 .- Liquefied Petroleum Gas (LPG). Cost US$: 1.25/galon.

Category: III .- Water Service:
3.1 .- Water consumption by m3. Cost US$: 0.20/m3.

Category: IV .- Cost of Living of a Middle Class Family:
Cost in US$: 1.300-1.500 per month.

Category: V.- Electric Energy:
Cost in US$: 0.11/kwh. (Note: Energy prices reflect the subsidy provided for this service.)

Category: VI .- Telephone Services:
6.1 .- Residential Line. Cost in US$: 20.20/month.
6.2 .- Business Line. Cost in US$: 26.26/month.
6.3 .- International Calling. Cost in US$: 0.50-2.00/min.
6.4 .- Internet Service. Cost in US$: 27.27/month.

Category: VII .- Transportation:
7.1 .- Internal, Public . Cost in US$: 0.40 (round trip).
7.2 .- Internal, Private. Cost in US$: 3.50 (a destination).

Category: VIII.- Cost of Housing (rent):
Cost in US$: 1,100.00 to 3,000.00.

Category: IX.- Office Rent:
Cost in US$: 1,000.00.

Category: X.- Cost of Education:
10.1.- Basic Education. Cost in US$: 150.00-175.00/month.

Note: Prices calculated according to an average exchange rate of RD$49.50 x US$ 1.00. (November 2004).

(Translator's Note: The average exchange rate on October 20, 2007, is approximately RD$ 33.00 x US$ 1.00.)

14 .- What are the costs to be recognized as deductible for a company?

Considered expenses deductible from gross income:

Interest on debts and the costs that would be incurred in the establishment, renewal or cancellation, provided that these expenses are directly related to the business, maintenance and/or operation of taxable income-producing assets;

Taxes and fees that burden the assets that produce taxed income when these costs are necessary to obtain, maintain or preserve the taxed incomes and the surcharges have been paid. Except those taxes to be paid by the income tax, its surcharges, penalties and interest, the taxes, fees and rights incurred to build and preserve capital assets, except when they are calculated as part of the cost to be alienated of the property in question; also these taxes are added to the inheritance and donations;

Insurance premiums to cover risks on assets that produce benefits;

Extraordinary damages caused by accidents or force majeure or crimes of others, will be recognized as losses, which must be reduced by up to the limit for insurance or compensation perceived by the company;

They are also allowed deductions for the depreciation due to wear, depletion and seniority, as well as losses due to disuse, justifiable, of the property used in the operation of the business.

15 .- What are the exemptions contained in the Código Tributario (Tax Code) of the Dominican Republic, regarding to income?

The income that the Chamber of Commerce and Production receives;

The income received by religious institutions, when they are obtained by direct reasons of religion;

The revenues of the sports associations and their ownership of the buildings in which they operate their sports fields and facilities inherent to their purposes, provided that they do not pursue profit or exploit or authorize gambling;

The awards for accidents at work;

Amounts received by the beneficiary in compliance with life insurance contracts because of the death of the insured;

The compensation of notice and lay-off period paid in accordance with the provisions of the Código de Trabajo (Labor Code) and the law on the subject;

Dividends paid in shares from a capital company to its shareholders;

The annual incomes of natural persons or physical residents in the Dominican Republic to the amount of RD$120,000.00 Dominican pesos adjustable for inflation each year;

Interest earned by individuals in financial institutions regulated by the monetary authorities; as well as the Banco Nacional de la Vivienda (National Housing Bank) and the Savings and Loan Associations;

The gain obtained up to the sum of RD$ 500,000.00 Dominican pesos in the alienation of the house when the following conditions are met cumulatively: 1) That it has been owned by the alienator in the last three years prior to counting the time of alienation; that it has been their principal residence for the same period.

16 .- What is the maximum rate that applies to the income tax?

25%.

About Income Tax.

What are the different rates that apply to deductions at the source?

Lease or rental of any type of property: 20%.
Honorary commissions and others: 10%.
Payments made by the State and its dependencies: 1.5%.
Any other type of income that is not explicitly referred to: 10%.
Interest charged for the use of Credit Cards: 4%.
Interest paid or credited abroad: 15%.

17 .- What is the income of individuals? :

Scale for the year 2002:

Revenues up to RD$197,470.00. Fee: Exempted.

Revenues from RD$197,470.01 to RD$329118.00: Fee: 15% = RD$19,747.00.

Revenues from RD$329118.01 to RD$493676.00.
Fee: RD$19,747.00 plus 20% on the excess of RD$329,118.00.

Revenues from RD$493,676.01 onwards.
Fee: RD$52,660.01 plus 25% on the excess of that amount.

Note: This value is adjusted for inflation each year, based on the index of consumer prices from the Banco Central (Central Bank).

About Impuesto Sobre Tranferencias de Bienes Industrializados y Servicios (Tax Transfers of Industrialized Goods and Services) (ITBIS):

18 .- What is the rate of this tax?

16%

19 .- What are the goods and services that are exempted from this tax?

The products from the primary sector of agriculture, livestock, farm forest, hunting, fishing and mining to be transferred by the producer without any degree of processing or treatment, except for the essential treatment to preserve them in their natural state;

- Books and magazines;
-Educational materials for pre-college level;
-Supplies used by the printing industry;
-Fresh meat, chilled or frozen;
-Milk and dairy products, eggs, honey;
-Plants for sowing;
-Milling industry products;
-Coffee;
-Cereals, flour, grains worked;
-Fuels;
-Medicines;
-Livestock supplies;
-Fertilizers and their components.

Services exempted from the tax:

-Educational services, including cultural facilities: theater, ballet, opera, dance, folk groups, symphonic or chamber orchestra;
-Health services;
-Financial Services, excluding insurance;
-Services of pension plans and retirement;
-Services of ground transportation of people and cargo;
-Services of electricity, water and garbage collection;
-Services of housing rental; and
-Personal care services.

They are also exempted from ITBIS imports covered in the Régimen de Internación Temporal (Regime of Temporary Placement);

Imports of machinery and spare parts for them, raw materials and supplies and equipment and their spare parts, made by companies of the industrial Free Duty Zones for Export;

The final importation of samples and parcels exempted from paying import duties;

20 .- What are the deductions that are allowed in the ITBIS?

It may be deducted from the gross tax the amounts that have been made by this tax, within the same period that it has been advanced: to local suppliers for the purchase of goods and services burdened by the tax and customs, by the introduction in the country of the assets subject to this tax. When the total tax deduction is higher than the gross tax, the difference will be transferred to the following month periods.

Exporters reflecting tax credits advanced in their purchased supplies are entitled to seek repayment of loans within six months.

21 .- What are the fees for Impuesto Selectivo al Consumo (Selective Consumer Tax)?

The tax rates are: 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50% and 60%

A. What goods are exempted from this tax?

They are exempted from this tax the funeral cars, the pump cars, the ambulances and the heavy equipment for construction.

Translator’s Disclaimer: This translation is just intended for the purpose of giving general information about this legal document. It is not intended to be used in the courtrooms or in any legal matter.

LEGISLATION IN THE FIELD OF TOURISM

2007-10-22T10:21:00.000-04:00

Source: http://www.asiex.org.do/pais/tur_legislacion.htm

Dominican Republic.

Legislation in the Field of Tourism.

The growth and development of tourism in the Dominican Republic can not be attributed only to the beauty of its landscapes, or the construction of the infrastructure necessary for development. It was imperative to give the industry a number of incentives contained in legislation that would ensure its rapid growth. Law 153 of 1971 on Promotion and Incentive to Tourism Development can be viewed as a cornerstone in the development of this sector.

At the present time it remains part of this legislation, but since the enactment of the Código Tributario (Tax Code) very important aspects of it were annulled.

It is good to note that this Law has fulfilled its mission in this process, and that the tourism sector has achieved a level of maturity required to continue its development and to maintain its competitiveness, without it.

The laws of tourism incentive prior to the entry into force of the Tax Code.

Law 153 of 1971 on the Promotion and Incentive of Tourism Development.

This Law laid the final groundwork for the development of tourism in the Dominican Republic. With it, and as embodied in Article 1, it was sought an accelerated process and streamlined the development of all factors that affect the tourism industry.

Within these factors it was provided a list, but not limited to, projects with profit potential, including hotels, motels, condominiums, apart-hotels, areas of free duty zones and sports clubs, among others. But Article 4 provided that this law did not benefit simple operations of buying and selling of land in tourist areas.

Tax incentives being given by Law 153 of 1971 for 10 years for natural persons or legal entities located in the country to invest in this sector, either through capital investments in domestic and / or foreign capital registered in accordance with Law 251 of 1964, as amended, or with loans in local currency or registered currencies were:

The exemption of 100% from income tax; from Law 71 of 1986 it was provided that the investment or reinvestment of profits or income could not exceed annually by such incentives 50% of its net taxable income. This provision was further amended by Regulation 407, 1988;

The tax exemptions on construction, the constitution of commercial companies or capital increases, national and municipal taxes on patents and public events;

The 100% exemption from taxes and import rights and other related taxes, including customs taxes, consolidated taxes and domestic consumption taxes on articles not available in quality and competitive prices, of domestic manufacture.

They also gave other incentives such as the possibility of receiving funding, ensuring repatriation of foreign exchange for repayment of principal and interests and security of a supply of foreign exchange for imports, among others.

To qualify for these benefits there were requirements like the presentation of a preliminary architectural and engineering project, economic feasibility studies, municipal and Urban Planning permits.

The implementation of this Law was in charge of the Directorio de Desarrollo Turístico (Board of Tourist Development), and the control and monitoring was done by the Dirección General de Turismo (General Directorate for Tourism), currently the Secretaría de Estado de Turismo (State Secretariat for Tourism). For the implementation of the Law it was promulgated the Regulation 1889 in 1980.

This Law was annulled with the coming into force of Law 11-92, which approved the Tax Code, specifically its Article 401. However, Article 394 remained in force for a certain period, exemptions to projects that have already been approved by the Directorio de Desarrollo Turístico (Board of Tourist Development), prohibiting the granting of new exemptions, except those which might be agreed to in contracts with the State approved by the National Congress.

The existing legislation.

Law 84 of 1979, which created the Secretaría de Estado de Turismo (State Secretariat for Tourism).

For a long time there was not a uniform approach on which institution should exercise governmental functions in the area of tourism. Hence, this activity often changed its affiliation within the official organizational chart. It was part of, among others, the Secretaría de Estado de Industria y Comercio (State Secretariat for Industry and Trade), the Secretaría de Estado de Economía Nacional (State Secretariat for National Economy), and the Gobernación Civil de Santo Domingo (Civil Governorship for Santo Domingo).

In 1969, under Law 541, it was established the Dirección Nacional de Turismo (National Directorate for Tourism), as an agency under the Executive Power. Among its duties, it was assigned to promote tourism, to monitor tourist services, to control the operation of travel and tourism agencies, to promote the official advertising, and to encourage the organization of the tourism sector.

The management and implementation of the tourism policy is based permanently from Law 84 of 1979, which created the Secretaría de Estado de Turismo (State Secretariat for Tourism), and amends to the necessary extent Law 541 of 1969. Among the priority functions of the Secretariat, we have:

To plan, schedule, organize, direct, promote, coordinate and assess tourism activities in the country, according to the goals and objectives of the national policy to be determined by the Executive Power;

To schedule and to promote the tourism industry and State and private investment in the sector;

To identify and to monitor tourist zones;

To guide the design and construction of infrastructure in the industry;

To launch promotional campaigns;

To control the tourism operators;

To create, with the approval of the Executive Power, national and international offices.

Similarly, the Law establishes the Corporación de Fomento de la Industria Turística y Desarrollo Turístico (Promotion Corporation for the Tourism Industry and Tourism Development) as an agency attached to the Secretaría de Estado de Turismo (State Secretariat for Tourism), which was established by Law 542 of 1969, which has as priority objective to coordinate the national activity for the development of the hotel business and tourism promotion in the country, promoting the acquisition, construction, financing, improvement, and maintenance of the hotel and tourism enterprises in general.

Another law that supports the institutional role of the State in the tourism sector is Law 121 of 1966, which creates the Comisiones de Turismo (Committees on Tourism) at national and provincial levels. These committees have the ability to make recommendations for construction of tourism infrastructure, and may intervene in the price range of tourist services.

Decrees on Tourist Zones or Tourist Hubs.

Since the beginning of an active national policy in the fields of tourism, it came up the need to establish what were the zones or hubs whose attractions made them eligible for developing viable tourism projects, and that they could also produce positive effects on the economies of these zones or hubs.

In the “Estudio para el Desarrollo Turístico de la República Dominicana” ("Study for the Tourism Development of the Dominican Republic") conducted in the year of 1967, it indicated for the first time the importance of establishing priority zones or tourist hubs in the country.

At the present time, the areas regarded as priorities for the development of tourism, described as "Tourist Zones" or “Tourist Hubs” are:

The expanded tourist zone of the Southern Region (Decree 322 in 1991) which covers the provinces of Barahona, Pedernales and Independencia, including Lago Enriquillo (Lake Enriquillo);

The Caribbean Coast tourist zone, which runs from Santo Domingo to La Romana;

The tourist hub of Puerto Plata, or the Amber Coast (Decree 2125 in 1972);

The tourist hub of the Northwestern Region (Decree 16 in 1993), which covers the provinces of Montecristi, Dajabón, Santiago Rodríguez and Valverde, except Montecristi National Park;

Macao-Bávaro (Decree 1256 in 1986);

Constanza and Jarabacoa (Decree 2729 in 1977);

Tourist zone of the Peninsula of Samaná;

Tourist zone of the province of Peravia (Decree 177 in 1995).

For the development of the Tourist Zones the State can perform the following actions:

To create infrastructure;

To provide incentives;

To declare as public utility the private real estate property located inside future project areas;

To get loans and funds from international financial institutions;

To lease or to sell State land;

To authorize the diversion of streets and to interrupt traffic;

To avoid speculative manoeuvers on the land in the zone.

Legislation on Gambling and Casinos.

Law 351 of 1964 considers that one way to contribute to the promotion of tourism and the influx of funds with which the State can finance the development of this sector is through the licensing process for the installation of gaming halls or casinos.

This law, amended several times, set out in its articles the following aspects:

The procedures and requirements for licensing;

The tax rules relating to casinos; according to Law 405, 1969, which amends Law 351, 1964, in this article, this activity is burdened with a flat tax of 20% on the annual profit that the casinos obtain;

It was commissioned to Secretaría de Estado de Turismo (State Secretariat for Tourism) to supervise these places.

The ability of casino gambling was expanded at the request of the private sector, allowing the use of slot machines on the condition that this game was banned for Dominicans (Law 96 of 1988). Its norms were laid down by Regulation 252, 1989.

This legislation, which regulates the activity of casinos and gambling, is completed with the following regulations:

Decree 3326 in 1978 states that the bets placed in casinos must be done and settled in U.S. dollars;

The eighth decision of the Junta Monetaria (Monetary Board), on February 19, 1987, requires casinos to redeem, at the Banco Central (Central Bank), the result of receipts for bets made in U.S. dollars;

Article 169 of the new Labor Code does not apply to such casinos as provided for in Articles 166 and 167 on closing during local holidays on the grounds of religion.

The Tax Code (Código Tributario).

As we have already pointed out, Article 401 of the Tax Code annulled Law 153 of 1971 on the Promotion and Incentive for the Tourism Development. Similarly, Article 394 established a transitional mechanism for the projects that were already being benefited by that law.

But the same article acknowledges the possibility that in the field of tourism, agro-industry, forestry and energy, through contracts with the Executive Power authorized by Congress, it can be granted exemptions on income earned from the proper exploitation of the activity or business, by the time and under the conditions deemed appropriate for the country's development. What it is noted in Article 394 of the Tax Code is part of the provisions of Article 110 of the Constitution of the Dominican Republic, as well as the powers it gives to the Chief Executive of the Nation, in paragraph 10 of Article 55 .

Legislation in the Field of Foreign Investment.

On November 20, 1995, it was adopted in the Dominican Republic the Law 16-95 on Foreign Investment, which annuls and replaces Law 861 of 1978. This Law substantially amends the regime of foreign direct investment made in the country, and seeks to place as far as possible to both domestic and foreign investors on an equal level in accordance with current trends in modernization and liberalization.

Law 16-95 provides for the right to repatriate the freely convertible foreign currency, after the payment of income tax and without prior authorization:

The entire investment, including capital gains;

All of the dividends declared during each tax year; and

The amounts needed to pay the duties, fees, or royalties arising from technology transfer contracts or technical services.

To benefit from the rights conferred by Law 16-95 it is necessary to register the investment in the Banco Central de la República Dominicana (Central Bank of the Dominican Republic). However, it is a very simple procedure that does not require prior approval.

Law 16-95 allows the registration of virtually all types of investments. In addition to the contributions in freely convertible currency, this investment may consist of:

Contributions in species, such as machinery, plant, equipment, spare parts, parts, among others;

Intangible technological contributions or resources from technology, such as trademarks, technical assistance, franchise and others;

Financial instruments issued abroad in accordance with the regulations for this purpose dictated by the Junta Monetaria del Banco Central (Monetary Board of the Central Bank).

Law 16-95 introduced another significant change regarding the destination of the investment, because it establishes that it can be done, not only in Dominican companies, but also in branches of foreign companies and in financial instruments issued by local companies. Also, it allows the registration of foreign investment in areas previously prohibited or restricted in accordance with the conditions and limitations established by the laws that regulate the related sector. The only activities in which foreign investment remains prohibited are:

Provisions and rights of toxic, hazardous and radioactive waste not produced in the country;

Activities that affect the balance of the environment or public health; and

Production of materials and equipment related to national defence and security, except where expressly authorized.

Translator’s Disclaimer: This translation is just intended for the purpose of giving general information about this legal document. It is not intended to be used in the courtrooms or in any legal matter.

Freddy Miranda
www.freddymiranda.com
Translated by Orlando Alcántara

MISCONCEPTIONS

2007-09-26T11:34:00.000-04:00

MISCONCEPTIONS.

What role does experience play in the legal scope? We ask the question to call the attention on the fact that the legal dynamics are always changing. In our case, we work with the specialty in the area of investment in real estate properties with special concentration in the tourist sector. In this sphere, our laws have changed quite a lot from 1998. We have had five or six tax reforms and one law of incentives, as well as changes in the construction regulations. For that reason, we repeat the question: What role does experience play?

We understand that it is vital to have the knowledge that gives the studies of cases and the practical insight but, for us, most important in investment consultancy is the modern wonder of synergy. This capacity to unite efforts with financial consultants, accountants, surveyors and other lawyers is what truly allows us to concentrate the best ideas in guiding those people who wish to invest in our wonderful island. The concept of synergy is intimately related to the concept of proaction or proactivity. As well, opposed to proaction or proactivity, there is the concept of reaction or reactivity. Synergy implies that one plus one is equal to three. That is to say, the whole is greater than its parts when proactive forces are united after a well-defined common goal.

Within these ideas there are the organization of the properties or the protection through companies by shares, the opening of banking accounts in the Dominican Republic, and the signing and consultancy of document for the purchase of properties, such as promises of sale and transaction (buying and selling) contracts.

The object of this article is to sum up as much as we can the ideas which we consider that can help to define the business goals of the investors and their level of risk. What is the main or cardinal rule to be able to evaluate if some type of risk in the purchase of a property in the Dominican Republic exists? We are going to try to offer guidance on this law - or rather laws- through the aspects that we consider that are handled in an incorrect way even by some Dominican lawyers. This is what we call “misconceptions”. These are criteria that do not go hand in hand with the practical or legal reality.

In all the areas of life a series of criteria or principles exists for getting what we call good performance. In golf, for example, we must start off a series of foundations to manage to direct the ball to the objective. This is what we called directionality. This sense of the goal is what it really constitutes the matter of investment. If we want something, we must ask ourselves the right questions, and soon we will get the answers. In this sense, I try to reunite some laws or foundations of real estate investment for our reading investors; foundations that without a doubt will allow them to come to orient their goals and to make their investments with greater awareness of the surrounding risks. It is necessary to take into account that directionality is different from intentionality. For example, the intention can be to travel towards a city that is located towards the East, but if we go towards the West, we will never get to that city.

Misconceptions:

I. - I MUST BE DOMINICAN, LIVE IN THE COUNTRY OR CREATE A DOMINICAN CORPORATION TO BE ABLE TO BUY A PROPERTY IN THE DOMINICAN REPUBLIC.

We suggest you to review -for greater information on the options to get the Dominican residency as a foreign investor- the Decree 950-01, of September, 2001, and also the recent Law 171-07, of July, 2007, on Incentives for Pensioners and Revenue Earners of Foreign Source (this last document is published at http://freddymiranda.blogspot.com in English).

This is one of the most common mistakes of some foreign investors; to think that we do not have a legislation that regulates foreign investment. In our website, which can be visited at www.freddymiranda.com and our blog at http://freddymiranda.blogspot.com, we have summarized the principles that govern foreign investment. The main objective of this legislation, number 16-95, is to grant an equal treatment to foreigners. Consequently, a foreigner, physical or moral person, has the same rights granted to the Dominican citizens; among them, the right to acquire real estate properties.

This allows us to answer the question about the need of acquiring properties through Dominican companies. It is not mandatory for a foreigner to buy through Dominican companies. A known principle like the one about territoriality - according to which in order to acquire rights in a territory it is necessary to have some type of legal bond with that territory- is not applicable because -as we indicated- the law of foreign investment protects the real estate investment or of another type made by foreigners in the Dominican territory.

Which would be then the limitation? The only control to which the foreign investors are put under is to the registry of their investment when they have the intentions to repatriate their capitals. In the case of the investment in real estate properties, the property registries (Registries of Titles) keep a list of the foreign companies that acquire real estate property in the country. So that in most of the cases the investment as such is not registered. This explains on a great scale this misconception, its origin and its lack of understanding in some foreign countries; especially in the United States.

II. - THE OPTION TO PURCHASE.

The option is well-known as a promise of sale. It is a contract by means of which the developer or the seller is committed to sell real estate property or to give real estate property in agreement with blueprints, specifications and a special design in benefit of another party that is called the buyer, in this case the foreign investor.

With respect to this case, as we are going to explain ahead, a definitive purchase does not take place, or that one in which the sale price is given and the developer or seller, according to the case, gives a property. What it does take place is an obligation to give this real estate property in a certain time, and the buyer must pay a difference of the price at that time.

Generally, this contract modality takes control of a deposit that in our Law it is named as signal or earnest (“arras”), and must in principle establish obligations for both parties. It is what we recommend to the foreign investors; that is to say, to demand that the promise of sale is not only for the investor to buy the property, but for the seller or developer to sell or to give, according to the case (the houses in pre-construction will have to be constructed to be given) the promised or offered goods in the promise.

Being clarified this point and starting off to our recommendation to demand bilateral promises (those in that both parties must conduct the operation) it is left the question about this promise in this contract, if it constitutes a true business, which takes us to the following mistaken criterion.

III. - THE OPTION TO PURCHASE IS NOT A COMPLETE TRANSACTION AND, THEREFORE, IT DOES NOT HAVE A CLOSING.

This is a misconception that has been extended by the practice stimulated by some lawyers who include restrictive clauses (“restricted covenants”) in the writing of the options in the contracts to the transfer of the property rights.

In the matter of already registered rights and finished goods, houses, villas, or apartments this makes sense because everywhere in the world the buyer must pay the price of the sale to have absolute rights on the real estate property. However, as far as it deals with rights that are based on properties to be built, whose object is a blueprint, that is to say, the pre-construction market, can we come up with the same logic taking into account that the goods must be previously built? This is the story of the hen and the egg, or the egg and the hen. In first term, the buyer seems not to have a way out because he would not be a proprietor of the goods until he pays, but it is the case that to settle the sale price in principle there must be a real estate property that constitutes an object of a selling and buying operation. So that in our opinion the investor must firstly demand that the builder or developer has to commit himself/herself to finish the goods that are the object of the real estate property so that its acquisition can be delayed or the operation is closed at that moment.

This it is a complex subject, but our message related to this topic is simple. In our Law, the union of two people to decide the purchase of goods it is a true closing of the transaction in the sense that the buyer acquires a special right on those goods although he/she has not paid, at least in principle (there are exceptions like the clauses that exist to which we have previously called as “restricted covenants”), and therefore, the buyer can demand to the seller the completion of the goods or the delivery or execution sometimes of the definitive contract only with the signature of a promise of sale.

The ideal scenario is that your lawyer advises you on the content of the promise of transaction (buying and selling) being essential in order to write the following clauses in benefit of the investor: a) a final price without variation, especially in pre-construction; b) a delivery and date to sign the definitive contract, or at least a calendar of payment with dates of building; and c) in principle, the acceptance that the promise - if it is for both parties- will be subjected to what it is established in the Dominican Civil Code (Código Civil Dominicano).

IV. - OPTIONS AGAINST THE BREACH OF CONTRACT BY THE DEVELOPER.

Another one of the frequent questions and also a source of great confusions is the completion of the option contract of purchasing in the face of a breach of contract on the part of the builder or developer in the conditions of the promise of sale. This happens in a collapse of the project that prevents to finish or to build the goods object of the promise; that is to say, a villa, town home, or apartment.

Here we are before a classic case of possible scenarios: a) legal proceeding on a registered land; b) rescind the contract by mutual consent with the builder or developer; c) establishment of measures that prevent to the builder or developer to sell the land on which would be constructed the real estate property, villa, apartment, or house.

Let us begin with option (b) for being the easiest to explain. In an ideal system, it is recommended to proceed in revoking the transaction (buying and selling) contract, in order to get the return of the paid sums in advance and to negotiate a penalty by the resulting damage of the loss of possible banking interests suffered by you as an investor. However, the problem appears when the transaction (buying and selling) has been made with the sums paid in advance not as a payment of the price of transaction (buying and selling) but as “arras” or signal (“earnest deposit”). In this case and except for restrictions in the contract, the one who has received the signal or deposit as earnest will be forced to give back the double of the sums. This is one of the matters that are preferable to negotiate with the developers before the signature of the promise.

As far as options (a) and (c), we want to unite them for the aims to offer our ideas and recommendations. In the first place, the purpose is in both cases of trying to prevent the transfer of land or lot that would serve as the basis of the construction. In that case, when a legal proceeding is opened or a civil lawsuit begins, the first thing that we do, after beginning the lawsuit of course, it is to take an act before the Recorder of Titles (Registrador de Títulos) in order to restrain the possible sale of the real estate property and a fraud to the rights of the investors. This means that if we prevent the sale of the real estate property, we would be allowing that the buyer keeps his/her proportional rights on the real estate property; proportional because you have only paid (“earnest deposit”) a part of the price. This instalment does not mean that you can claim absolute rights on the real estate property, but to legally act against the development company, since you are deserving or has rights on all of the property to recover the part that you paid for or deposited for the sale of the real estate property.[1]

In summary, you have options to protect yourself from the breach of contract by the developer/seller in the promise of sale. The Dominican law has a very advanced system. However, keep in mind that the ideal is to avoid the legal processes, since the courts worldwide operate with slowness.

V. - TO INCORPORATE OR NOT TO INCORPORATE ABROAD OR IN THE DOMINICAN REPUBLIC.

We have covered elsewhere in our website the subject of the incorporation of companies (www.dr-realestateinvestment.com.do/dr_investor.html), and the fact that in our opinion they continue to be the best option in order to protect that money that so hard has been earned by you and that you try to invest in the Dominican Republic. So we will concentrate ourselves in the steps necessary to incorporate a company in our country first and abroad in a second term.

In our mission as lawyers, and in our vision as a law firm, the idea of being a little irreverent is assumed, trying to look for ways that although they have already been walked (we do not want to reinvent the wheel) are for a greater benefit to our clients; the game is a little like that of an anti-guru. In effect, in our country, we have found the recommendation of some lawyers and law firms -some of them with good prestige- that advise without no type of doubt as a first option the constitution of a Dominican company in order to buy real estate property. We feel aversion towards that advice due to the difficulty in constituting a company in the Dominican Republic.

The incorporation of a Dominican company requires by law the participation of at least seven (7) shareholders. These shareholders may not have an equal participation, being some of them practically “nomines” or “partners” who only participate in the company to complete the legal quorum. However, this supposes a tremendous degree of difficulty for you, foreign investor, who are buying your second home or who simply want to acquire goods to sell and do not want to be bound to other shareholders. In some cases, these companies already are constituted (“shelf companies”), but this supposes at least the transfer of stocks and change of the directors, which has to be registered in the Registry of Companies (Registro de Sociedades) by the Law of Mercantile Registry (Ley de Registro Mercantil), and the new shareholders must as well be registered in the General Directorate of Internal Taxes (Dirección General de Impuestos Internos) (DGII) (“Internal Revenue Service” –IRS- in the United States). In synthesis, a true setback and an inconceivable obstacle for an investor mainly specialized in the area of real estate.

Once that this decision has been surpassed about submitting oneself to the joint control of other people whom have nothing to do with the purchase of one’s property, but that they would be used simply to fulfil the Dominican law, we are faced with the true bureaucratic proceeding that allows the incorporation of a company in the Dominican Republic.

The following steps have been baptized as a critical route for the incorporation of a company in the Dominican Republic:

1) Availability and Registry of Commercial Names. This is the preliminary registry, which allows to know if a chosen corporative name for constituting a company is free to be used. This proceeding, made with ease in almost all Central America and the Caribbean, takes at least three days.
2) Elaboration of the social articles of incorporation. Once we have the name available, a project of articles of incorporation is put under the consideration of the members. Like in the rest of the world, these articles of incorporation can be standardized, and they can be submitted according to the general practice. Nevertheless, in our country the partners sign it, as well as the list of subscribers or shareholders with their participation in the company; this is, the number of stocks that they will have in the company.
3) Payment of taxes on capital.
4) Elaboration, signature and registry of the certified declaration by the Notary Public. This is the document that serves to certify that the shareholders have the capital necessary to constitute the company.
5) Elaboration and signature of the Constituent Assembly.
6) Submitting of the documents in the Chamber of Commerce, “Law of Mercantile Registry”, or registry of companies.
7) Submitting of these documents at the General Directorate of Internal Taxes (Dirección General de Impuestos Internos) (DGII) (Internal Revenue Service - IRS- in the United States).

It is easy to notice the difficulty for a foreign investor who has just a short time to analyze his/her investment, and to see the acquired property, to wait for this type of such a slow process. The only possibility of accelerating the process for a foreign investor is the acquisition of a “shelf” company or previously constituted company. However, in this case, it is necessary to register the changes of shareholders and of the proprietor and this also takes some time to be done; at least seven (7) working days.

Now we are going to compare the incorporation of a company abroad:

1. If the company has been previously founded, the change of shareholders and Board of Directors can be made in a day, and the delivery of the company from the foreign State takes other two or three days, which means that you can have your company in a maximum of seven (7) working days.
2. In case that the client decided to constitute a company with a name of his/her preference, the availability of the name can be had in a maximum of 24 hours, and the incorporation will follow the same process, and you, investor, can have your company in the same previous term, or perhaps in one more day, but always less than the time taken to incorporate a company in the Dominican Republic.
3. The steps to follow would be the following ones: a) To give an address for the Board of Directors and the company, although this can be facilitated by the lawyer; b) To determine the amount of participation of each shareholder in the company; that is to say, if it will be a company of a sole shareholder (100% of the stocks in the name of one person) or, in the case of spouses, if the stocks will be divided on a 50/50 basis between each one of them; c) Finally, it is enough with determining the person who will take the position of Director of the company or if a board or group of people is going to be in charge of the day-to-day working routine of the company. The Directors, for those ones who are not familiar with the handling of societies, are those physical people or companies represented by physical people that control the signature of documents, the payment of accounts and, in short, all the administrative aspects in a company. In our country the companies are controlled by several people. Abroad, especially in the tax havens, such as Belize, British Virgin Islands, Panama, Anguilla, etc., these companies can have up to a single Director for the handling of the corporative subjects in the case of you, investor interested in buying properties in the Dominican Republic, the signature of corresponding contracts, definitive option or as we previously explained.

Surely you will ask about the disadvantages to incorporate a foreign company to buy a real estate property in the Dominican Republic. In effect, two inconveniences or disadvantages exist that, in our opinion, are surmountable: a) the foreign companies require of an annual payment to maintain themselves in good order or “good standing”; and b) the company must be registered in the country for the aims to transfer the property and payment of the property tax.

a) Annual rate. The average annual rate, as well as the wages and expenses of the offices that maintain the registries of your company, oscillates between US$1,200 and US$1,500; these values can be reduced still more depending on factors that are not the object of this article. Nevertheless, if you compare the fact that in our country it is mandatory in our country for the Dominican companies to keep or to submit monthly declarations although they are not operating, to register the company in the social security, and other obligations, you will notice that you have to pay to an Authorized Public Accountant the wages for this work plus the payment of the annual declaration. Consequently, it is more advantageous in my opinion to defer this cost. Up to what moment? This takes us to the second of the disadvantages to incorporate a company in a tax haven.
b) The registry in the country. Your company must be re-addressed in the country to be able to fulfil the diverse tax commitments such as payment of taxes on the property and tax transfer. This proceeding represents for you, intelligent investor, an additional cost. So you will ask: So why to incur in this additional cost? The answer is that being the option to purchase the more frequent document, or the main contract to buy properties in development (pre-construction) it is not convenient to document or to make transparent its operation in the Dominican Republic. It is for this reason that we recommend to defer the moment from registry of your company. Once having an address in the country, your company is subject to formal duties with the General Directorate of Internal Taxes (Dirección General de Impuestos Internos) (DGII) (“Internal Revenue Service” –IRS- in the United States). The formal duties mean reports that will have to make your company on its status; this is so if it is operating or making businesses in the country or not.

VI. - ANOTHER MISCONCEPTION: SIGNING OF DOCUMENTS ABROAD.

One of the most common practices in the modern world is the signing of documents anywhere in the planet to make them valid in a certain country. It is frequent nowadays to be sleeping whereas their buyers or sellers are abroad discussing and signing documents related to the purchase and sale of properties or products.

This world-wide practice has in the Dominican Republic an important limitation: our country is not a signatory State to the convention of apostilles; agreement that allows to the consulates or diverse offices to guarantee the signature of documents when these are signed abroad. This generates a tremendous confusion among most of the foreign investors. How do you proceed then?

Firstly, you will have to understand that -although in our country there is a law that protects the digital signature of documents- this legislation is not still so well recognized in practice. Consequently, you will have in principle to follow the tedious consular proceeding when you want to validate the signing of documents that will be executed or will be valid in the country. This is very important because if you, intelligent investor, have to take your case before the courts it is not convenient for you to have documents of purchase of your real estate property, apartment or house, that it is not properly certified and executed with the validity required by the Dominican laws. And which are those requirements of validity? Simply it is one, and it is that the document that serves as a prove is legally signed by the person against who you want to make it valid. This is what it is known as prove requirement. This means that your contract can be accepted, but if the signature of the seller (promotional agent or developer) in this case is under debate you will have a risk on your investment, because the operation could be rejected by the Dominican judicial system.

Secondly, and to follow with our recommendations, you must make sure to guarantee the signature of documents proceeding with their legalization, at least in principle by a Notary Public of your State or country of origin. Do not trust the apostille system of documents because not all the Dominican instances, offices or courts will accept them as valid. Once obtained this legalization, the most common accepted practice according to consular laws that control the consular and diplomatic offices abroad is the one to have the Dominican Consul to certify the signature of this Notary Public through the confirmation that has to be made by an office of your State in favor of this Notary Public authorizing him/her to sign valid documents, as a general rule the secretary of your county (County Clerk).

Finally, thirdly, if you were to proceed to the digital signature of documents you must make sure that the same ones (the companies of the developer and the buyer) are in encrypted documents or programs that do not allow their modification and can soon prove in the Dominican courts with ease the authenticity of those documents. This is so for the improbable case of a legal action against the seller or developer in the case of real estate in pre-construction.

VII. - THE PAYMENT OF TRANSFER AND PROPERTY TAXES.

We have already said that our country has experienced strong changes in the structure of taxes and the amounts to pay or taxable rates. Within those reforms, the most recent affects -but in a positive sense- the transfer tax of real estate property.

The transfer of property is a topic of confusion for certain investors, mainly those of an American origin. The source of this confusion is the poor quality of information received, and in addition, the fact that both systems of registry of the property differ.

The basic differences, continuing with the American market (probably the greatest investor in the matter of houses in pre-construction) are in the tax basis, that is, the amount to be calculated on the payment of taxes and in the system of registry.

Our system is not based on a chain of acquirers, but in a true registry and title issuance where it matters little who was the last acquirer. The registry has a list or information mainly on that which can affect the transfer, sales transfer or getting the certificate of the title.

The buyer has, then, to get a certificate of title that is issued through the Registry of Titles of the place where the real estate property is located. To such aims a definitive contract of transaction (selling and buying) with the value of transfer is due to be registered. This value is the one that creates the greatest confusions to the investor.

Our tax system offers in many cases a true advantage to the national or international investor. This is the one that -although it does not allow it specifically- admits that the value for the payment of the tax of transfer is the value registered by them (the investors), appraised by themselves (the investors) for the payment of the tax to the property, today so much changed and with so many names that we do not know how to really call it, but that in summary, It would be taxed on the Assets of appraised value the companies and Tax on the Real Estate Property (Impuesto a la Propiedad Inmobiliaria -IPI-) for the physical people.

This tax is paid on the basis of the value of appraisal of the real estate property that -as we said- represents certain type of advantage because it can be (and thus it happens in many cases) that the value of transaction of the real estate property is greater than the value of appraisal of the real estate property and as an investor you take the advantage of this reduction in the payment of taxes. The way of taking advantage of this advantage supposes experience and practical knowledge, so it is the reason why you are advised to contract the services of a good accountant or an experienced lawyer.

The tax to the property for the investors who follow our gold advice to protect their real estate properties through the incorporation of national or foreign commercial companies is called Tax on the Assets (Impuestos sobre los Activos), and it implies to maintain the company in order regarding to its accounting or financial registries, this is, expenses and income. The aid of an accountant to benefit from the few advantages that grant the tax laws and norms is essential in our opinion.

VIII. - MAINTENANCE OF COMPANIES.

We have insisted on synergy, proactivity and directionality, and in the coordination of two disciplines like the accountant and the lawyer so that you can leverage on the advantages (the very little advantages) that you could receive from the Dominican tax system. One of the reasons in our opinion that it is in the limits of stubbornness, is that -after the changes in the tax legislation- the commercial companies, which have not escaped to those changes, must be kept in good order and with their registries of accounting operations fit to the norms of the General Directorate of Internal Taxes (Dirección General de Impuestos Internos) (DGII) (“Internal Revenue Service” –IRS- in the United States).

Why does this topic of the maintenance of companies create so much confusion? The reason is in the routine. In the past one got used to presenting the declarations of income tax of companies that were created to protect real estate property as companies without operations. This practice supposed that the company hid part of its real tax situation, such as income and expenses.

In the last change introduced to the system of tax payment to the property settled down that the companies reported without operations, this is without taxes to pay on the income (Impuesto Sobre la Renta (ISR) -Income Tax in the United States-) are forced to pay at least 1% on its assets like a minimum payment.

The direct consequence is that you must: a) make sure that your real estate property appears registered correctly in the accounting registries of your company; b) that in principle you can report the greatest amount of real expenses of the company, in special those that can be subject of the total tax deduction to be paid; and c) guarantee and indeed verify that the tax is paid on the real estate property so that it can benefit from the possible reduction of the income tax, or the revenue earned.

We recommend that you get legal advice, because we have not dealt with this subject here with all its depth, but –moreover- it is good that you, intelligent investor, get aware of what the laws have changed, and nowadays you will take advantage of, perhaps, we do not guarantee it, more of the order than of the lack of control in the registries of the necessary operations for the maintenance of your property. Do not be satisfied with a routine answer, and you will surely find routes to get the greatest benefit from your money and your main assets: the real estate property, your second home, or your investment.

In another article that will count with the collaboration of one of our partners, we will approach the topic of the Dominican residence for investors and the opening and handling of banking accounts.

LEGAL DISCLAIMER: The present document and its opinions do not constitute a definitive legal advice. The opinions that contain this article are based on the experience of the author, and the fact of wisely having made all the diligences necessary to obtain the legal data that it contains making sure that this information corresponds with the reality of the market and, by all means, comply with the laws. If you wish greater protection, we always advise you to contract the services of a lawyer, so that you may prefer our law firm or another legal adviser.
[1] Some conditions to establish a lawsuit about real estate properties when it deals of future developments are found in the new law of lands, but we don’t refer to them because they are not the object of this article.

New Legislation for Pensioniers and Revenue Earners

2007-09-06T11:37:00.000-04:00

Web page:
http://www.dgii.gov.do/legislacion/pdf/leyes/Ley171-07.pdf

Translator’s Disclaimer: This translation is just intended for the purpose of giving general information about this legal document. It is not intended to be used in the courtrooms or in any legal matter.

Law No. 171-07 on Special Incentives for the Pensioners and Revenue Earners[1] of Foreign Source (sobre Incentivos Especiales a los Pensionados y Rentistas de Fuente Extranjera).

El Congreso Nacional (The National Congress)
In the Name of the Republic

Law No. 171-07.

CONSIDERING: That Law No. 16-95 on Foreign Investment (de Inversión Extranjera), of November 20th, 1995, establishes the principle of the national treatment inspired in the necessity that the investors, both foreigner ones as well as national ones, might have similar rights and duties in the matter of investment;

CONSIDERING: That the role that has to be played by the government in order to facilitate the flow of investments towards the country makes it necessary to implement a joint strategy of the public institutions for the execution of coherent actions oriented to the promotion of those investments, optimizing the efforts that had been made and their competitive advantages;

CONSIDERING: That the Dominican State recognizes that the investments in currency or capitals from the foreign countries contribute to the collective development and well-being of the country through the dynamism that it is generated in the economic and productive national activity;

CONSIDERING: That the Dominican Republic has natural, cultural, technological, and human resources that are enough in order to launch itself as a suitable place for the pensioners and revenue earners[2] (rentistas) interested in the country as a retirement and jubilation destiny;

CONSIDERING: That the countries of Central America and the Caribbean region have developed this program in their territories with highly satisfactory results.

SEEN: Law No. 14-93, of August 26th, 1993, on Customs Duty of the Dominican Republic (sobre Arancel de Aduanas de la República Dominicana) (whereof the tax payment for home appliances and personal goods are exempted);

SEEN: Law No. 168, of May 27th, 1967, on Partial Tax Exemption of Motor Vehicles (sobre Exoneración Parcial de Impuestos de Vehículos de Motor), amended by Law No. 146-00, on Customs Duty Reform and Tax Compensation (sobre Reforma Arancelaria y Compensación Fiscal);

SEEN: Law No. 16-95, of November 20th, 1995, on Foreign Investment (sobre Inversión Extranjera);

SEEN: Law No. 11-92, of May 16th, 1992, which establishes the Código Tributario (Taxes Code), and its amendments;

SEEN: Decree No. 950-01, of September 20th, 2001, which creates the Residency Permit due to Investment (Permiso de Residencia a través de la Inversión), establishing the Regulations for Implementing Articles 5, 6 and 7 of the Law No. 95, of Immigration (de Migración), of April 24th, 1939;

SEEN: Decree No. 756-03, of August 12th, 2003, which gives special incentives to the pensioners or retired people of a foreign source.

HAS GIVEN THE FOLLOWING LAW:

TITLE I.
DEFINITIONS, OBJECT, AND CONDITIONS.

ARTICLE 1.- For the purpose of implementing the present law, the following definitions are given:

1.- Pensioners or Retired People: Foreign or Dominican people who are beneficiaries of a monthly income from a pension or retirement plan of a government, official organism, or private company of foreign origin, who have stated their intention of changing their permanent residency to this country, and to receive their pension or retirement benefits in the Dominican Republic;

1.- Pension: Rents of foreign origin coming from income that it is utility or benefit, that renders a good or activity, and all of the benefits; utilities that are generated or earned of materialized patrimony, not justified by the taxpayer, whatsoever it is its nature, origin, or denomination;

1.- Revenue Earners (Rentistas): Those people who enjoy stable and permanent rents, whose main capital is generated or originated from a foreign country due to any of the following reasons:

1.- Deposits and/or investments in established banks abroad;

1.- Money transfers coming from banking or financial institutions abroad;

1.- Investments in established companies abroad;

1.- Money transfers generated from real estate property[3];

1.- Interests received out of titles issued in foreign currency generated abroad, that are located in financial institutions authorized legally for operating in the Dominican Republic;

1.- Benefits obtained by investments in titles issued in foreign and/or national currency, with the State or its institutions, whenever the capital has been generated abroad, and that a currency exchange has been done in any of the financial institutions of this country;

1.- Interest, rents or dividends from real estate and non-real estate investments done in the Dominican Republic, whose principal capital has been generated or earned mainly abroad.

ARTICLE 2.- Main Objective of the Law. The pensioners as well as the revenue earners (rentistas) who comply with the requirements and conditions established through the present law, will be able to get the same benefits and exemptions given to the foreign investors and resident citizens abroad, through the following legal dispositions:

1.- Program of Residency due to Investment (Programa de Residencia por Inversión), created through Decree No. 950, of September 20th, 2001, which allows to the foreign investors to obtain the permanent residency in a period of 45 days;

1.- Law No. 14-93, of August 26th, 1993, on Customs Duty of the Dominican Republic (sobre Arancel de Aduanas de la República Dominicana), which gives exemptions to the payment of taxes for home appliances and personal goods;

1.- Law No. 168, of May 27th, 1967, on Partial Tax Exemption of Motor Vehicles (sobre Exoneración Parcial de Impuestos de Vehículos de Motor).

Additionally, the pensioners and revenue earners (rentistas) who get protected under the present law will have the following benefits, according to the conditions and stipulations stated in this law:

1.- Tax exemption on real estate transfers, for the first acquired property.

1.- Tax exemption for 50% on mortgages, when the creditors are financial institutions duly regulated by the Monetary and Financial Law (Ley Monetaria y Financiera);

1.- Tax exemption for 50% on the real estate property, whenever this applies;

1.- Tax exemptions that burden the payment of dividends and interests, generated in the country or abroad;

1.- Tax exemption for 50% on the Gain of Capital, whenever the revenue earner (rentista) is the major stockholder of the company that it is subjected to the payment of this tax, and that such company is not endeavored in commercial or industrial activities.

ARTICLE 3.- Minimum Amount of the Pension or Monthly Revenue. For the purpose of acquiring the preferential regime established in the present law, the pensioner will have to receive a monthly income of no less than one thousand, five hundred dollars, United States’ currency (US$1,500.00); and the revenue earner (rentista) will have to receive a monthly sum of two thousand U. S. dollars (US$2,000.00), or its equivalent in national currency.

PARAGRAPH.- For each dependant defined in Article 5 of the present law, who applies jointly with the main applicant, it will be required an additional monthly income of the sum of two hundred and fifty U.S. dollars (US$250.00).

ARTICLE 4.- In order to qualify for this program, the main applicant will not be required to have a minimum age, simply he/she will have to comply with the requirements of the present law.

TITLE II.
OF THE RESIDENCY PERMIT DUE TO INVESTMENT.

ARTICLE 5.- Beneficiaries. Under the protection of the dispositions of the present law, the pensioners and revenue earners[4] (rentistas) defined in Article 1 of the present law will be able to apply for the Program of Residency Permit due to Investment (Programa de Permiso de Residencia por Inversión); as well as his/her spouse and single sons and daughters under the age of 18 years-old, disabled ones who are of age, or the ones of age who can prove that they are studying at an university, and that they depend financially on the main applicant. In the same way, the minors under guardianship of the titleholder or his/her spouse can also be included when they are under a fully recognizable guardianship.

ARTICLE 6.- Application Procedure. The foreigners who acquire the category of resident pensioners and resident revenue earners (rentistas) through the Program of Residency Permit due to Investment (Programa de Permiso de Residencia a través de la Inversión) will have to comply with all the requirements for these purposes at the foreign investment window of the General Directorate of Immigration (Dirección General de Migración).

PARAGRAPH I.- In the case of pensioners, the applicants will have to show a certificate of the government, the official organism or the private company of foreign origin where they rendered their services, duly translated into Spanish by a judicial translator, legalized by the Dominican consular office from the country of origin of the document. Such certificate will have to include the general data of the applicant, the time that he/she stayed on the company, position that he/she held, and the amount of money received as a pension.

PARAGRAPH II.- In the case of revenue earners (rentistas), these ones will have to prove that they enjoy these permanent and stable rents generated or coming from abroad for a period of no less than five years, through a copy of the contract of the revenue duly translated into Spanish by a judicial translator, legalized by the Dominican consular office from the country of origin of the document. At the same time, they will have to show the income’s receipt of the money to the country, through a copy of the check(s) or notice(s) of money transfer from the financial entity(ies) established abroad.

ARTICLE 7.- Once the documents have been deposited at the foreign investment window, the personnel in charge will proceed to verify and to purge the validity of them, according to the established requirements in the present law, and to send them at the shortest time to the Director of Immigration (Director de Migración) for the purpose of approving them. In the positive case, the General Directorate of Immigration (Dirección General de Migración) will issue an approval letter of the application for the Residency Permit due to Investment (Permiso de Residencia a través de la Inversión), whereof will be stated that the application has been satisfactorily accepted, and it is authorized the issuance of a residency card in a minimum period of time of forty-five (45) working days, beginning at the date after receiving the application.

ARTICLE 8.- Renewal of the Residency Permit. After the expiration of one year of validity of the residency permit, the pensioner and/or revenue earner (rentista) will be able to apply for a renewal at the foreign investment window of the General Directorate of Immigration (Dirección General de Migración). For such purposes, the interested party will have to deposit the following documents:

1.- Renewal form of the residency permit for pensioners and/or revenue earners (rentistas).

1.- Copy of identification card.

1.- Certificate of no background files[5] issued by the Prosecuting Attorney’s Office (Procuraduría Fiscal) of the Judicial District (Distrito Judicial) where the applicant belongs or by the National Police (Policía Nacional) of the Dominican Republic.

1.- Expired Residency Card.

PARAGRAPH I.- The pensioners and revenue earners (rentistas) will have to deposit at the foreign investment window of the General Directorate of Immigration (Dirección General de Migración) the documents that prove that they have received their pensions or revenues in the national territory for the same period of time that they received the previous residency permit.

PARAGRAPH II.- Once that the renewal application has been approved, the General Directorate of Immigration (Dirección General de Migración) will issue a residency card in a minimum period of time of eight (8) working days, beginning at the date of the application. The residency card will have an expiration period of two (2) years, or the time given by the General Directorate of Immigration (Dirección General de Migración), and it could be renewed at the time of expiration.

ARTICLE 9.- Loss of the Residency Card. In the case of loss of the residency card, the interested party will have to fill up and show at the foreign investment window of the General Directorate of Immigration (Dirección General de Migración) the application form due to loss, with two (2) photos, size of 2 inches by 2 inches, and loss certificate issued by the National Police (Policía Nacional).

ARTICLE 10.- Tax Exemption for the Pension or Revenue Received. The sums of money declared as income in order to enjoy the benefits of this law will be exempted from the Income Tax (Impuestos Sobre la Renta) (Article 271 of the Taxes Code (Código Tributario) is amended).

TITLE III.

ON THE BENEFITS OF THE LAW NO. 14-93, WHICH GIVES AN EXEMPTION FROM THE PAYMENT OF TAXES FOR HOME APPLIANCES AND PERSONAL GOODS OF THE FOREIGNERS WHO COME TO THE DOMINICAN REPUBLIC TO LIVE PERMANENTLY.

ARTICLE 11.- The pensioners and revenue earners (rentistas) whose residency applications have been approved according to the dispositions of the present law will have the benefit of the exemption of the customs duty for the imports of personal and home appliances as well as equipment used in their occupations or professions, according to what it is established by the Law No. 14-93, which gives an exemption from the payment of taxes for home appliances and personal goods to the foreigners that come to the country to live permanently. In addition to the standard requirements and formalities of the General Directorate of Customs (Dirección General de Aduanas) for the application of the Law No. 14-93, the pensioners and revenue earners (rentistas) will have to include in their application a copy of their Permanent Residency Card (Tarjeta de Residencia Definitiva).

PARAGRAPH I.- The pensioners and revenue earners (rentistas) whose applications of Residency due to Investment (Residencia por Inversión) have been appropriately approved by the General Directorate of Immigration (Dirección General de Migración), which are in the waiting process for the issuance of the residency card will be able to begin the procedures of applying for the benefits of the Law 14-93 before the General Directorate of Customs (Dirección General de Aduanas). For these purposes, it will be necessary to show a certified copy of the Approval Letter of the Residency due to Investment (Carta de Aprobación de la Residencia por Inversión), issued by the General Director of Immigration (Director General de Migración).

This document will have to be filed with all the standard requirements of the General Directorate of Customs (Dirección General de Aduanas) for the enjoyment of the benefits of the Law 14-93.

PARAGRAPH II.- The dispositions of the present article will benefit only and exclusively the pensioners and revenue earners (rentistas) who have a Residency due to Investment (Residencia por Inversión) application form appropriately approved by the General Directorate of Immigration (Dirección General de Migración). Therefore, the benefits stated on the Law No. 14-93 will be applied neither to the spouses nor to the dependants of the applicant.

PARAGRAPH III.- All of the exempted goods like home appliances will not be able to be taken away without previously paying for the applicable attributes[6] to the Dominican State.

TITLE IV.
ON THE BENEFITS OF THE LAW NO. 168, ON PARTIAL TAX EXEMPTION OF MOTOR VEHICLES, MODIFIED BY THE LAW NO. 146-00, ON CUSTOMS DUTY REFORM AND TAX COMPENSATION.

ARTICLE 12.- The pensioners and revenue earners (rentistas), and their respective spouses[7], whose permanent residency applications have been approved according to the dispositions of the present law, will benefit from the Regime of Partial Tax Exemption of Motor Vehicles (Régimen de Exoneración Parcial de Impuestos de Vehículos de Motor), established by the Law No. 168, of May 24th, 1967, amended by the Law No. 146-00, on Customs Duty Reform and Tax Compensation (Reforma Arancelaria y Compensación Fiscal).

In addition to the standard requirements and formalities of the General Directorate of Customs (Dirección General de Aduanas) for implementing the Regime of Partial Tax Exemption of Motor Vehicles (Régimen de Exoneración Parcial de Impuestos de Vehículos de Motor), the interested party will have to include in his/her application form a copy of his/her permanent residency card.

PARAGRAPH I.- The pensioners and revenue earners (rentistas), and their respective spouses, whose applications of Residency due to Investment (Residencia por Inversión) have been appropriately approved by the General Directorate of Immigration (Dirección General de Migración), which are in the waiting process of the issuance of the residency card will be able to begin the procedures of applying for the benefits of the Law 168 before the General Directorate of Customs (Dirección General de Aduanas). For these purposes, it will be necessary to show a certified copy of the Approval Letter of the Residency due to Investment (Carta de Aprobación de la Residencia por Inversión), issued by the General Director of Immigration (Director General de Migración). This document will have to be filed with all the standard requirements of the General Directorate of Customs (Dirección General de Aduanas) for the enjoyment of the benefits of the Law 168, amended by the Law No. 146-00, on Customs Duty Reform and Tax Compensation (Reforma Arancelaria y Compensación Fiscal), which establishes the Partial Tax Exemption of Motor Vehicles (Exoneración Parcial de Impuestos de Vehículos de Motor).

PARAGRAPH II.- The motor vehicles that enjoy the benefits of the present disposition will not be able neither to be sold nor transferred to a third party in a period of time of five (5) years, beginning on the date of their arrival to the country, except in the case that the difference of the total rights and applicable taxes are paid.

PARAGRAPH III. For the purpose of implementing the present disposition it will be understood as motor vehicles:

Automobile: It is allowed to the applicant to import one (1) automobile under the benefits of this program; even though, the vehicles which are acquired in the local market will be exempted from the payment of the Transfer Tax to Industrialized Goods and Services (Impuesto de Transferencia de Bienes Industrializados y Servicios) (ITBIS), as well as the Selective Tax on Consumption (Impuesto Selectivo al Consumo[8]).

TITLE V.
ON THE EXEMPTION FROM THE PAYMENT OF TAXES ON TRANSFER, MORTGAGES, TAX ON THE REAL ESTATE PROPERTY, AND GAIN OF CAPITAL.

ARTICLE 13.- The pensioners and revenue earners (rentistas), and their respective spouses, whose permanent residency applications have been approved according to the dispositions of the present law, will benefit from the exemption from the payment of taxes on real estate operations for the first property that they acquire. At the same time, and while their Residency Permit due to Investment (Permiso de Residencia por Inversión) is valid, they will benefit of the exemption of the 50% of the tax on documents and Real Estate Property Tax (Impuesto sobre la Propiedad Inmobiliaria). At the same time, they will be exempted from the payment of the 50% of the mortgages taxes. Therefore, for the beneficiaries of this law and while their Residency Permit due to Investment (Permiso de Residencia por Inversión) is valid the following taxes are modified in the established proportions:

1.- Law No. 18-88, of January 19th, 1988, and its amendments;

1.- Law No. 145-02, of September 9th, 2002, which amends the Law No. 18-88;

1.- Law No. 3341, of July 13th, 1952, on Real Estate Operations (sobre Operaciones Inmobiliarias), and its amendments, including the Law No. 288-04, of September 28th, 2004;

1.- Law No. 33-91, of November 8th, 1991;

1.- Law No. 80-99, of July 29th, on Documents.

ARTICLE 14.- All of the real estate properties acquired by the pensioners and revenue earners (rentistas), under the protection of this law, at the moment of their sale to a third party, will be exempted from the payment of the 50% of the tax on gain of capital.

TITLE VI.
POSSIBILITY OF DOING REMUNERATED WORKS IN THE COUNTRY.

ARTICLE 15.- The pensioners and revenue earners (rentistas) protected under this law will be able to endeavor themselves in remunerated works. Even though, the wages earned for that activity will be subjected to the payment of the applicable taxes to the Dominican State, like any other national employee, according to the principle of equal treatment established on the Law No. 16-95, of November 20th, 1995, on Foreign Investment (sobre Inversión Extranjera).

TITLE VII.
GENERAL DISPOSITIONS.

ARTICLE 16.- The benefits of this law protect in an equal way the Dominican citizens who are persioners or retired people, by governmental institutions of other countries, and for those ones who do not have that character can prove that they receive rents or revenues according to the terms that Article 1 of the present law establishes, and who have lived permanently abroad no less than ten (10) years.

PARAGRAPH.- The foreign residents in this country who acquire the condition of pensioners and/or revenue earners (rentistas) will be able to obtain the benefits of this law.

ARTICLE 17.- In the case of death of the main applicant, the acquired rights by him/her as beneficiary will be adjudicated to the spouse, or by default to any other dependant, defined in Article 5 of this law, whenever these ones comply with the legal requirements that were requested to the main applicant, established on Articles 3 and 6 of this law.

ARTICLE 18.- Sanctions due to Violation of the Present Law. The persons who apply in order to be beneficiaries of this law and who on a conscious manner provide false information in order to benefit themselves of the concessions that this law gives will be liable of sanctions, and they will have to pay a fine of an equivalent sum of the double amount of applicable taxes which they have to pay to the Dominican tax authorities.

ARTICLE 19.- The present law annuls any other disposition that might be contrary to the purpose of its implementation.

GIVEN in the Meeting Hall of the Deputies’ Chamber (Sala de Sesiones de la Cámara de Diputados), Palace of the National Congress (Palacio del Congreso Nacional), in Santo Domingo de Guzmán, Distrito Nacional, capital city of the Dominican Republic, at the 10th day of the month of April of the year two thousand and seven (2007); at the 164th year of the Independence, and the 144th year of the Restoration (Restauración).

Julio César Valentín Jiminián
President

María Cleofia Sánchez Lora
Secretary

Teodoro Ursino Reyes
Secretary

GIVEN in the Meeting Hall of the Senate (Sala de Sesiones del Senado), Palace of the National Congress (Palacio del Congreso Nacional), in Santo Domingo de Guzmán, Distrito Nacional, capital city of the Dominican Republic, at the 19th day of the month of June of the year two thousand and seven (2007); at the 164th year of the Independence, and the 144th year of the Restoration (Restauración).

Reinaldo Pared Pérez
President

Amarilis Santana Cedano
Secretary

Luis René Canaán Rojas
Ad-Hoc Secretary

LEONEL FERNÁNDEZ
President of the Dominican Republic

In the exercise of the attributions that confer me the Article 55 of the Constitution of the Republic.

I PROMULGATE the present Law, and I give the order to publish it in the Official Gazette for its knowledge and enactment.

GIVEN in Santo Domingo de Guzmán, Distrito Nacional, capital city of the Dominican Republic, at the 13th day of the month of July of the year two thousand and seven (2007); at the 164th year of the Independence, and the 144th year of the Restoration (Restauración).

LEONEL FERNÁNDEZ.
[1] Translator’s Note: A bondholder is a specific case of revenue earner.
[2] Translator’s Note: There is a mistake on the original text since the Word “and” is missing.
[3] Translator’s Note: The Word “abroad” is missing in the original. According to the context, this Law is dealing with income generated from a foreign source.
[4] Translator’s Note: There is no consistency in the original text when it refers to the pensioners and revenue earners. Sometimes they are called “pensioners and/or revenue earners”, which is the correct way of referring to them. Most of the time, they are called “pensioners and revenue earners”.
[5] Translator’s Note: Criminal Records.
[6] Translator’s Note: Instead of “attributes”, this Law could be speaking of “tributos” (taxes) in the original text.
[7] Translator’s Note: This Law should also mention the “dependants” of the main applicant in some articles like in this one.
[8] Translator’s Note: The original text has a mistake when naming this tax. It wrongly calls it “Impuesto sobre el Selectivo al Consumo”.

WORLDWIDE FALL OF MARKET

2007-09-06T11:34:00.000-04:00

Sources: AFP, BBC World, and El Nacional.

Web page: http://elnacional.com.do/article.aspx?id=24197

Date: August 9th, 2007.

World-wide fall of the markets does not affect Latin America

Photo:
A stockbroker appears next to the screen of the stock-market of Tokyo, where today the quotations of the security companies appear in loss. The Nikkei Index fell by second consecutive day. (AFP)

MADRID (By BBC World). - The recent volatility of the world-wide markets triggered to a great extent by the crisis of the real estate and credit sector of the United States has put on the debate table a financial instrument that as well as in that country as in the United Kingdom has been presented like a solution for the less well off.

One is the subprime mortgages, or credits of high risk that are granted to people with a doubtful credit record with a higher interest rate and more demanding clauses of cancellation than the conventional ones,

Sometimes the loan can go up to a 120% from the value of the house, and the income of the credit beneficiary put in serious doubts their capacity of fulfilment of the monthly payments.

A fall in the prices of houses in the United States and an increase in the unpaid credits have been a matter of concern in Wall Street and the economic authorities of that country.

Ten days ago, the Chairman of the Federal Reserve, Ben Bernanke, speaking before the Congress, noticed that the crisis in the market of these credits of second order could carry costs of up to US$100,000 millions.

Although the Latin American economies suffer of several evils, apparently are free from this problem, simply because it is an unknown financial instrument in its markets.

“The real estate market of Mexico is very small. It has just been developing during the last five or six years, but still with the traditional mortgages”, said to BBC World from Mexico DF, Luis Enrique Mercado, director of the specialized newspaper El Economista.

In Buenos Aires, Ricardo Delgado, head economist of the Consultora Ecolatina, agreed that in Argentina the “market of mortgage credit is very small”.

“The operations of purchase and sale of real estate in general are made to a great extent on cash. It does not have like in the developed countries with very advanced financial systems the possibility of buying a house with a 80% or a 90% of credit”, he explained.

For the Argentine economist, although the Latin American markets can offer financing of high risk for the purchase of automobiles or credit cards, it is almost impossible to see in the short term products similar to subprime ones.

The crisis in the real estate market of the United States of America was the trigger of recent stock-exchange volatility.

“In these countries that are very volatile, with very unstable economies in time, it is very difficult to recreate these instruments and to let them grow in a consistent way”, he says.

“While Argentina has a relation of loans to the private sector on its GIP of 10%, in Brazil it is of 30% and in Italy, to only put a case, it surpasses the 200%”, Delgado exemplifies.

He explains that in such case, when a financial system is only very great (by the scale and the minimization of the risk of these instruments) can be created “what in our slang it is called to deepen the relation of the saving and the investment”.

Freddy Miranda
Translated by Orlando Alcántara

©Periódico El Nacional, Av. San Martin #236
Santo Domingo, Dominican Republic

2007-08-30T10:29:00.000-04:00

Los 8 Mayores Errores de los Inversionistas.

“Los errores comunes se pueden ir sumando. En última instancia, ellos disminuyen el valor de su cartera de inversión. Mi meta es aumentar la consciencia de los inversionistas sobre las trampas comunes y ayudarlos a proteger sus valiosos recursos económicos.”

¿Es Usted un inversionista auto-dirigido? Si es así, ¿está Usted completamente satisfecho con el actual desempeño de sus inversiones? O, ¿ha Usted batallado para alcanzar consistentemente sus metas de inversión a través del tiempo?

Existe la probabilidad de que Usted sienta que algún nivel de mejoría puede ser logrado. Todos nosotros típicamente buscamos el mismo objetivo general: maximizar nuestros retornos de inversión mientras, al mismo tiempo, nos protegemos del riesgo de pérdidas. Sin embargo, para muchos se está convirtiendo mucho más difícil alcanzar este objetivo, ya que ellos están inundados con más información y se enfrentan a más alternativas de inversión. En última instancia, el panorama se ha vuelto más complejo.

Afortunadamente, muchos principios fundamentales de la inversión han permanecido sin cambios. A partir de más de 30 años en el manejo de dinero de muchas instituciones e individuos prestigiosos, he aprendido algunas lecciones importantes sobre lo que es necesario para lograr el éxito –y sobre lo que puede llevar al fracaso.

Mediante esta guía, mi objetivo es ayudar a los inversionistas a darse cuenta de estos errores comunes –y proveer una sabia visión sobre cómo evitarlos. Al hacer esto, estoy confiado en que la guía puede ayudarle a aumentar sus probabilidades de alcanzar sus metas de inversión.

Kenneth L. Fisher.
Director Ejecutivo (Chief Executive Officer) (CEO) y Director General de Inversión (Chief Investment Officer), Fisher Investments (Inversiones Fisher).
Columnista sobre Estrategia de Cartera de Inversión en la Revista Forbes.

Error No. 1: Subestimar el horizonte de tiempo de tus recursos económicos.

¿Cuánto tiempo Usted piensa que vivirá?
¿Y qué sobre su esposo/a?
La mayoría de la gente son exageradamente demasiado pesimistas al estimar la longitud de sus vidas, un problema que ocurre al planear su futuro financiero.

…Y cómo evitarlo.

Es un hecho simple. Los grandes avances y descubrimientos en la Medicina ocurren tan a menudo, y aún así nosotros frecuentemente ni siquiera oímos hablar acerca de ellos. Así como el progreso ha ocurrido en la efectividad del tratamiento de la enfermedad, la mejoría en la nutrición en general y los mayores estándares de vida, la mayoría de la gente ahora vive por más tiempo del que ellos piensan que vivirán.
Esto significa que hay nuevos y costosos métodos de cuidados de la salud que ahora están disponibles para aumentar la extensión de vida del mismo modo que la población envejece, lo cual aumenta los costos del cuidado de la salud y de mayor vida.

Por estas razones, encontramos que la mayoría de la gente estima en un bajo perfil cuando esto tiene que ver con cuánto tiempo ellos vivirán. Como un resultado de esto, muchos fracasan en implementar planes financieros para acomodar sus mayores extensiones de vida. Hoy muchos corren el riesgo de mermar sus fondos mucho antes que sus vidas hayan terminado.

Es importante tener una estrategia financiera sólida, una estrategia que proveerá para su estabilidad financiera y sus necesidades de ingresos a lo largo de su vida entera. La planificación financiera sólida es igualmente importante para aquéllos cuyas metas consisten en aumentar sus recursos económicos de tal manera que ellos puedan legar una herencia a sus seres queridos y los miembros de su familia que les sobrevivan. En cualquier caso, un horizonte de tiempo de expectativa de vida realista es vitalmente importante.

Error No. 2: Alineando incorrectamente los objetivos de inversión y la estrategia de cartera de inversión.

Alineando su estrategia de cartera de inversión con sus objetivos es un factor crítico para determinar el éxito a largo plazo de la inversión. Esto puede sonar obvio, pero muchos inversionistas realmente emplean estrategias que funcionan en contra de sus objetivos.

…Y cómo evitarlo.

“…objetivos de horizonte a corto plazo están a menudo exageradamente expuestos al riesgo…”

Un error común del inversionista es juzgar inadecuadamente el riesgo. Generalmente, a un mayor horizonte de tiempo de los recursos económicos de un inversionista, hay un riesgo mayor que ellos son capaces de asumir. Sin embargo, muchos inversionistas terminan tomando demasiado poco riesgo. Al enfocar sobre la volatilidad a corto plazo en vez del horizonte a largo plazo de sus recursos económicos, los inversionistas se vuelven miopes e inevitablemente ignoran las variadas probabilidades de lograr sus objetivos. Como un resultado de esto, muchos inversionistas no alcanzan sus metas.

Por ejemplo, algunos inversionistas sobrecargan sus carteras de inversión con bonos de la Tesorería de cupones bajos, debido al temor de que las acciones caerán en un plazo corto. Entonces, ellos a menudo apenas generan un retorno que está por encima de la tasa de inflación. Esto reduce las probabilidades de lograr una meta a largo plazo de crecimiento –especialmente si los retiros de fondos son también anticipados.

Por el contrario, aquellos inversionistas con objetivos de horizonte de corto tiempo están a menudo exageradamente expuestos al riesgo, lo cual crea un peligro de los recursos económicos durante un período de corto plazo de volatilidad. Esto puede poner todo su futuro financiero en peligro.

Error No. 3: Confundir las necesidades de ingreso con las necesidades de flujo de efectivo.

El ingreso y el flujo de efectivo no son la misma cosa, aunque muchos inversionistas piensan que lo son. De hecho, los dos diferentes conceptos y las distinciones entre ellos son extremadamente importantes.

…Y cómo evitarlo.

Expuesto con simpleza, el flujo de efectivo es cuánto dinero Usted necesita para los gastos para vivir y otros usos personales del efectivo. El ingreso, por el otro lado, es la cantidad de dividendos e interés ganados por una cartera de inversión que, en el caso de una cuenta sujeta a impuestos, Usted pagará actualmente los impuestos sobre el ingreso o impuestos sobre la renta. Aquí está la diferencia importante:

La manera en que Usted genere ingreso puede tener un efecto tangible en el crecimiento de sus recursos económicos, así como en los impuestos que Usted paga, y ambos impactan su habilidad para conseguir flujos de efectivo.

Es un error pensar que Usted debería conseguir el nivel de flujo de efectivo que necesita solamente de su ingreso y nunca tocar el capital principal. Este es un prejuicio emocional que para muchos simplemente no pueden vencerlo. En vez de esto, su enfoque debería estar en el retorno total después del pago de los impuestos. Por ejemplo, vender acciones para satisfacer necesidades de ingreso pueden permitirle mantenerse completamente en la inversión y crear dividendos “auto-cultivados” al vender valores (securities) selectos.

Cuando son comparados con algunos dividendos, así como con el interés del ingreso fijo, vender acciones puede ofrecer ventajas fiscales o de impuestos, porque la transacción podría ser gravada con impuestos en las ganancias del capital en vez de la tasa marginal del cliente. Cosechar pérdidas también puede ser ventajoso respecto a los impuestos.

Error No. 4: Dejar de ver factores de riesgo no intencionales.

Muchos inversionistas no se dan cuenta que manejar una cartera de inversión diversificada de recursos económicos puede estar cargada con riesgos ocultos. Muy a menudo, encontramos que las carteras de inversión están expuestas exageradamente a ciertos factores de riesgo que nunca fueron apropiadamente reconocidos. No permita que esto le pase a Usted.

…Y cómo evitarlo.

La concentración no intencional produce exceso de riesgo. Esto le expone a mayores fluctuaciones y a la posibilidad de pérdidas aceleradas. Factores como sector, país, moneda, valuaciones y tamaño juegan todos un papel en una cartera de inversión diversificada apropiadamente. Más aún, algunos valores (securities) son altamente correlacionados por otras razones (como movimientos de la tasa de interés o precios de la materia prima).

Por ejemplo, supongamos que a Usted le pertenece una acción japonesa y una acción inglesa. Estas parecen no tener relación, ¿verdad? Sin embargo, ¿ha considerado la fuente de ganancias para cada compañía? ¿Son ambas sensitivas a las fluctuaciones de tasa de interés? Tal vez el desempeño de cada una está vinculado de una forma similar a los movimientos de la moneda.

¡Una concentración demasiado elevada de cualquiera de estos u otros factores puede exponer sus recursos económicos a riesgos que Usted nunca tuvo la intención de asumir!

Error No. 5: Ignorar los mercados de valores (securities) extranjeros.

Contrario a la creencia doméstica popular, los Estados Unidos no es el único país con condiciones favorables de inversión. De hecho, en términos de capitalización de mercado, los Estados Unidos sólo representa menos de la mitad del valor (value) de todas las acciones globales.

Como un resultado del desarrollo y la expansión económicos globales, una multitud de compañías innovadoras y de oportunidades de inversión están disponibles alrededor del mundo.

…Y cómo evitarlo.

Es un error creer que su cartera de inversión está apropiadamente diversificada simplemente porque Usted ha elegido acciones en diferentes sectores. Eso no es suficiente. El retorno de las acciones está parcialmente relacionado con el desempeño económico general y el clima político del país natal. Una economía doméstica decadente hace difícil que muchas compañías localizadas allí prosperen. Sin darle consideración al país y a la región, Usted puede incurrir en riesgos excesivos asociados con hacer negocios en ese país.

Muchos inversionistas promedio sufren del “prejuicio del país natal”, lo cual significa que ellos tienden a invertir sólo en el país en que ellos viven. Por ejemplo, si Usted fuera a comprar acciones diversificadas a través de todos los sectores localizados dentro de los Estados Unidos, el desempeño podría depender más sobre cómo el país se desempeña que en la calidad de las compañías individuales seleccionadas.

La diversificación es una parte clave al construir una cartera de inversión bien edificada que aumentará sus recursos económicos. Invertir en el extranjero ayuda a fortalecer su cartera de inversión al expandir la frontera eficiente. También crea un mayor conjunto de posibilidades para encontrar inversiones valiosas.

Error No. 6: Olvidar la importancia fundamental de la oferta y la demanda.

Los principios fundamentales de la oferta y la demanda de los valores (securities) son fácilmente desapercibidos u obviados. Los analistas y los expertos citan una lista interminable de teorías acerca de qué mecanismos guían los precios de las acciones. Sin embargo, el hecho simple permanece: la oferta y la demanda de los valores (securities) siempre serán la guía fundamental de los precios de las acciones.

…Y cómo evitarlo.

La teoría económica básica establece que la relativa oferta y demanda de bienes en un mercado abierto determinará sus precios. Por ejemplo, manteniendo la oferta igual, la demanda de equipo para esquiar aumenta alrededor de los meses de invierno, y así el precio de los equipos para esquiar aumenta en ese tiempo. En los meses del año cuando la gente esquía menos, la demanda disminuye y los precios bajan. Las acciones no son diferentes: pensamos que es sentido común que sus precios fluctúen basados en la demanda a corto plazo.

La oferta de valores de renta variable (equities) es relativamente fija a corto plazo porque toma tiempo para las compañías crear nuevas ediciones de acciones; por consiguiente, los cambios en la demanda son la causa primaria del movimiento de precio a corto plazo. Sin embargo, a largo plazo, la oferta tiene casi una habilidad infinita para cambiar. Las Ofertas Públicas Iniciales (Initial Public Offerings) (IPOs), las divisiones de acciones, las re-compras de acciones, las fusiones y las adquisiciones se combinan para hacer la oferta el factor dominante en los precios de acciones a través de períodos de tiempo mayores. Entender la relación entre la oferta y la demanda de valores (securities) es vital para elegir entre invertir o no en acciones.

La habilidad de rastrear, analizar y evaluar exactamente este principio fundamental de la teoría económica es vital, desde nuestro punto de vista, para hacer pronósticos exitosos en los mercados, porque esto le permite eliminar ruido sin importancia.

Error No. 7: Hacer apuestas de inversión solamente basándose en información ampliamente conocida.

¿Cuáles fuentes de información utiliza Usted cuando considera hacer una inversión? Con la posible excepción del “consejo práctico caliente” que Usted obtuvo en la cena para invitados, su información probablemente viene de fuentes que están ampliamente disponibles. Ese es un problema.

…Y cómo evitarlo.

“…Usted debe conocer algo que todos los demás desconocen.”

Si es del periódico matutino, de investigación de su corredor o agente de Bolsa de Valores, de comentario en la radio, televisión o el Internet, u otra fuente cualquiera que está disponible al público, todas ellas esencialmente no tienen utilidad.

¿Por qué? Porque los mercados son descontadotes eficientes de toda la información ampliamente conocida. Esto significa que tan pronto una pieza de información se hace disponible con mucha amplitud al público, ésta se refleja en los precios de las acciones de las compañías. Pese a este hecho, muchos inversionistas todavía cometen el error de hacer intercambios comerciales basados en información ampliamente conocida.

Para generar consistentemente retornos en exceso, creemos que Usted debe conocer algo que todos los demás no conocen o interpretar la información ampliamente conocida de un modo diferente y correcto al de la multitud. En otras palabras, Usted debe conocer algo que no está reflejado ya en los precios de las acciones de las compañías. La habilidad para generar este conocimiento requiere de experiencia, investigación y disciplina.

Error No. 8: Experimentar una confianza exagerada en sus habilidades de inversionista.

Al invertir recursos económicos personales, es natural para los inversionistas experimentar mucha emoción mientras ellos observan las subidas y bajadas de los mercados. Después de todo, sus futuros financieros están en juego.

Esta emoción típicamente trae en juego un número grande de prejuicios cognitivos, obnubilando el juicio de los inversionistas y obstaculizando su habilidad de hacer decisiones racionales y objetivas.

…Y cómo evitarlo.

Reconozcámoslo: el cerebro humano no está configurado para invertir. Nuestros antecesores de la Edad de Piedra evolucionaron y sobrevivieron enfocándose en lo que fuera que los ayudara a cazar y colectar alimento. Sus prejuicios le dieron forma a sus creencias, creando y reforzando su entendimiento del mundo.

El hecho es que, como nuestros antecesores, nosotros vemos el mundo hoy a través de una pantalla de prejuicios. Por ejemplo, la mayoría de los inversionistas se enfocarán en sus éxitos y tratarán de olvidar los errores que han cometido, confirmando consistentemente sus puntos de vistas personales en vez de mantener la objetividad.

Una carencia particular de los inversionistas es su tendencia innata en tener una confianza exagerada. Naturalmente nosotros levantamos barreras que nos permiten olvidar los errores que hemos cometido en el pasado. Al mismo tiempo, tendemos a enfocarnos en las inversiones exitosas que hemos realizado –lo cual nos hace tener una confianza exagerada. Esto nos guía a tomar riesgos excesivos en las carteras de inversión.

Ninguno de nosotros somos inmunes a estos prejuicios. Por eso es que resulta vital crear un ambiente de inversión que esté desprendido de la emoción y que se base en datos y análisis imparciales para hacer las decisiones correctas para su futuro financiero.

¿Ha cometido algunos de estos errores?

Es difícil de evitar todas las trampas de la inversión –aún para los más inteligentes de los inversionistas. Esa es la razón por la que muchos inversionistas simplemente no tienen tiempo para procesar la vasta cantidad de información disponible hoy y luego aplicarla a sus necesidades individuales y complejas de inversión.

Por más de dos décadas, Fisher Investments (Inversiones Fisher) ha estado ayudando a individuos de alto valor neto lograr sus metas de inversión. A través de los mercados en alza y en baja nosotros aplicamos un enfoque dinámico e individualizado en la gerencia de la cartera de inversión. Nuestro récord de historial a largo plazo habla por sí mismo. Además, nuestros clientes valoran nuestro excepcionalmente alto nivel de servicios, personalización y estructura de tarifa transparente.

Le invitamos a descubrir más acerca de lo que hace único a Fisher Investments. Aún si no está considerando actualmente en hacer nada diferente con sus inversiones, Usted debería conocer más acerca de nuestros servicios como una alternativa potencial. Simplemente llámenos gratuitamente, 1-800-568-5082, para hablar con un representante de Fisher Investments.

Kenneth L. Fisher ha escrito cuatro libros sobre Finanzas y numerosos artículos en revistas especializadas en los negocios y de temas académicos. Él es mayormente conocido por su columna en la Revista Forbes intitulada “Portfolio Strategy” (“Estrategia de Cartera de Inversión”), la cual ha estado escribiendo por más de 22 años.

Notas Legales: Fisher Investments es el nombre de negocios de Fisher Assets Management, LLC.

Las inversiones en valores (securities) implican el riesgo de pérdida.

El desempeño pasado no es garantía de retornos futuros.

Las inversiones en valores (securities) extranjeros pueden implicar riesgos adicionales tales como las pérdidas relacionadas con otras monedas y los mercados de valores (securities).

Anuncio Publicitario:

Los expertos financieros están aclamando el libro mejor vendido del diario New York Times del columnista Ken Fisher de la Revista Forbes, intitulado “The Only Three Questions That Count” (“Las Únicas Tres Preguntas Que Valen La Pena”), con un preámbulo del legendario Jim Cramer.

“Creo que leer este libro puede ser la mejor cosa que Usted pudiera hacer este año para hacerse un mejor inversionista.”

-James J. Cramer.

Columnista de TheStreet.com, columnista de New York Magazine, anfitrión del programa de TV Mad Money de CNBC, anfitrion del programa de radio Real Money de CBS.

“El maestro gerente del dinero Ken Fisher ha estado iluminando con ganancias a nuestros lectores con sus columnas por más de 20 años. Los inversionistas encontrarán que este libro brillante es una experiencia que abre los ojos y produce ganancias en el capital.”

-Steve Forbes.
Director Ejecutivo (CEO) y Editor Jefe de la Revista Forbes.

¡Ahora disponible en el Internet y en las librerías de todas partes! ¡Consigue tu ejemplar hoy!

De acuerdo a Jim Cramer, “este pudiera ser la clase de libro que cambia por entero la faz de la inversión de aquí en adelante…”

Portada del libro: Autores: Ken Fisher con Jennifer Chou y Lara Hoffmans.

Sub-título del libro: “Invirtiendo al conocer lo que otros no conocen.”

Nota Legal:

El libro no es sobre ninguno de los servicios de consejos provistos por Fisher Investments o retornos de desempeño por clientes de Fisher Investments. Fisher Investments maneja las cuentas de sus clientes usando una variedad de técnicas y estrategias de inversión que no son necesariamente discutidas en el libro.

Traducido por Orlando Alcántara

INVESTMENT GUIDE

2007-08-30T10:24:00.000-04:00

Source: Instituto Español de Comercio Exterior (ICEX) (Spanish Foreign Commerce Institute).
Web page:
http://www.icex.es/FicherosEstaticos/auto/0307/GUIA%20ORGANISMOS%20APOYO%20INVERSION%20-%20REP%20DOMINICANA_27224_.pdf

ICEX: INVESTMENT GUIDE OF SUPPORT ORGANISMS: Dominican Republic.

DOMINICAN REPUBLIC.

Note from the Adviser.

The sector with the highest Spanish implementation is tourism, where the investments continue to be implemented both from the already established groups as well as from investors. It is estimated that more than half of the approximately 60,000 hotel rooms in the country belong to Spanish companies. There are also investments in energy, banking, insurance, service concessions, industry, and other services. It is observed, in addition, that there is an increasing Spanish presence in the real estate sector in Santo Domingo and in the tourism zones in the East of the country, and in non-hotel real estate promotions.

The most frequent problems of the Spanish investors happen with the acquisition of lands. Due to shortcomings in the formalities of the Registry of property, the cases of the appearance of alleged new owners of already acquired lands are frequent. There are also cases where lots had been occupied illegally.

These and other problems are aggravated sometimes due to the functioning of the system of Justice administration. Without dealing with possible cases of corruption in the courtrooms, aired often in the mass media, the system allows dilatory tactics in a way that the investor’s rights of property cannot be exercised, giving a disproportionate negotiating power to the opposing party.

It is advised, therefore, to contact the Commercial Office and get advice from a specialized law firm with good reputation.

Luis Ruiz Arberola.
Economic and Commercial Adviser.

1.- INVESTMENT SUPPORT ORGANISMS.

The investment promotion activities in the country are done by Centro de Exportación e Inversión de la República Dominicana (CEI-RD) (Exports and Investment Center for the Dominican Republic). Within this organism, there is the Departamento de Normas e Incentivos (Norms and Incentives Department), whose main objectives are the following up of the existing normative in the matter of investment and exports, as well as to offer the information and consultation services related to existing norms and incentives in both sectors.

CEI-RD has regional offices that give exporters and investors all of the services that the institution has to offer, serving theses support branches in the promotion of the exporting offering of the country and attracting local and foreign investment.

Among its functions, CEI-RD takes part in an active way of the execution of financing programs and technical assistance for the promotion of investors and exporters, promotes the approval of new investments through the inter-institutional channels of the country, and recommends to the Executive Power the adoption of measures in order to improve the investment climate, cooperating in the international negotiations of multilateral, regional and bilateral agreements that have an influence in the exports and investment sectors.

On the other hand, it manages the registry of investments and exports of the Dominican Republic, it serves as a center of compilation and distribution of information about exports, investments and other communication materials, and it is a main point of contact with probable investors, and lastly, it facilitates the technical and specialized consultancy for producers, exporters or investors in the development of their investment initiatives and/or access to both national and international markets.

ORGANISM:

CENTRO DE EXPORTACION E INVERSION DE LA REPÚBLICA DOMINICANA (CEI-RD).

CONTACT INFORMATION:

Address: Av. 27 de Febrero esq. Gregorio Luperón, in front of the Plaza de la Bandera (Flag’s Plaza),
Santo Domingo, Dominican Republic.

Phone: (809) 530-5505.
Fax: (809) 530-8208.

E-mail: webmaster@cei-rd.gov.do

Web page: http://www.cei-rd.gov.do

2.- INVESTMENT INCENTIVES.

The judicial framework of foreign investment in the Dominican Republic is comprised of Law 16-95 sobre Inversión Extranjera (on Foreign Investment) and its implementing regulation approved through the Presidential Decree 380-96, modified at the same time by the Presidential Decree 163-97.

The principles that apply to foreign investment in the Dominican Republic are the following ones:

-Equity in the treatment of the foreign investor in relation to the national investor, according to his/her rights as well as his/her duties on the matter of investment.

-Liberalized regime without restrictions about the destiny of capitals and dividends, which can be taken out of the country in currency that can be exchanged freely.

-The investors can have the direct representation of his/her manufactured products abroad or in the country.

-Simplified system of implementation, which means saving of time and reduction of the discretionality in the actions of the competent authorities. These formalities are limited to the registry with the purpose of statistics, which has to be done at CEI-RD.

In Spain and the Dominican Republic there is the Acuerdo de Promoción y Protección Recíproca de Inversiones (Agreement of Mutual Promotion and Protection of Investments), in effect since October 7th, 1996, in which it is proposed to create the favorable conditions for investments made by investors of each one of the Contracting Parties in the territory of the other party.

There are special and tax laws that establish specific incentives destined to foreign investment, in favor of determined types of investments. The most relevant ones are specified as follows:

2.1.- INCENTIVES LAWS FOR FOREIGN INVESTMENT.

Among the most important laws, we can enumerate the following ones:

-The companies that are suppliers of goods and services for exports established as Free Duty Zones (Law 8-90 and Implementation Regulation No. 366-97) are benefited by the special regime of customs controls and tax incentives of up to 100%.

-The companies located in Special Zone of Frontier Development (created by Law 28-01) can be benefited with the exemption of all of the taxes during 20 years.

The entity that it’s in charge of giving the Certificado de Empresa Fronteriza (Certificate of Frontier Enterprise) is Consejo de Coordinación de la Zona Especial de Desarrollo Fronterizo (Coordination Council of the Special Zone of Frontier Development) (more information at Dirección General de Desarrollo Fronterizo (General Directorate of Frontier Development), http://www.dgdf.gov.do ). This organism receives, evaluates the development projects, and emits the certificate of Frontier Enterprise, establishing a set of incentives for the national and foreign private investment in order to benefit the installation of new companies.

-Law 150-97 establishes a zero rate for the raw materials, equipment and machinery for the production, applicable exclusively to the companies that are established in the country for agricultural projects.

-The Law 183-02 sobre Código Monetario y Financiero (on Monetary and Financial Code) opens up the sector of financial services to the foreign investors, and it was promulgated with the objective of establishing a regulatory regime of the national monetary and financial system in order to procure an efficacious performance of the system in an environment of competitiveness and free market.

2.2.- PROGRAM OF RESIDENCY FOR INVESTORS.

The Programa de Permiso de Residencia (Residency Permit Program) through investment, created through the Decree No. 950-01, has the objective of benefiting the foreigners that make a significant investment in the Dominican Republic, giving them a special residency, with the same rights that Law No. 95 on Immigration gives to foreigners living in the country.

In order to get more information about these and other incentives programs, consult the following websites:

http://www.cei-rd.gov.do
http://www.bancentral.gov.do
http://www.presidencia.gov.do

FREDDY MIRANDA
Translated by ORLANDO ALCANTARA

FAQ REAL ESTATE TAXES

2007-08-21T17:21:00.000-04:00

Source: Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) (Internal Revenue Service –IRS- in the United States).

Webpage:
http://www.dgii.gov.do/publicaciones/pregfrecuentes.html

Title: Frequently Asked Questions.

Tax on the Assets (Impuesto Sobre los Activos).

What is the Tax on the Assets?

It is an annually applicable tax on the goods in possession of the taxpayers, who could be Legal Persons (with operations or not) or Physical Persons with businesses of sole proprietorship and organized accounting.

What is burdened by this tax?

The total value of the assets, including in an explicit way the real estate, that appear in the taxable balance of the taxpayer, that is not fixed by inflation and after the deduction of depreciation, amortization and reserves implemented for uncollectible accounts.

Which Assets are included in the tax basis?

Cash in Cash Desk and Bank.
Accounts Receivable - Clients (minus authorized reserve).
Accounts Receivable - Administration Employees and Employees.
Accounts Receivable - Shareholders.
Inventories.
Merchandise in Transit.
Paid in advance expenses.
Buildings (net and not fixed by inflation).
Improvements in Renting (net).
Lands.
Automobiles and Equipment (net).
Other Net Fixed Assets.
Fixed Credit Investments.
Intangible Assets.

What Assets do not comprise the tax basis?

Investments in shares in other companies.
Lands located in the rural zone.
Real estate that by their nature are used for agricultural operations.
Advance taxes or advance payments.

Is there some exemption for the payment of the Tax on the Assets?

The Legal Persons who are free of the payment of this tax are those ones who, according to the implementation of the Código Tributario (Taxes Code), Special Laws or Contracts approved by the National Congress, are totally free of the payment of the Impuesto Sobre la Renta (ISR) (Income Tax in the United States).

Who can ask for a temporary exclusion?

Those companies whose acquired net fixed assets are higher than 50% of the total assets.
Those companies whose investments, that by the nature of their activity have a cycle of installation, production and beginning of their operations greater than one (1) year, so that determined assets are excluded from the tax basis of this tax.
Those taxpayers with losses by causes of greater or extraordinary force will be able to request for this year the temporary exemption of the Tax on the Assets.

What is the Rate to be paid?

The tax rate will be of one percent (1%) annually, calculated on the total amount of the taxable assets.

How is the payment of this tax determined?

It is determined with data of the General Balance Sheet that is enclosed with the Declaración Jurada (Sworn Financial Statement) of the ISR (Income Tax) that the taxpayer presents.
A form is filled up (back of IR-2) to make the calculation.

When is this tax paid?

The payment of this tax, if it applies, will take place in two quotas, beginning the first in the same date limit fixed for the payment of the ISR (Income Tax), and the second to the counted term of six (6) months from the expiration of the first quota.

In what case does the Tax on the Assets have to be paid?

In case that the amount of the Tax on the Assets is higher than the amount of the ISR (Income Tax), the taxpayer will pay the difference in favor of the tax collecting agency in the two anticipated quotas, divided in equal parts.

On the contrary, that is to say, if the ISR (Income Tax) were equal or higher, the obligation of the payment of the Tax on the Assets.will consider itself to be extinguished.

Can the taxpayer compensate Balances in Favor by effect of the excess in the payment of advance payments of the ISR (Income Tax)?

The taxpayer will be able to ask to the DGII (IRS in the United States) the compensation of this balance with the Tax on the Assets generated according to the previous point.

What implementation will happen with the payments of the Impuesto a la Propiedad Inmobiliaria (IPI) (Tax to the Real Estate Property) in relation to this tax?

For the taxpayers with the closing date of December 31st, the amount to be paid by concept of the IPI during year 2006 will take into account a credit against the Tax on the Assets corresponding to the tax period 2006, whose statements must be presented in the year 2007.

What does it happen if it is paid after the established date?

If it is paid after the deadline date, a surcharge of 10% for lateness in payment will be implemented to the value of the tax to be paid, by the first month or fraction of month; 4% of a progressive and indefinite surcharge by every month or fraction of subsequent month; and 2,58% cumulative compensatory interest by every month or fraction of month, on the amount to be paid of the late quota.

From January 1st, 2007, compensatory interest will increased to a 1,73%

Withholdings.

Is the payment of the Retenciones de Asalariados (Withholdings of Wage-Earners) due to be made on the same day that the payment of the Social Security?

No, the payments of Withholdings of Wage-Earners will continue to be carried out no later than the 10th day of every month.

To name of whom the checks for the payment of the withheld ISR (Income Tax) of the wage-earners must be emitted?

The checks for payments of the liquidation of Withholdings of Wage-Earners must be emitted to the name of: Colector de Impuestos Internos (Collector of Internal Taxes).

Must the checks for the payment of Withholdings of the Wage-Earners be certified although they are paid in the same banks where the taxpayers have accounts?

No, in case that the taxpayer who is going to make the payment has an account in the same bank he/she does not have to certify the check.

Which is the procedure to modify the wages of the employees through the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment) in order to liquidate the ISR (Income Tax)?

The taxpayers must access the SUIR system of the Tesorería de la Seguridad Social (TSS) (Treasury of the Social Security), in the webpage http://www.tss.gov.do, with his class and choose the link of Novedades (New Features) where they will be able to make the modifications that are required.

In which article of Law 11-92 is it mentioned that the employees who work in different companies must choose an employer as Agent of Withholding?

Article 73 of the Regulation of the ISR (Income Tax) states that the wage-earners that receive income of other employers must choose as his/her Agent of Withholding the company where he/she earns a greater wage, as his/her only Agent of Withholding, with prior authorization of the DGII.

Is it possible to update Novedades (New Features) of the payroll in the SUIR system via telephone through the DGII?

Yes, through the Centro de Atención Telefónica (Telephone Assistance Center) of the DGII (809-689-3444 and 1-809-200-6060 from the interior of the country without charges –toll free-) the taxpayers will be able to update Novedades (New Features).

Which is the procedure for the taxpayers to make the payment of the ISR (Income Tax) according to the system of the TSS?

The taxpayers must go to the affiliated commercial banks (Bancos Popular, Bancos León, Bancos BHD, and Bancos de Reservas –Reserves Banks-) with the payment voucher, emitted through the webpage of the Tesorería de la Seguridad Social (Treasury of the Social Security) (www.dgii.gov.do).

How will the taxpayers receive the liquidation and payment voucher of the Withholdings of Wage-Earners?

The taxpayers will receive the voucher for the payment of their liquidation through the TSS; it can be printed from the webpage of the TSS or in the affiliated banks.

What document must present the taxpayers in the banks for the payment of the Withholdings of the Wage-Earners?

The taxpayers can pay their Withholdings presenting the liquidation of the ISR (Income Tax) payment, with the reference number or the voucher of payment that is generated through the SUIR system of the TSS.

What is the procedure for implementing the ISR (Income Tax) to the employment bonuses that receive the wage-earners with the new method of sending them through SUIR?

The representatives must access the SUIR system through the webpage of the TSS (www.tss.gov.do), choose the option Novedades, Cambio de Salario y Otros (New Features, Change of Wages and Others), insert the number of the Cédula de Identidad y Electoral (Electoral and Identification Card) of the employee who will receive the employment bonus in the company, click on Buscar (Search), confirm the data of the employee, insert the value of the employment bonus in the corresponding space, then click on the options of Insertar (Fill Up) and Aplicar (Implement) Novedades (New Features).

Through which disposition can the taxpayers obtain more information about the agreement between the TSS and the DGII?

The taxpayers can obtain all the information about the agreement between the Tesorería de la Seguridad Social (Treasury of the Social Security) and the Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) through Norm 10-04.

Note: Norm 10-04 is published in the section of General Norms of our webpage (http://www.dgii.gov.do/legislacion/normas2004.html).

What is the procedure for taxpayers to send the payroll’s data through the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment) that the TSS operates?

The taxpayers must be enrolled in the Tesorería de la Seguridad Social (Treasury of the Social Security) and to update the payroll’s data of their companies.

Can the taxpayers register in the TSS through the DGII?

At the moment, only the Tesorería de la Seguridad Social (Treasury of the Social Security) is registering in the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment).

How must be placed the wages in the space Salario Cotizable (Quotable Wages) for the ISR (Income Tax) of the SUIR system with or without the Social Security implemented?

In the space Salario Cotizable (Quotable Wages) of the ISR (Income Tax) the wages that the employee earns without having deducted the Social Security to him/her must be placed.

What is the procedure for sending Otras Retenciones IR-17 (Other Withholdings IR-17) through SUIR?

The representatives must access SUIR through the webpage of the TSS, in option DGII, choose IR-17, fill up the form, confirm the data that have been inserted, and then click in the option Declarar (To Make the Statement).

Through what link can be accessed the form IR-17 of Otras Retenciones (Other Withholdings) in the SUIR Plus?

The taxpayers must access the webpage of the TSS through the link http://www.tss2.gov.do/Login.aspx?log=r, insert the RNC (National Registry of Taxpayers number), ID number and password, and log in the system, and then choose DGII and click on Declaración IR-17 (Statement IR-17) (Form IR-17).

What is the procedure to follow in order to make a correction of form IR-17 through SUIR Plus?

In order to modify the data filled up in form IR-17, the interested user must access SUIR Plus through the webpage of the TSS before the 10th day of every month, and in option DGII, choose IR-17, fill up the form, confirm again the data that have been filled up, and then click on the option “Actualizar Declaración” (“Update Statement”).

What withholding must the companies implement as an item of income when the owners are physical persons?

The withholding that the companies must implement to the physical person as an item of income is 10% according to Law 288-04.

Impuesto a la Propiedad Inmobiliaria (IPI) (Tax to the Real Estate Property) / Impuesto sobre las Viviendas Suntuarias y los Solares Urbanos no Edificados (IVSS) (Tax on the Sumptuary Houses and the Non-Built Urban Lots).

What are the Taxes that are due to be paid for real estate transfers?

The Taxes that are due to be paid for real estate transfers are the following ones:

3% of the value of the real estate property.
Law 80-99 (Impuestos sobre Documentos) (Taxes on Documents) on the value of the real estate property.

What are the requirements for declaring real estate property in the IPI and where must they be presented?

The interested party will have to go to the Administration or a Local Agency that corresponds to him/her with the following documents:

Communication informing the exact address of the real estate property and the owner;
Copy of the Title of Property, Letter of Certainty from the Registrar of Titles, Sentence of the Tribunal Superior de Tierras (Superior Court of Lands) or Act of Sale of the real estate property;

Copy of the Mensura Catastral (Cadastral Measure) (if it exists);.
Copy of the draft of the Improvement built in the lot; and
Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card) in the case of Physical Persons; Tarjeta Tributaria de Identificación (Taxes Identification Card), in the case of Companies; and Passport in the case of Foreigners or Dominicans living abroad who do not have Cédula de Identidad y Electoral (Electoral and Identification Card).

What is the rate to be paid for the IPI?

One percent (1%) on the excess of the amount of five million pesos, which are exempted.

Will the commercial lots and premises be taxed with a 1% of the excess of the amount of RD$5.000.000,00 with the Reforma Fiscal (Tax Reform) (Law 288-04)?

Yes, according to Law 288-04 the non-built lots and those ones where in their lands there is a building are burdened with this tax; the real estate property destined for housing and commercial premises, when they exceed the amount of RD$5,000,000.00 (five million pesos). The commercial premises are excluded, because they are taxed by the Impuesto Sobre Activos (Tax on the Assets). (Translator’s note: There is a contradiction here with the information given by the DGII regarding the commercial premises. It is pertinent that the reader consult by himself/herself this information directly with the DGII.)

What is taxed by the IPI/IVSS?

Houses and commercial establishments in urban or rural zones, and non-built urban lots, which are the property of Physical Persons or Companies of Sole Proprietorship without organized accounting.

What is exempted from the IPI/IVSS?

Houses whose value is lower than the amount of five million pesos (RD$5,000,000.00).

Houses whose owners are sixty and five (65) years old, in the case that this house has not been transferred to another owner in the last fifteen (15) years, and the owner has only this house as his/her real estate property.

The buildings and lots in the name of the Dominican State, Charitable Institutions, Religious Organizations and Diplomatic Delegations.

Who must pay the IPI/IVSS?

The owners of houses and lots whose value exceeds the amount of five million pesos (RD$5,000,000.00).

When is it due to be presented and paid for?

It must be presented annually in the Declaración Jurada (Sworn Financial Statement) within the first sixty (60) days of the year, and it must be paid in two (2) semester quotas, the first on March 11th, and the second on September 11th.

Motor Vehicles.

What are the requirements to make sales transfer of motor vehicles and how much must I pay?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) the following documents:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of both the seller and the buyer of the vehicle.

Original Matrícula (Motor Vehicle Certificate), properly endorsed.

Notarized and legalized Act of Sale.

Certification of Plan Piloto (Translator’s note: Plan Piloto is a Police Department office in Santo Domingo).

Payment of the Sales Transfer Tax of 2% of the value of the vehicle (according to the rates table).

Receipt of payment of RD $100,00 for printing of the Matrícula (Motor Vehicle Certificate).

Receipt of payment for service of RD $300.00.

Receipt of payment required by Law 80-99 out of the value of the vehicle (according to rates table).

What are the requirements to request license plates duplicates and what is the rate to be paid?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) a communication requesting the elaboration of a new License Plate, annexing:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of the vehicle’s owner.

Certification of Complaint to the Policía Nacional (National Police).

Publication of loss of License Plate in a newspaper of national circulation, certified by 3 consecutive days.

Collection of services for RD$300.00.

Original Matrícula (Motor Vehicle Certificate).

Receipt of payment (License Plate emission) of RD$2,500.00 for automobiles and RD$200.00 for motorcycles.

Receipt of payment of the RP-01 (printing of Matrícula –Motor Vechicle Certificate-) for RD$100.00.

What are the requirements for requesting duplicates of Matrículas (Motor Vehicle Certificates) and what is the rate to be paid?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) the following documents:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of the vehicle’s owner.

Copy of the Tarjeta de Identificación Tributaria (Taxes Identification Card) in the case of Companies.

Publication of loss of Matrícula (Motor Vehicle Certificate) in a newspaper of national circulation (certified by the newspaper).

Certification of Complaint to the Policía Nacional (National Police).

Receipt of payment for RP-01 (printing of Matrícula –Motor Vechicle Certificate-) of RD$100.00.

Collection of services for RD$300.00.

The duplicate must be requested by the vehicle’s owner, or an authorized representative by means of a legalized power.

Legal Successions and Donations.

What are the requirements for presenting Declaraciones Sucesorales (Legal Successions Statements)?

The interested party will have to go to Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) with the following documents:

Death Certificate (indispensable).

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card) of the deceased.

Birth Certificate of the inheritors or heirs (indispensable).

Marriage Certificate (if it applies).

Documents related to the funeral expenses and the pending debts to be paid.

Testament or Will (if it exists).

Financial Certificate and Bank Account Books.

Titles of Property.

Declaración Jurada (Sworn Financial Statement) (form SD-1 and Annexes).

What is the Tax that is due to be paid for Donations?

The Tax to be paid for Donations according to Law 2569 (modified by Laws 288-04 and 557-05) is 25% of the value of the donation.

Are the Donations received by the Not-For-Profit Organizations exempted from the payment of the ISR (Income Tax)?

The Donations obtained by the Not-For-Profit Organizations are exempted of the payment of ISR (Income Tax) whenever such income and the social patrimony are destined to the aims of their creation and in no case they are distributed directly or indirectly among the associates; according to what it is stated on Article 299 of Law 11-92. However when these Organizations generate income originating from activities of a different nature from the intentions for which they were created, these incomes will be subject to this tax.

What percentage can be deducted by the companies out of the Donations that they make?

The companies can deduct themselves up to 5% of the taxable net income of the exercise, after carrying out the compensation of loss originating in previous exercises, when it corresponds when they make donations to Not-For-Profit Organizations properly registered, according to Articles 287 of Law 11-92 and 31 of the Reglamento (Regulation).

What are the requirements for the companies to make donations to Non-Governmental Organizations (NGOs)?

The companies that wish to make donations will have to comply with the following norms:

The donations can be made in money or species, tangible and intangible goods, real estate property and in quantifiable services.

The value of the donations made in non-real-estate property, real estate property or other species, which constitute capital assets, registered in joint accounts of Categories 2 or 3, will have to agree with the value in books whereupon these goods are entered by the taxpayer when making the donations. The donations made in stocks or shares, bonds, certificates and similar ones, will be computed according to their value in book, updated with the premiums, discounts, dividends or interests receivable.

The donor will have to credit, with the respective receipt or document given by the beneficiary organization, the amount and destiny of the donation that has been made.

In order for a donation to be deducted to a donor, the beneficiary organizations will have to be enrolled previously in a special registry that will be kept by the Administration. This registration will have to be renewed every three years, previous verification of the fact that the organization is fulfilling the aims of its creation and the formal duties that correspond to it as stated in the Código Tibutario (Taxes Code).

Not later than March 15th of every year, the referred organizations will have to inform to the Administration of the donations received in the previous year, including the statement of the donors, the donated amounts and goods.

In the case of donations in money, the deduction will only be able to be computed when the respective amount indeed is given to the organization receiving the donations, if the donation is made in cash; or once the checks, letras de cambio (letters of transfer) or other similar documents of payment are received by the beneficiary organization, if the donation takes place by means of titles, values or document of credit.

The donations will have to fulfil, in addition, the effective legal dispositions for the validity of the donations.

What is burdened by this tax?

All transfers of non-real-estate property or real estate property caused by death or donation.

Who must pay?

The testament/will inheritors or heirs, successors and beneficiaries.

Donees.

Who are exempted?

The amount of the transfer is lower than five hundred pesos (RD$500.00).

The homestead instituted by law.

Life insurances of the deceased.

The goods bequeathed by testament to public and charitable institutions, charity or public utility institutions recognized by the State.

When is it due to be presented and to be paid?

Within thirty (30) days after the death, it is required to present documentation, for liquidation of the legal file.

What form is it required to be presented?

The required form is Form SD-01 and Annexes in original format.

Translator’s Disclaimer: This document has been translated for general information purposes. For official information, please, contact the DGII or a qualified lawer.

TAX ELIMINATION

2007-08-13T11:53:00.000-04:00

Newspaper: Diario Libre.

Web page: http://diariolibre.com/app/article.aspx?id=114764

July 29th, 2007, 10:22 p.m.

New Law forces DGII (IRS in U. S.) to eliminate 17 taxes.

The reductions will be applied as of August, according to the legal ads published by the Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) (IRS in U. S.).

23 services of certifications will be free of charge for the applicants.

Santo Domingo. With the approval of Law 173-07, on Tax Collecting Efficiency, the Dirección General de Impuestos Internos (DGII) (IRS in U. S.) will eliminate at least 17 small taxes in rates of services by the State, in addition to the fact that it reduces four taxes in the areas of real estate, business and vehicles.

In a legal ad published by the DGII (IRS in U. S.), it is expressed also that 23 services of certifications that the institution grants now will be free of charge for the applicants.

The taxes on tickets of public shows, documents, medical certificate, seals of national and imported alcoholic beverages, and the copies of abstracts of civil act and divorces are included among the taxes that as of August of this year are eliminated.

More reductions

Also, the legislation establishes the reduction of the tax to real estate transfers from 4,3% to 3%, whereas the tax for sale transfer of vehicles is lowered from 3,3% to 2%.

The taxes for the constitutions of companies are reduced from 1,83% to 1% on the capital decided in the contract or agreement that gives birth to the Company. A similar reduction will also be applied to the taxes for the increases of capital of the companies.

In addition, they will be free of charge the certifications Presentation of Declarations, Payment of Taxes and Exemptions, Tax to the Real Estate Property, Exemption of the Tax on the Sumptuary Houses and the Non-Built Urban Lots (IVSS), Motor Vehicles, Companies, Refund of Checks, Reimbursements and Deposits in Consigment and Non Objection, Transfers of Non-Real-Estate and Real Estate Titles.

Freddy Miranda,
Translated by Orlando Alcántara

CONSPIRACY AGAINST THE CARIBBEAN

2007-08-13T11:52:00.000-04:00

Newspaper: Diario Libre.

Web page: http://www.diariolibre.com/app/article.aspx?id=114687

July 29th, 2007, 6:51 P.M.

Tourist conspiracy against the Caribbean.

In the Caribbean they are getting together against protected zones.

Bahía de las Águilas (Bay of Eagles): an appraised booty for tourism.

Santo Domingo. The Society for the Conservation and Study of Caribbean Birds (SCSCB), the greatest regional organization dedicated to the conservation of biodiversity, concluded its 16th meeting in Viejo San Juan, Puerto Rico. The conference lasted 5 days, and it discussed the impact of the Climatic Change in the towns and birds of the Caribbean, and on the increasing threat of tourist development to the biodiversity of the region. Representative organizations of 19 countries described as critic the situation in the Caribbean islands.

The delegates became perplexed when listening to the report of which it seems to be a campaign without precedents of Caribbean governments to change the legal status of areas previously protected for being important sites of conservation, and to take step to a devastating tourist development. Two of the denounced cases involve the chain of hotels Four Seasons Hotels and Resorts Group. The government of Grenada has plans of selling to this partnership the Mount Hartman National Park, which was created in 1996 to save the Dove of Grenada, its national bird, which is in critical danger of extinction. Studies show that almost a 25% of the hardly counted 80 individuals of this species live in the small coastal restricted zone of Mount Hartman. The area is, then, vital for their survival.

In Puerto Rico, the Corredor Ecológico del Norte (Ecological Strip of the North), habitat of the threatened species of Yaguasa of the Caribbean, endemic duck of the region, the migratory Playero Silbador (Singing Beach Bird), and an important place of nesting of the Tinglar turtle, is objective of tourist development by the group Four Seasons, that has become a threat for the exclusive biodiversity of the insular Caribbean. This ecological zone is a natural area located in the already degraded Reserva Nacional de El Yunque (El Yunque National Reserve), one of the first forest reserves of the Western Hemisphere, that is the main habitat of the Cotorra of Puerto Rico (Puerto Rico Parrot), the most threatened of its sort.

In the Dominican Republic.

In the Dominican Republic, a law in 2002 was promulgated that changes the limits and categories of several protected areas, in order to build hotels in sites of great ecological value like Bahía de las Águilas (Bay of Eagles), a coastal area of the Parque Nacional Jaragua (Jaragua National Park), that is part of the Reserve of Jaragua-Bahoruco-Enriquillo Biosphere areas, which includes three parks, and it is considered to be one of the areas with more biodiversity in the island. As always, the strategy consists of altering the legal status of the protected area to facilitate the construction of hotels. Local Non-Governmental Organizations (NGOs) objected the constitutionality of this law before the Supreme Court of Justice, but the Court did not pay due attention to the demand. The Secretary of State of Environment and Natural Resources has denounced the plot to new modifications of this law.

Andrew Dobson, President of the SCSCB, considers that it is an unjustifiable backward movement at a time at which the coastal conservation of the forests and areas is essential to mitigate the impacts of the climatic change. According to him, this type of development will only be able to damage the reputation of the Caribbean as an atmosphere-friendly tourist destiny. It adds that this type of tourist projects without future vision will accelerate the effects of climatic change on the Antillean forests, and the singular biodiversity that they lodge will be the main victim, since 85% of the natural forests of the Caribbean has already been destroyed. According to the last report of the United Nations on Climatic Change, the Antilles run an enormous short term risk of being struck by these changes.

Impact

85% of the Antillean forests has already been destroyed.

The climatic change will strike harder if we continue destroying the forests.

A tourist company glides to construct hotels in protected areas.

guerrero.simon@gmail.com

- Simón Guerrero

Freddy Miranda,
Translated by Orlando Alcántara

CENTRAL BANK IMF

2007-08-13T11:49:00.000-04:00

Newspaper: Diario Libre.

Web page: http://diariolibre.com/app/article.aspx?id=114760

July 29th, 2007, 10:19 p.m.

Banco Central (BC) (Central Bank) says that all the goals were fulfilled with the IMF.

Santo Domingo. The Government informed that throughout this year it has fulfilled and exceeded all the quantitative goals decided with the International Monetary Fund (IMF). A report given by the Banco Central (BC) (Central Bank), indicates that the prudent handling of the monetary and fiscal authorities, and the commitment with the maintenance of the macroeconomic stability helped in the fulfillment “with comfort” of all the quantitative criteria of performance.

It adds that during the period January-June 2007 the balance of the non-finance public sector reached a surplus of DR$13,653 million pesos, including the deposits of Verizon, with which surpassed the goal of DR$7,600 million pesos.

In the first semester, the Government had the commitment to transfer to the Banco Central (Central Bank) DR$2,900 million pesos, but it surpassed the amount and it gave DR$2,945 million pesos to reduce the quasi-fiscal deficit.

Freddy Miranda,
Translated by Orlando Alcántara

FOREIGN INVESTMENT IN MICHES DOMINICAN REPUBLIC

2007-07-27T12:24:00.000-04:00

Newspaper: Noticias SIN.

Web page:
http://www.antena-sin.com/noticiassin/Details.asp?id_article=7722

May 8th, 2007. 08:02: 00 A.M. INVESTORS.

Foreigners will develop ecological tourism in Miches.

The information was disclosed in the course of a meeting that was headed in this city by the American entrepreneur Ted Khell, pioneer of the tourist project in Punta Cana.

New York. - A group of foreign investors has shown interest in investing a high sum of money in a development project in the Municipality of Miches, Dominican Republic, to give impulse to that zone as an exclusive and ecological tourist destiny, preserving its natural resources, that are its main attractions.

The information was disclosed in the course of a meeting that was headed in this city by the American entrepreneur Ted Khell, pioneer of the tourist project in Punta Cana, and John R. Gagain Jr, Executive Director of the Comisión Presidencial sobre los Objetivos del Milenio y el Desarrollo Sostenible (COPDES) (“Presidential Commission on the Millennium Goals and Sustainable Development”).

Previous to the activity a detailed study was presented by the students of Architecture at Columbia University, on the guidelines to give impulse to the development of Miches.

To the presentation of the report on Miches attended, in addition to Gagain, Mrs. Vivian Sundset, Attached Director of COPDES, and authorities of the Secretaría de Estado de Turismo (“State Secreetariat for Tourism”) and the Secretaría de Estado de Medio Ambiente y Recursos Naturales (“State Secretariat for the Environment and Natural Resources”). In addition, journalist Arismendy Calderón, in representation of the Comité Pro-Desarrollo Turístico y de Conservación de los Recursos Naturales de Miches (“Pro-Tourist-Development Committee and of Conservation of the Natural Resources of Miches (Conatura-Miches). In the debates, professors of Columbia University took part.

The meeting was summoned by professors Don Melnick and Elliot Sklar, Directors of the Centro de Medio Ambiente, Economía y Sociedad (“Center for Environment, Economy and Society”), and the Centro de Planificación Urbana Sostenible (“Center for Sustainable Urban Planning”), respectively, of Columbia University. Influential real estate investors from New York City participated.

A group of these investors formalized the commitment to visit the Municipality of Miches in the next month of June with the professors of Columbia University and representatives of the Secretaría de Estado de Turismo and the Secretaría de Estado de Medio Ambiente y Recursos Naturales.

Some of them that took a look at the report elaborated by students of that training center were impressed with the natural beauties of this region, specially its beaches, rivers, its natural resources and the impressive lagoons Redonda and Limón.

The interest of this visit is for managing to give impulse to key investments for the development of sustainable tourism, such as a marine, restoration of the lagoons Redonda and Limón (in the community of El Cedro), rehabilitation of the hydric river basins and cascades, as well as complement works.

It was not informed, in the immediate term, about the initial investment in this ambitious project.

The initiative in that zone was applauded by the gentlemen Robert Roskind, president of the Crescent Hotels Group, Martin Kaplan and Peter Resnick, investors, who saluted the role of Columbia University to choose Miches as a pilot project to turn that municipality in a model of creation of jobs, mobilization of the economy, and conservation of its natural resources.

The group of investors expressed, separately, the interest to continue supporting Columbia University, and to collaborate with the Dominican authorities, the Mayorship of Miches, and the community in general, to give impulse to its development, to reduce poverty, and to fulfill the Millennium Development Goals of the United Nations.

FREDDY MIRANDA
www.freddymiranda.com
Traduced by Orlando Alcantara

SALTO DEL LIMON AT SAMANA DOMINICAN REPUBLIC

2007-07-27T12:22:00.000-04:00

Source: Turismo Visión, Informative Service of TourismWatch

Wep page:
http://www.tourism-watch.de/esp/2esp/2esp.dominicana/index.html

By Leida Bouglas.

Dominican Republic: Organizing community groups around eco-tourist practices and conservation of Nature.

The case of Salto del Limón, Samaná, Dominican Republic.

The Cascade of El Limón comprises a great deal of the landscaping attractions at the peninsula of Samaná, Dominican Republic. The tourist potential that has this region offers the possibility of promoting a type of tourism that ties the generation of benefits by means of the reasonable use of the resources with the conservation of Nature.

Nevertheless, until now the region is rather developing a traditional tourism. Most of the tourists buys the “all-included” packages from their countries of origin, which remarkably limits the economic benefits in the destiny countries. This type of tourism development, in addition, can be pernicious to the environment.

A “Diagnosis of the Tourist Sector in the Province of Samaná” from the year 1996 confirms this problem. The affected local people recognized the necessity to develop solutions and changes.

In search of an improvement, the non-governmental organization CEBSE (Centro para la Conservación y Ecodesarrollo de la Bahía de Samaná y su Entorno) (“Center for the Conservation and Eco-development in the Bay of Samaná and its Surroundings”) promotes strategies for the sustainable development of tourism (Plan de Manejo Integrado para la region de Samaná, 1996) (“Plan of Integrated Management for the region of Samaná”, 1996). This plan implies the involvement of the local community groups and opportunities of income for them by means of regulated eco-tourist practices.

Around the cascade, approximately 1,500 people live in the rural localities of Rancho Español, Arroyo Surdido, Loma de la Cruz y El Café. Ten percent of the population works directly in tourism, and many families obtain indirect benefits. In tourism, which began to introduce itself about 15 years ago, many see an economic alternative, more attractive than agriculture.

Nevertheless, problems, unexpected by the communities, arose. This new form of work distorted the social customs, and individualism and lack of fellowship arose, which are not very usual in the rural population. Competitions and conflicts of opposite interests increased, and the quality of the tourist services diminished.

CEBSE tried to generate a base of confidence among the community groups. Activities began to improve the situation together, like, for example, the rehabilitation and the improvement of the footpaths. Little by little, people began to organize themselves and to act in a collective way to improve their services, and mainly to defend their interests before agents like the tourist operators. In workshops, they formulated their expectations, and the strengths and the weaknesses were analyzed. Important subjects of the discussion were the community organization, tourism in general, the protected areas and eco-tourism, the improvement of the tourist services, social problems, other additional economic activities to eco-tourism, and the tourist capacity of the region.

As a result, the Asociación Comunitaria de Ecoturismo del Salto del Limón (ACESAL) (“Eco-Tourism Community Association of Salto del Limón”) arose. Another decisive step was the participation of public organizations in the certification workshops, which contributed “to break the ice”. An important role was also played by the continuous self-evaluations of the activities.

Results and learned lessons.

In order to regulate the tourist activity, ACESAL, CEBSE, and SECTUR (Secretaría de Estado de Turismo) (“State Secretariat for Tourism”) discussed and elaborated in a participative way a plan of norms of use and control for the area. This process was historical, because it was the first time that this governmental instance made norms with previous consultation and approval of the communities. Another result was the formation of a community association integrated by 200 members from 5 communities to make joint activities for the improvement and the sustainable management of the eco-tourist activities. There was also a significant improvement in the infrastructure and the tourist offering, and a greater recognition of the importance of the conservation of the natural resources. Voluntary actions are organized to improve the quality of the place like, for example, cleaning or reforestation initiatives.

Although the Board of Directors and the sub-commissions of ACESAL meet periodically and conduct positive debates, weaknesses in the decision making process, assuming shared responsibilities, and the operation of the same association exist. Nevertheless, ACESAL has begun to take its first steps.

At the moment, there are 12 micro-companies that offer tours with an on-foot or on-a-horse tour guide towards the cascade or the beaches and the caves of the region, as well as typical food, and there are sales of local crafts, organic cacao or coffee. In the tourist activity almost 200 people work directly. Salto del Limón received approximately 20,000 visitors in 1998. The increasing number of visitors raises the expectations put in tourism, but they also increase the disappointments.

The authoress is consultant at Centro para la Conservación y Ecodesarrollo de la Bahía de Samaná y su Entorno (CEBSE) and contributor to the DED (Deutscher Entwicklungsdienst / Servicio Alemán de Cooperación Social-Técnica / German Service of Social and Technical Cooperation)

FREDDY MIRANDA
www.freddymiranda.com
Traduced by Orlando Alcantara

MICHES DOMINICAN REPUBLIC

2007-07-27T12:18:00.000-04:00

Newspaper: Diario Digital F-27
Web page: http://www.diariof27.com/articulo,928,html

A FORGOTTEN TOWN; A HIDDEN AND ABANDONED MUNICIPALITY.

Miches .................... A treasure to be discovered.

LET US RECOVER MICHES TO GIVE LIFE TO THE DEAD.

By José Rafael Sosa.
Wednesday, July 25th, 2007.

MICHES. It has already finished the noisy party and the cultural activism that was held on the activity of Miches Art 2007, but this population is left in its same position on the road, waiting for its tourist development.
***
A zone with an extraordinary tourist potential that it is just now starting to have a glimpse of. Miches deserves to see itself from a necessary positive perspective.
***
Miches’ history it’s the history of waiting. Miches has some unique attractions from the tourist and eco-tourist points of view, so it is needed that the eyes of the Government and the investors turn their staring look towards that locality, where they are failing to fulfill their duties of developing it (the Government) and preventing themselves of making money (the investors) with every day that goes by without establishing projects and properties.

Miches, simply, waits patiently for its development.

A long time has gone by since the year of 1808, when the settlement of the first families coming from the Cordillera Oriental (“Eastern Mountain Range”), coming from El Seybo and other nearby regions, and improvised several inexpensive houses for their temporary permanence in this zone, attracted by the beautiful marine coast.

Miches waits. It waits for opportunities and justice.

Columbia University recommends the creation of a Patronage Council.

A fundamental step for developing tourism in Miches is the creation of a Patronage Council, integrated by the most influential sectors in the population life: City Hall, Government institutions, academicians in environmental sciences and in urban development, the community through business people and residents, as well as non-governmental organizations.

This recommendation is made by the Columbia University that sent to Miches a team of professors and students, who investigated the conditions that this population holds for its development.

The intention is to create the Comisión de Desarrollo de Miches (“Development Commission for Miches) (with its respective planning office, and an auditing commission), with the massive participation of the women’s sector from the urban and rural areas. Work groups would be created in the following topics: economic development, environmental balance, youth, women, historical and cultural aspects, population increment, and public health.

FREDDY MIRANDA
www.freddymiranda.com
Complided and traduced by Orlando Alcantara

ECO TOURIST PRACTICES IN DOMINICAN REPUBLIC

2007-07-26T12:54:00.000-04:00

Source: Turismo Visión, Informative Service of TourismWatch

Wep page:
http://www.tourism-watch.de/esp/2esp/2esp.dominicana/index.html

By Leida Bouglas.

Dominican Republic: Organizing community groups around eco-tourist practices and conservation of Nature.

The case of Salto del Limón, Samaná, Dominican Republic.

The Cascade of El Limón comprises a great deal of the landscaping attractions at the peninsula of Samaná, Dominican Republic. The tourist potential that has this region offers the possibility of promoting a type of tourism that ties the generation of benefits by means of the reasonable use of the resources with the conservation of Nature.

Nevertheless, until now the region is rather developing a traditional tourism. Most of the tourists buys the “all-included” packages from their countries of origin, which remarkably limits the economic benefits in the destiny countries. This type of tourism development, in addition, can be pernicious to the environment.

A “Diagnosis of the Tourist Sector in the Province of Samaná” from the year 1996 confirms this problem. The affected local people recognized the necessity to develop solutions and changes.

In search of an improvement, the non-government organization CEBSE (Centro para la Conservación y Ecodesarrollo de la Bahía de Samaná y su Entorno) (“Center for the Conservation and Eco-development in the Bay of Samaná and its Surroundings”) promotes strategies for the sustainable development of tourism (Plan de Manejo Integrado para la region de Samaná, 1996) (“Plan of Integrated Management for the region of Samaná”, 1996). This plan implies the involvement of the local community groups and opportunities of income for them by means of regulated eco-tourist practices.

Around the cascade, approximately 1,500 people live in the rural localities of Rancho Español, Arroyo Surdido, Loma de la Cruz y El Café. Ten percent of the population works directly in tourism, and many families obtain indirect benefits. In tourism, which began to introduce itself about 15 years ago, many see an economic alternative, more attractive than agriculture.

Nevertheless, problems, unexpected by the communities, arose. This new form of work distorted the social customs, and individualism and lack of fellowship arose, which are not very usual in the rural population. Competitions and conflicts of opposite interests increased, and the quality of the tourist services diminished.

CEBSE tried to generate a base of confidence among the community groups. Activities began to improve the situation together, like, for example, the rehabilitation and the improvement of the footpaths. Little by little, people began to organize themselves and to act in a collective way to improve their services, and mainly to defend their interests before agents like the tourist operators. In workshops, they formulated their expectations, and the strengths and the weaknesses were analyzed. Important subjects of the discussion were the community organization, tourism in general, the protected areas and eco-tourism, the improvement of the tourist services, social problems, other additional economic activities to eco-tourism, and the tourist capacity of the region.

As a result, the Asociación Comunitaria de Ecoturismo del Salto del Limón (ACESAL) (“Eco-Tourism Community Association of Salto del Limón”) arose. Another decisive step was the participation of public organizations in the certification workshops, which contributed “to break the ice”. An important role was also played by the continuous self-evaluations of the activities.

Results and learned lessons.

In order to regulate the tourist activity, ACESAL, CEBSE, and SECTUR (Secretaría de Estado de Turismo) (“State Secretariat of Tourism”) discussed and elaborated in a participative way a plan of norms of use and control for the area. This process was historical, because it was the first time that this governmental instance made norms with previous consultation and approval of the communities. Another result was the formation of a community association integrated by 200 members from 5 communities to make joint activities for the improvement and the sustainable management of the eco-tourist activities. There was also a significant improvement in the infrastructure and the tourist offering, and a greater recognition of the importance of the conservation of the natural resources. Voluntary actions are organized to improve the quality of the place like, for example, cleaning or reforestation initiatives.

Although the Board of Directors and the sub-commissions of ACESAL meet periodically and conduct positive debates, weaknesses in the decision making process, assuming shared responsibilities, and the operation of the same association exist. Nevertheless, ACESAL has begun to take its first steps.

At the moment, there are 12 micro-companies that offer tours with an on-foot or on-a-horse tour guide towards the cascade or the beaches and the caves of the region, as well as typical food, and there are sales of local crafts, organic cacao or coffee. In the tourist activity almost 200 people work directly. Salto del Limón received approximately 20,000 visitors in 1998. The increasing number of visitors raises the expectations put in tourism, but they also increase the disappointments.

The authoress is consultant at Centro para la Conservación y Ecodesarrollo de la Bahía de Samaná y su Entorno (CEBSE) and contributor to the DED (Deutscher Entwicklungsdienst / Servicio Alemán de Cooperación Social-Técnica / German Service of Social and Technical Cooperation)

FREDDY MIRANDA
Compiled and traduced by Orlando Alcántara

How to Buy a real property in Dominican Republic

2007-07-25T19:04:00.000-04:00

Throughout our career of more than 15 years as a Law professional and more than 10 years as a professional specialized in real estate and foreign investment, I have reached the following conclusions: a) the most important factor for an investor is to work with a professional who has deep knowledge of expertise in these areas; b) not only the expert professional should know the language of the investor; this is important, but without having still a great knowledge of the investor’s language, the expert dedicated to investing in real estate must know the customs and the habits that are held in the country where the foreign investor makes his/her investment; c) it doesn’t exist nor it shouldn’t exist such a thing as free legal advice; rather our firm focuses itself in providing free guidance, or a guide or a map in order to be able to invest with the lesser possible risk.

Our clients have taught to us. We have only put the ears in their complaints, needs and wants, regarding that the best way to serve their interests is generating alternatives so that they by themselves can choose that option who they consider correct and that fills their expectations. In other words, to know and to act.

The following lines summarize what in our opinion really represents the greatest interests of the investors at world-wide level, and at the end the aspects in which we give advice to focus at the time of taking into account how to make a foreign investment.

Firstly, it is evident that when leaving a country, where we know the laws, it is very important to eliminate all type of uncertainty regarding the political and social stability of the destiny country of our investment. Secondly, we must know that when we make a change in our destiny of investment, placing our money in another country, it is the rules of this new destiny the ones that reign and, therefore, we must allow an efficient professional expert to take us by the hand; an expert professional who knows the economic, social, political and cultural environments of the country where we are going to make the investment.

It is necessary to look for the alternative that is less expensive in the short term, but that does not put at risk the investment in the long term. That is to say, if we must incorporate a company, it is better that this company belongs to a reliable jurisdiction, and it should have a low budget. You must ask your lawyer on the necessity of registration of this company in the country that it is the object of the investment; in this case, the Dominican Republic.

This takes us to the following topic. A comparison among the different types of incorporation or constitution of companies for foreign investors. That is to ask: isn’t a foreign investor better protected by the local laws? Isn’t it better, then, that the company or society that is going to protect his/her investment belongs to the destiny country of the investment? Can I incorporate a company that it doesn’t belong to the Dominican Republic to buy a property?

Another question would be: Do I have to incorporate a company? The answer is yes. It is not mandatory, but after giving legal services to many clients in this area we are convinced that the less risky way to protect a purchase is through a society or company.

In the last years, the Dominican companies have increased a lot in their costs of incorporation. In addition, the tax laws have modified a lot the kinds of maintaining or keeping up to date the companies with the Dirección General de Impuestos Internos (DGII) (IRS in the United States of America). Consequently, the incorporation of a Dominican company can be a trap due to the high cost that it can have at the moment of its constitution. It is possible to be said that with a small capital for incorporating the company, for example, 100.000,00 pesos of capital versus the value of the investment, the company can be economical for the investor. Nevertheless, the trap is in the monthly maintenance of the companies, and in the fact that it could be considered as tax evasion over the social capital or the difference between the investment and the company’s capital. Consult with your lawyer on this matter.

For us, the best options regarding to foreign investment are found in the jurisdictions called “tax havens”. The jurisdictions that we recommend are, of course, BVI, Panama, Anguila and lately Belize. These companies are of fast constitution, they do not require of so many shareholders as in the Dominican companies, and through them there is greater control of the investment. By control, we are talking about handling with ease the company through a Board of Directors that allows to name up to a single Director of the company.

There is a necessary comparison among the structures of U. S. companies of reduced risk to special capital LLC and Dominican companies or foreign companies of jurisdictions called “tax havens”. This comparison raises an important point, and it is the objective or destiny of the investment. In general, we like to think that an entrepreneur or investor has greater yield if he/she tries to maintain his/her investment as a foreign investment in the Dominican Republic in order to avoid the risk that implies double taxation. In effect, when companies of American origin are constituted, it is essential to declare them in the United States and then to register them here; so the company will have to pay taxes both in the United States and in this country, the Dominican Republic.

As a general rule, we would say that -for investors with money originating by a trust or another type of investment structure that forces them to be transparent in all its operations immediately- it is better for them to constitute their companies in their country of origin; in this case, we have used the United States as an example. For those who pursue a greater benefit, we understand that the advisable thing is the constitution of national companies or special jurisdictions, such as Belize, Anguila, BVI or Panama.

Numerous aspects must be considered by the foreign investors concentrated in the area of tourism real estate. We summarize the most important as follows: a) the transaction contract that has to be reviewed by a lawyer; b) “due diligence” or previous investigation on the taxes that could affect the tax property, and on the possible charges or mortgages that the building has; c) if it does not exist a title certificate, it is necessary to investigate the state of the segregation of the land or delimitations to protect the investment; d) flat cadastral or “survey”; e) construction permissions that could affect the development; f) possession of the building; and h) employees in the case of properties already developed and that require maintenance.

In the still much more specialized segment of preconstruction, the investor must look for a professional who helps to solve or to answer basic investment questions such as: a) who is the developer and what is his/her reputation in the market?; b) what type of protection offers the Dominican laws for the constructions (protection against hidden vices or defects in the construction)?; c) which options do I have as an investor when I rent my property?; d) what type of taxes do I have to pay in the form of rents?; e) which are the benefits to give my property in administration? ; f) how can I obtain financing for my property in the Dominican Republic?; and f) which are the maintenance costs?

A last aspect to consider in the investment is the risk and the suitable type of investment that are more to our interests as investors in the Dominican Republic. On this point, we refer to the classic ideas of investment in real estate in general that they suggest drawing up to the plans and goals of investment starting off from the following parameters: a) financial resources. As a general rule, while more resources or liquidity are controlled, the possibilities of investing in rent properties are greater in the first place, and then in apartments or lots located in strategic sites; b) if our objective is on the contrary to involve us little in the handling of the companies, then it is always suggested -taking the factor of liquidity in account- the investment in land or lot and in apartments or houses is recommended after that one. In apartments, if they do not require of much maintenance, and in houses depending, as always, of the location of them; c) finally, for those investors looking for greater risks by all means and more long term yield, the first option always will be the land investment located in areas of growth like the lands of Bávaro and Cabarete. Our readers can get more information on this subject in the extraordinary book written by William Benke and Joseph M. Fowler entitled “All About Real Estate Investing”.

THE PIÑEIRO GROUP INVESTS 50 MILLIONS

2007-07-25T18:57:00.000-04:00

Source: Europe Press.

Web page:
http://www.lukor.com/not-neg/empresas/0601/23171220.htm

Economy/Companies. - The Piñero group invests 50 millions in four luxury resorts in the Dominican Republic.

MADRID, 23 (EUROPA PRESS)

The hotel chain Bahía Príncipe, who belongs to the Piñero group, will invest 60 million dollars (about 50 million euros) in the acquisition and remodeling of four resorts with more than 900 rooms, so that the company will add seven establishments in the country and will have a total of 3,600 rooms, informed today Antonio González, the person in charge of Marketing of the hotel firm Bahía Príncipe.

In the presentation of the promotion that the Dominican Republic will make in the Feria Internacional de Turismo (International Tourism Fair) in Madrid (Fitur) 2006, González indicated that these hotel acquisitions, whose inauguration is predicted for the season 2006-2007, respond to the bet of the group in the Latin American country, that, in his opinion, has a tourist potential with the opening in the next month of November of the new airport in the zone of Samaná.

In particular, the chain has destined the investment, on the one hand, in the acquisition of three establishments of five stars located between the Bahía de Samaná (Bay of Samaná) and the Bahía Escocesa (Scottish Bay) and, on the other hand, in the purchase of a hotel, that was in phase of construction in Cayo Levantado (Raised Key), as well as in the operation during 50 years of the island where it is located. This last establishment will have a category of five stars Great Luxury.

In this sense, González indicated that the objective of the company is to turn the resort of Cayo Levantado, that has a colonial design and style, in a “referring tourist spot”, and added that the four establishments will have a regime of an “all-included” package. In particular, the hotel Gran Bahía Príncipe Cayo Levantado will have a capacity of 191 rooms, among which it will have junior superior suites distributed in 12 villas of 8 rooms, suites, rooms “Villas Playas” (“Villas Beaches”), and standard rooms. Also, it will have 4 restaurants, other 4 bars, 2 tennis courts, 1 paddle court, and heliport.

On the other hand, the Gran Bahía Príncipe Cayacoa will offer 223 rooms, among which there will be junior suites and suites with views to the sea and standard rooms, whereas the establishment Gran Bahía Príncipe Samaná will have 103 rooms. Also, the Piñero group will have the Gran Bahía Príncipe El Portillo.

EAGERNESS TO INCREASE ITS PRESENCE IN THE DOMINICAN REPUBLIC.

These new openings are added to the three hotels that the company already has in the Dominican Republic, two of them, with a category of five stars, are located in Punta Cana -Gran Bahía Príncipe Punta Cana and Gran Bahía Príncipe Bávaro- and the other in Playa Grande –Gran Bahía Príncipe San Juan.

In this sense, González affirmed that the hotel chain is going to continue extending its presence in the Dominican island in the next years with the acquisition of new establishments and the construction of resorts. In particular, he asserted that the company hopes to open at the end of 2007 a hotel in the Bayahíbe zone (Southeast of the country).

Bahía Príncipe has three establishments in Mexico, although it hopes to initiate another hotel project with golf course in that country and to inaugurate another resort in Jamaica the next month of November. Also, it has two other hotels in Tenerife –Bahía Príncipe Costa Adeje and Bahía Príncipe Tenerife-. The Piñero group besides having the hotel chain Bahía Príncipe, has the hotel firm Piñero Hotels, with establishments of three stars, and the tour-operator Soltour.

LA NORMA GENERAL NUMERO 07-2007 SOBRE LA EXENCION PARA LAS EMPRESAS DE CONSTRUCCION DE PROYECTOS

2007-07-25T18:45:00.000-04:00

En fecha 26 de Junio del año dos mil siete (2007) la Dirección General de Impuestos Internos dictó la norma 07-2007 conocida como

NORMA PARA ESTABLECER LA FORMA DE APLICACIÓN DE LA EXENCION A LOS ACTIVOS DEL ISR Y EL ITBIS PARA EL SECTOR CONSTRUCCION Y DEL USO DE COMPROBANTES FISCALES QEU DEBEN SUSTENTAR SUS OPERACIONES.

En su artículo primero esta norma establece que para ser beneficiarias de la exención fiscal establecida en el Código Tributario sobre el impuesto a los activos las sociedades DEDICADAS a la construcción de obras importantes deberán someter a la Dirección General de impuestos Internos el estimado de los costos del proyecto y el plazo para la ejecución.

En otras palabras para que la empresa pueda calificar como exenta del impuesto de los activos tienen que estar registradas como tal en la DGII. De conformidad con dicha norma las empresas constructoras de obras estatales tales como carreteras, puentes, presas, caminos vecinales o edificaciones o similares, tienen derecho a la exención siempre y cuando la registren como avance al final del ejercicio. No obstante para recibir este beneficio se hace necesario el registro en la DGII del contrato con el Estado Dominicano.

El plazo para calificar una obra como exenta de impuesto sobre los activos es de 120 días. Estos comenzarán a correr para los nuevos proyectos al momento de inicio de las obras y para los que ya están en ejecución en el mismo plazo. Cuándo es el momento de inicio de la obra? Para la DGII el inicio de la obra (parrafo III) es el momento de la primera erogación de fondos. Es decir desde que el proyecto tenga los fondos para trabajar la obra.

Si los constructores decidiesen prorrogar el plazo del inicio de obra deberán informarlo a la DGII oportunamente. No se define en la norma cuál es el plazo de oportunidad pero se entiende que lo que busca la administración de impuestos es que las obras no se paralicen con la finalidad de acogerse a la exención. Es por este motivo que el párrafo V de dicha norma establece que de todas formas es necesario que las empresas se inscriban en la DGII para calificar como constructoras exentas del impuesto sobre los activos cumpliendo con las disposiciones del Título V del Código Tributario.

Cuando una empresa de venta de inmuebles o dedicada a la construcción tenga varios proyectos en ejecución cada proyecto debe de mantener sus registros individualizados, aunque para fines del Impuesto sobre la renta estos proyectos se presenten como obras consolidadas con el formulario IR-2.

Loa pagos que hagan dichas empresas a los subcontratistas estarán sujetos a una retención de un 2%. Los arquitectos, ingenieros, agrimensores y otros de profesiones similares "facturen consignando únicamente el valor del servicio profesional prestado, la retención del ISR será del 10% del valor facturado. En adición las empresas estarán obligadas a retener a su vez un 2% con carácter de retención a los trabajadores bajo la dependencia de los subcontratistas es decir de los trabajadores que documentados o indocumentados estén bajo la dependencia de dichos subcontratistas. Esta retención del 2% bruto se considerará pago definitivo.Estos pagos no requerirán de comprobante fiscal. En consecuencia podrían beneficiar a las empresas constructoras por la facilidad de reportar dichos pagos al final del ejercicio fiscal, sólamente consignando los datos de los beneficiarios tales como nombres cédulas, fecha, etc.Como indicamos anteriormente estos pagos no requerirán de comprobante fiscal, pero para la DGII existe una obligación general de prudencia que tienen las empresas constructoras en el sentido de que estos pagos tendrán que ser razonables y guardar relación con los parámetros aceptados para este tipo de gastos.Los maestros constructores, ajusteros, y obreros no estarán sujetos a la retención del Impuesto a la Transferencia de Bienes y Servicios (ITBIS); sin embargo el ITBIS será retenido por las empresas constructoras de la siguiente forma: a) persona jurídica ITBIS más retención del 2% de impuesto sobre la renta como pago definitivo; y b) si se trata de persona física 30%, repetimos que esta retención la efectua en la fuenta la empresa que realiza el pago.El artículo 4 de la norma establece que "Cuando un contratista o subcontratista, sean estas personas físicas o jurídicas, realicen trabajos de construcción y dichos trabajos inlcluyan materiales, equipos o piezas de la construcción, la facturación del 16% del ITBIS se aplicará sobre el 10% del monto de los trabajos facturados. El ITBIS facturado de esta manera, estará sujeto a la retención del 100% si quien factura es una persona física y de 30% si quien factura es una persona jurídica.Las obras contratadas como CONTRATO DE ADMINISTRACIÓN se calcularán sobre el porcentaje a percibir por el subcontratista como pago de su obra.El promotor o dueño de la obra podría para documentar el costo de la obra aportar como evidencia de dicho costo los comprobantes fiscales que sirvan de sustento a la compra de materiales de construcción por parte de las personas físicas o jurídicas que trabajen bajo la modalidad de contrato de administración.En el párrafo III de la norma en lo relacionado con el ITBIS se expresa que: " Las disposiciones de la presente norma sobre el ITBIS, no incluye los demás pagos que los constructores hagan a favor de técnicos, profesionales liberales y otras personas físicas cuya labor haya sido prestada sin estar bajo relación de dependencia de la empresa constructora que realiza el pago, los cuales estarán sujetos a las disposiciones establecidas en el Código Tributario y sus reglamentos. En el caso de que estos profesionales no estén registrados como contribuyentes, la emprsa constructora podrá hacer uso del comprobante fiscal proveedor informal para sustentar estos pagos.Los pagos que se realicen fuera del contenido de la norma y que las empresas contratistas deseen deducir como gastos tendrán que ser avalados por comprobantes fiscales válidos.Las empresas dedicadas a la venta de inmuebles tendrán que registrar sus ventas como ingreso cuando las transferencias sean efectivamente realizadas o cuando el bien se entregue al propietario. Los recibos emitidos o el contrato tendrán que tener el número de comprobante fiscal para que sea considerado por la DGII.La norma deroga expresamente la norma 04-07 del 30de marzo del 2007 y la norma general del 11-01 del 26 de diciembre del 2001.

Freddy Miranda Severino, Esq.Real estate lawyer. http://www.freddymiranda.com/

TITULO V. EL REGISTRO EN LA JURISDICCIÓN INMOBILIARIA

2007-07-25T18:42:00.000-04:00

CAPITULO IEL REGISTRO
En lo concerniente al registro se destaca en primer término el tipo de documentos que esta nueva ley considera registrables.Los dos primeros párrafos del artículo 89 parecen hechos en consonancia con la teoría clásica de los derechos inmobiliarios.En los párrafos primero y segundo encontramos las formas llamadas derivativas de adquisición de derechos inmobiliarios y además las que involucran los derechos accesorios. El párrafo primero ratifica el principio de que los derechos registrales son constitutivos, es decir que la condición de propietario se asume y surte efectos jurídicos a partir del registro. Este principio aparece confirmado en el artículo 90.El párrafo III es muy especial y está dedicado a las restricciones a la libertad de adquirir, haciendo mención de las servidumbres y a las declaraciones de patrimonio cultural. Este mismo párrafo, sin embargo establece que puede haber otras inscripciones que limiten la libertad del adquiriente. Esto es inusual en la teoría y en la práctica toda vez que en materia de actos jurídicos se entiende que los particulares no pueden establecer por convención limitaciones a la libertad de adquirir que pudiesen redundar en perjuicio de terceros. En la esfera publica si porque se admiten las leyes que alteran o limitan la libertad de acción sobre el derecho de propiedad como inembargabilidad o servidumbres.De todos modos debe interpretarse este articulo de forma enunciativa y no limitativa y admitirse que los particulares puedan establecer limitaciones “particulares sobre los inmuebles”.En el artículo 90 encontramos consagrado el principio de que el derecho de registro se genera con la inscripción y es convalidante de este derecho. No existen en este régimen hipotecas ocultas.

El peligro de este artículo es que establece una presunción absoluta contra la inscripción. Esto es no admite prueba en contrario. Lo que el registro consigna se presume exacto. Una disposición arbitraria que limita la corrección de simples errores materiales por vía administrativa como en principio era admitido por la vieja ley. En el presente caso se admite la prueba en contrario pero por la vía de recurso por causa de error o por fraude.En el artículo 92 se consigna la nueva forma del duplicado del certificado de titulo. Una copia fiel dice este artículo, no una constancia anotada un verdadero duplicado.¿Y que decir de los copropietarios, aparecen todos en un mismo certificado? El párrafo I de este artículo establece que cada copropietario tendrá derecho a un extracto del certificado original. En otras palabras ellos aparecen en el título original, pero en vez de una copia individual tienen derecho a un extracto, que no parece otra cosa que una constancia del derecho del copropietario.Esta ley ha simplificado un poco la obtención de un nuevo certificado cuando el anterior se ha perdido o destruido. En la actualidad basta con una declaración jurada una publicación y una solicitud al mismo Registro de Títulos quien deberá expedir la copia del duplicado.La constancia de la inscripción de derechos reales accesorios como hipotecas y medidas provisionales se hará mediante una copia del documento y una certificación de que ese derecho está inscrito, artículo 93.Las disposiciones del artículo 94 parte infine que establece la posibilidad de prueba en contrario de las certificaciones sobre las inscripciones de gravamen, parecen contradictorias con lo establecido por el artículo 90 sobre los efectos del registro. Parecería que el artìculo 90 se consagra para el certificado de tìtulo, sin embargo el mismo establece que el registro de cargas o gravámenes no sòlo del certificado de tìtulo.No obstante el mismo artìculo 94 parece hacer la diferencia entre ambas nociones de registros. El artìculo 94 se refiere a las certificaciones de registros. Estas admiten la prueba en contratio, pero las anotaciones que las atestan no. Asì una certificación es vàlida en un tribunal como medio de prueba hasta prueba en contrario, mientras que la anotación de esta certificación se presume exacta. ¿Qué debemos entender? Que lo que puede hacerse es mostrar que el registro y la certificación difieren y con esto se hace prueba contra la certificación, ya que el artìculo dice “excepto cuando se demuestre que son contrarias a la realidad del Registro.” O sea que difieren. No obstante el registro parece tener la misma fuerza probante, tendría que ser desonocido por un tribunal, aunque el artìculo 90 parece admitirlo sòlo por causa de fraude o por error material.Cuando el derecho de propiedad ha sido objeto de registro, los nuevos actos a inscribir quedan en lo que respecta especialmente a sus formas a juicio y calificación del Registrador de Títulos. Esta facultad no es privativa del Registrador sino que la ley señala que deberà estar establecida por la vìa reglamentaria.Cuando el acto a registrar provenga de una decisión de la Jurisdicción Inmobiliaria el Registrador sòlo puede calificar la forma de la inscripción, artìculo 96 de la ley.Todas las anotaciones deben de ser promovidas por las partes interesadas salvo las que sean autorizadas por los òrganos de la Jurisdicción Inmobiliarias. Las anotaciones que sean resultado de modificaciones a los derechos registrados o fruto del saneamiento deberán estar acompañadas de un plano aprobado por la Dirección de Mensuras y Catastro.Esto està regulado por el artìculo 97 de la ley la cual en su párrafo II establece la posibilidad de que luego de realizado un diagnòstico los propietarios pueden ser objetos de una actualizaciòn de sus planos.Esta disposición es confusa porque la ley no puede tener efectos retroactivos. Puede alegarse que lo que ese busca es la exactitud de los derechos registrados, pero que decir de un propietario con derechos reconocidos por màs de 20 años? El derecho de propiedad es reconocido como perpetuo. Un propietario que no ha actualizado para usar el tèrmino de la ley su plano, puede por eso ser objeto de una actualizaciòn de su plano? Esta es una solución dudosa.En ese mismo artìculo se regula el registro de derechos en caso de expropiación por el Estado Dominicano. No hay necesidad de oponerse a la expropiación en apariencia, porque los registradores no inscribirán la misma hasta tanto no se les de constancia de que los derechos de la parte expropiada han sido satisfechos.Esta ley contempla un bloqueo registral. Mediante el sistema de venta condicional de inmuebles. En el registro complementario al certificado se inscribe esta venta y desde ese momento no se puede ya registrar ningún acto de disposición sobre el inmueble a ser afectado. En ese mismo registro se inscriben otras limitaciones a la transferencia como son las declaraciones de bien de familia.

En el artìculo 99 nos encontramos con una disposición aunque no colide con el artìculo 90 respecto de la exactitud de los registros inmobiliarios al menos darà muchos problemas prácticos. Se establece que los errores puramente materiales puedan ser corregidos por los Registradores. Esto existìa en el antiguo sistema y por los fraudes y distorsiones los propietarios terminaron requiriendo por resolución hasta modificaciones a las cèdulas y errores de nombres. Suponemos que todo esto tendrá que ser ampliado por vìa reglamentaria.

CAPITULO IICONDOMINIOS
El artículo 100 está consagrado a la definición de lo que es un condominio. Dentro de los elementos de la definición encontramos el de independencia funcional y salida directa o indirecta a la vìa pública de las unidades.

El terreno se mantiene como comùn y proindiviso entre los condomines. Los sectores o àreas comunes son insperables y no estàn sujetas a venta o disposición.Para fines de financiamiento està permitido a las entidades financieras inscribir la intención del propietario de convertir en régimen comùn el inmueble.Està prohibido constituir condominios sobre inmuebles o unidades ya incorporadas al régimen de condominios ni sobre los que pudiesen estar amparados en cartas constancias.

La propiedad de diferentes unidades construidas en terrenos registrados tendrán que ser constituidas en condominio si estàn divididas por pisos de lo contrario pertenecerán a un solo propietario.

El consorcio de propietarios tendrà derecho a un Certificado de Titulo y a un bloqueo registral para que no puedan ser inscritos nuevos gravámenes sobre la parte comùn.
Las cuotas vencidas y no pagadas de los gastos comunes gozan de un privilegio y una vez liquidadas gozan de toda la fuerza de un titulo ejecutorio.

La competencia para todos los conflictos que surjan en esta materia será competencia del tribunal de Jurisdicción Original relacionadas con: a) derechos; b) cargas y gravámenes registrados.

CAPITULO III PUBLICIDAD REGISTRAL

Nos encontramos que aunque las informaciones de los registros son públicas la obtención de certificaciones es privativa de los propietarios.Los propietarios pueden sin embargo provocar un bloqueo para realizar transacciones inmobiliarias mediante la obtención de una certificación con reserva de prioridad. Un sistema novedoso sobre todo para ciertas promesas de venta. Decimos que sólo algunas porque el bloqueo sólo puede ser hecho por 15 días aunque no parece que el artículo restringa la renovación de la misma.
Aunque la certificación con reserva produce un bloqueo para fines de traspaso de la propiedad, la ley permite la inscripción de cargas y gravámenes provisionales, que se convierten en definitivas al final del plazo.
Entiendo que el sistema aunque novedoso parece admitir que se burle la protección de los acreedores, toda vez que si la operación cuyo objeto es el bloqueo se materializa las inscripciones provisionales son objeto de una especie de purga.

CAPITULO IV INMUEBLES DEL DOMINIO PUBLICO
Los artículos 106 y 107 están consagrados a los bienes del dominio público, una noción que no nos merece mayores comentarios, tal vez que la desafectaciòn o la colocación de estos bienes en el comercio debe ser hecha por ley.

TITULO V MODIFICACIONES PARCELARIAS
CAPITULO IOPERACIONES DE MENSURAS CATASTRALES
Las modificaciones parcelarias parecen estar sometidas a un régimen simplicado. Se obliga a someter a mensura todas las propiedades que se vayan a ser objeto de registro de acuerdo a la presente ley.El procedimiento de conformidad con el artìculo 111 es bastante sencillo, una vez hecho el contrato de mensura con el agrimensor la Dirección Regional de Mensura inviste o autoriza al agrimensor y ya està.En la pràctica parece estar comenzando a funcionar el sistema de satélite que permitirà agilizar los procedimientos. Lo que antes tomaba seis o siete meses se podrà hacer en uno o dos.

Si el contrato de mensura genera algún tipo de controversias, el asunto se dirime por la jurisdicción inmobiliaria. Si por el contrario el acto de mensura es impugnado se procede por la vìa administrativa que vamos a explicar:

Los recursos estàn abiertos contra las decisiones administrativas y de los òrganos técnicos y contra las decisiones administrativas de la Jurisdicción Inmobiliaria.El recurso de acuerdo con el artículo 75 está abierto a todo el mundo, todo el que sienta afectado.La primera fase para impugnar un acto administrativo es la reconsideración, que se interpone en un plazo de 15 dìas contados a partir la fecha de publicidad.El fallo debe producirse tambièn en un plazo de 15 dìas después de interpuesto el recurso. Denegada la reconsideración se abre el recurso jerárquico.El plazo para interponer el recurso jerárquico es el mismo, o sea de 15 dìas. Tambièn el plazo para fallarlo es el mismo.Rechazado el recurso jerárquico se abre el recurso jurisdiccional. El tribunal competente es el Superior de Tierras territorialmente competente.El plazo para interponer el recurso y para fallarlo es de 30 dìas.Haremos otro paréntesis para discutir acerca de los recursos contra las decisiones jurisdiccionales. Estos recursos son Apelación, Casación Revisión por error material y revisión por fraude.

La apelación es el recurso abierto contra las decisiones de los tribunales de jurisdicción original. Como sabemos de conformidad con el artìculo 6 de la ley habrà no menos de cinco (59 tribunales Superiores de Tierras, los cuales como todo lo relacionado con esta nueva ley estarà controlado por la Suprema Corte de Justicia la cual los pondrà en funcionamiento de acuerdo CON LAS

NECESIDADES DEL SISTEMA

Volviendo al articulo 80 de la ley el Tribunal Superior de Tierras es el del territorio del tribunal de jurisdicción original que dicto la sentencia.

En el aspecto formal el recurso de interpone en la Secretarìa del Tribunal que dictò la sentencia, mediante escrito motivado. Este recurso debe de ser notificado a la contraparte en un plazo de 10 dìas.

El recurso està abierto contra las partes y los intervinientes, pero si se trata de apelaciòn relacionada con el saneamiento cualquier intersado lo puede interponer.

El plazo del recurso es de 30 dìas, contados a partir de la notificación de la sentencia.
La Casación està abierta contra las decisiones de los Tribunales Superiores de Tierra, y se rige por la ley de Casación, y por los reglamentos que se dicten para complementar la ley.
LA REVISIÓN.

Este recurso està abierto para corregir errores puramente materiales. Como dijimos la ley no define cuales son esos errores y este artìculo podría colidir con los artículos 90 y 99. El primero que determina la exactitud del registro y que sòlo puede ser impugnada por el recurso de revisión. El 99 permite a los Registradores corregir los errores puramente materiales.
Entendemos que la vìa reglamentaria tendrà que determinar la aplicación de ambos artículos, aunque el artìculo 83 se refiere a decisiones de la jurisdicción inmobiliria, pero al dejar abierto el 90 este tipo de recursos contra el registro inmobiliario que afecta a los registradores podría suceder como señalaramos anteriormente con la vieja ley que hasta para los números de cèdula los registradores decidìan no enmendarlos y someterlos al Tribunal Superior.

De todas formas entendemos que debe prevalecer el principio de que el registrador de títulos puede evaluar y decidir lo que es un error puramente material y enmendarlo de forma que la revisión estè abierta contra las decisiones jurisdiccionales y las del registro por supuesta inexactitud del mismo de conformidad con el artìculo 90.

El plazo para este recurso es breve de quince (15) y es competente el órgano que generò la decisión. Hay que fijarse bien que la ley habla como dijimos, de forma indistinta de organo y tribunales. Algo que tambièn tendrà que ser ampliado por los reglamentos.

REVISIÓN POR FRAUDE

Abierto contra fraudes en el saneamiento este proceso està abierto para todo aquel que haya sido privado de su derecho, y se interpone por ante el Tribunal Superior de Tierras competente en un plazo no mayor de un año (1) después de expedido el certificado de tìtulo correspondiente.
No obstante el recurso està abierto desde la publicación de la sentencia pero se extiende hasta un año después de la emisión del PRIMER CERTIFICADO DE TITULO.

El principio de tercero adquiriente de buena sufre una derogación mientras estè abierto el plazo para la revisión por causa de fraude.

Como forma de determinar el inicio del plazo del recurso el párrafo IV de la ley determina que el registrador harà una anotación en el primer tìtulo el plazo de la prescripción. No sabemos cual es la sanción por la omisión. Ahora bien como toda prescripción se presume que comienza en caso de omisión cuando el interesado conoce del certiticado. Esta serìa la mejor solución pero en este artìculo se habla de emisión asì que la parte interesada en caso de que no estè anotado del plazo de prescripción tendría que partir de la fecha de emisión del certificado.

OFFSHORE ASSET PROTECTION

2007-07-25T18:32:00.000-04:00

A fresh look at offshore techniques in conjunction with recent developments in law relating to fraudulent transfer in the Isle of Manby Charles A. Cain

For some years, the favoured mechanism of Asset Protection vehicles, that is to say, vehicles for the protection of the assets of US persons from litigious creditors, has been the offshore trust. Indeed, it had almost reached the point where nothing else was ever mentioned, in spite of the fact that there always have been a variety of mechanisms available.

The original reason for this was a tax reason. At that time, and indeed, still today, the objective was to establish a vehicle into which assets could be placed which

protected the assets from attack through the US judicial system· would be able to make the assets available, if necessary, to the client and/or his family

would at worst be entirely tax neutral and at best enable routine Estate Tax planning to be done.

To achieve the first objective was comparatively simple - just get the assets out of the USA into a jurisdiction which had no Reciprocal Enforcement of Judgements Agreement1.

The actual holding mechanisms available then had to be selected.

At that time, the Limited Liability Company (LLC) was not available. In addition, the older classification rules of the IRS were still in force, and had not been replaced by the Check-the-Box Regulations, which were introduced in 19972.All offshore Corporate forms were, as a consequence, ruled out because an overseas holding corporation would have been a Controlled Foreign Corporation3. Quite apart from the enhanced reporting requirements implicit in a Controlled Foreign Corporation (CFC) with Sub-Part F income, a Foreign Personal Holding Company (FPHC)4, a Passive Foreign Investment Company (PFIC)5 and the other implications of being caught up in Prof. Harvey Dale’s renowned five armed Pentapuss (now six-armed with the addition of the PFIC), there is a distinct penalty provision in relation to Basis step-up for Capital Gains Tax, derived from the rules in IRC s.1246(e) and 1291(e). The tax consequences of using a CFC for asset protection were therefore prohibitive.The Limited Partnership was another vehicle which was used extensively inside the USA, but in those days, few offshore jurisdictions had them, although they have been in the statute book in the Isle of Man since 1909 (Partnership Act, 1909).Many US Practitioners then looked at Trusts for Asset Protection. They found that there was a rich tradition of Trusts being used for ‘Asset Protection’ in a more general sense - indeed, there is scarcely any other purpose for a Trust.For tax purposes, they were brilliant, since a trust established by a US person which he was also capable of benefiting from was a Grantor Trust6, and therefore entirely transparent for income and capital gains tax purposes. Thus the offshore trust was tax neutral, but was still capable of being structured for basic estate tax planning.

There were, of course, some drawbacks. Firstly, the establishment of a foreign trust, even though a Grantor Trust, led to enhanced reporting. This could, in theory be cured, by making the trust a domestic trust. This could be done by providing as a joint trustee, a US trustee, and by ensuring that the provisions of IRC s. 7701(a)(30) were met. The trustee would resign the moment the heat was turned up, but until that time it could be argued that the trust to argue was a US domestic trust for tax purposes, notwithstanding that the proper law was overseas, as were the assets, and the actual management of those assets.The second drawback was the desirability of having a holding company below the trust. Such a company immediately plunged the structure back into the CFC problem. There were three solutions to these CFC problems. Either the assets were transferred direct into a bank ‘street’ name or nominee company. Or, they were held in a US corporation, which because of the tax attribution back to the Grantor, could be a transparent S-corporation7, or, thirdly, the assets were held in a foreign corporation which, although owned by the Trustee, was arguably a nominee company, relying on the decision in Commissioner v Bollinger 108 S.Ct 1173(1988).None of these was very satisfactory. Not all assets can be held in a “street name”. The use of a US S-corporation immediately brought the ownership of the assets back into the USA, where they could be frozen and/or sequestrated. But the use of a nominee company correctly made it impossible to use the company as a mechanism for the day-to day management of the assets by the client.The problem remained until the advent of the offshore LLC, which, by being classified as a partnership8 instead of a corporation enabled the Tax Transparent trust to have a Tax Transparent LLC beneath it, with the client as Manager of the LLC.

There were also other problems derived from the fundamental character of trust law itself, and from the so-called ‘Statute of Elizabeth’9. The most serious problem of all was perceived to be the issue of fraudulent transfer, and this still remains the biggest problem for a foreign trustee.Under normal English Common Law principles, the principles set out in the so-called Statute of Elizabeth (Fraudulent Conveyances Act 1571 (13 Eliz I Cap 5) are now contained in the UK’s Insolvency Act 1986) have been adopted in one way or another by every country which looks to England for the source of its law (in the USA, the Uniform Fraudulent Transfer Act 1984). This is not, technically, a matter of trust law, but is a matter of bankruptcy law. Where a person effects a transfer to a trust with the intent to defeat any future creditor, the transfer can be set aside and the trust declared void.Virtually every jurisdiction which had adequate equity-based trust law (anything else was and is far too risky in terms of dealing with the unknown) had also absorbed the principles of the Fraudulent Conveyances Act 1571 (13 Eliz I Cap 5).There is one jurisdiction, however, which while being an absolutely traditional Common Law jurisdiction, has never been afflicted by the problems thrown up by the Statute of Elizabeth.In the Isle of Man there was considerable uncertainty concerning fraudulent transfer, and, in consequence, after a promising start in the Asset Protection business, the Isle of Man fell by the wayside. But, in 1999 came the case of Re Heginbotham’s Petition 199910. In that case, it was determined that the Statute of Elizabeth had never been accepted into Manx law. Different Manx legislation applied, and in consequence Asset Protection Trusts or other structures established in the Isle of Man are now safe, provided that, at the time of establishment, the Settlor was solvent, was able to meet all his known and ascertainable creditors, and had no intent to defraud creditors. We shall examine this case in a little more depth later on.Elsewhere, the Asset Protection Trust has been running into problems, largely derived from the equitable character of trust law, and the extreme reluctance of the courts to allow an equitable remedy to be used to deny equity to another party. Notwithstanding aggressive legislation in certain jurisdictions (which has caused some commentators to wonder whether trust law now actually exists in such jurisdictions, have been replaced entirely by bailments14, the courts have shown a determination to uphold basic rules of equity.In consequence, we have the excitements of the Orange Grove11 case in the Cook Islands, the Lawrence case12 and the more recent Anderson case13, where the settlor went to prison for contempt for failing to return the funds to the USA. Effectively, the trusts were treated as bailments.As all this was happening, there were changes to the law too. In August 1996, the USA enacted the Small Business Jobs Protection Act 1996, which, under the wing of a fairly innocuous piece of social security legislation, fundamentally altered the tax rules relating to foreign Grantor Trusts. As far as Asset Protection Trusts are concerned, it abolished the charade of the foreign trust being a ‘US Trust’ for tax purposes, and thereby forced the reporting regime for foreign trusts on all offshore Asset Protection Trusts. It also greatly enhanced that reporting regime, including a requirement on the offshore trustee to provide information, and appoint an agent in the USA for that purpose. This latter has caused real difficulties in situations where there are beneficiaries resident outside, as well as inside the US tax net.Finally, the Check-the-Box Regulations2 that came into force on 1st January 1997, changed the whole classification mechanism for entities, and thus the arguments that had been stitched together in favour of the use of the offshore Asset Protection Trust all came apart.Let us go back to first principles. We need to park assets offshore into an entity which is both transparent for tax purposes, and which provides substantial asset protection capability. We now know that the trust is subject to many difficulties, but these do not afflict the LLC. A properly designed LLC can provide tax transparency, as well as powerful Asset Protection features, which are not vulnerable to shifting sands of trust law.The offshore LLC, though, has its limitations. It cannot be used to do Estate Tax planning in the USA. It cannot cope with complex family inheritance issues. For such matters, a trust is needed. Such a trust, however, does not need to be offshore – it can easily be established in the USA itself, in a suitable state, as a domestic trust. Since the Asset Protection planning is being done in the offshore LLC, the domestic trust need not concern itself with asset protection. Thus, the preferred solution now is a domestic trust in which all the estate tax planning is effected, and, below it, an appropriately designed LLC, in which all the asset protection planning is done.In the Isle of Man, the LLC is a legal entity created under the Limited Liability Companies Act 1996. It is not a Trust. No US court will have jurisdiction. Only the Isle of Man Courts have jurisdiction. An order made by a US court requiring the US Client to instruct the overseas Trustee to instruct the LLC to distribute the assets will not be enforced in the Isle of Man15.There are three members of such an LLC. The US person will have a 99.9% interest, and two offshore members will have (genuinely and beneficially) an 0.01% interest between them (there are no de minimis rules.) All decisions have to be made unanimously.The parties attacking the US Client will first have to demolish the US domestic trust. After that, they will have to take the action to the Isle of Man courts15, and endeavour to obtain a charging order over the US Client’s beneficial Interest. But that will achieve nothing, since they cannot obtain any access to funds in the LLC, while now having a tax liability commensurate with their 99.9% interest16. This means that no transferee can force a distribution. He can only wait until the members unanimously decide to make a distribution. This could be never.Furthermore, in consequence of the decision in Re the Petition of Christopher Jollian Heginbotham 199910, the transfer to the LLC cannot be attacked, even though the trust may have been set aside in the USA. Asset Protection LLCs established in the Isle of Man are now safe in Manx law, provided that, at the time of establishment, the Settlor was solvent, was able to meet all his known and ascertainable creditors, and had no intent to defraud creditors.For many years, there has been considerable uncertainty in the Isle of Man relating to the law of fraudulent transfer. This arose because the Isle of Man, as a jurisdiction is, and always has been separate and distinct from that of England, and thus English law was never ‘received’ in the same way as, for example, it was received into former English colonies, including the USA. The infamous ‘Statute of Elizabeth’, or more properly, the English Fraudulent Conveyances Act 1571 (13 Eliz I Cap 5) was never adopted in the Isle of Man. The earliest legislation on the subject in the Isle of Man is the Fraudulent Assignments Act 1736 of which, today, just one section remains in force. This reads as follows:“(4) And that all fraudulent Assignments or Transffers [sic] of the Debtor’s Goods of Effects shall be void and of no effect against his just Creditors, any Custome or Practice to the contrary notwithstanding.”The only other reference in Manx legislation is to found in the The Bankruptcy Code 1892.Section 30 of that Act reads:“Avoidance of voluntary Settlements(1) Any Settlement of property, not being a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife and children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of settlement, be void against the trustee1, and shall if the settlor becomes bankrupt at any subsequent time within ten years after the date of the settlement, be void against the trustee 17 unless the parties claiming under the settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor had passed to the trustee of such settlement on the execution thereof.(2) .........(3) ‘Settlement’ shall for the purposes of this section, include any conveyance or transfer of property.”Thus the whole situation relating to future creditors, (i.e. creditors not existing or being ascertainable at the time of the settlement is effected and arising subsequent to such a settlement having been made) was unknown.This is of great significance because the Isle of Man was one of the pioneer jurisdictions for asset protection trusts, but fell by the wayside because of uncertainty on this point. In addition, the Isle of Man turned its face against the type of ‘debtor’ protection legislation as was adopted in many other jurisdictions, to the extent that the Isle of Man does not even feature on a list of jurisdictions favored for asset protection work.However, as a result of the judgement in Re the Petition of Christopher Jollian Heginbotham 199910, the uncertaint has been resolved. The note of the Editor of the International Trust and Estate Law Reports 18 (Philip Baker) states:-“The issue decided by this case had not previously been settled in Isle of Man jurisprudence. The issue is of relevance because the Isle of Man has eschewed specific asset protection legislation. This case now establishes (subject to any contrary decision of a higher court) that a transfer of asset to a trust, for example, cannot be set aside at the instance of creditors whose debts were not known and ascertained at the time of the transfer. Thus so long as the transferor is not in a ‘state of insolvency’ at the time of the transfer - that is, he can pay all his known and ascertained debts, including those falling due on a future date - the transfer cannot be set aside.This case also confirms the general principle that a trust, bona fide established by a person who is not insolvent, is a perfectly good asset protection arrangement. In some instances, the use of a trust in a territory with strong asset protection legislation - such as in the Cook islands - is an indication that the transferor was not bona fide or knew of future debts he wished to avoid. On the outcome of creating an asset protection trust under such a regime, see FTC v Affordable Media 2ITELR 73.”The case was a petition under the Fraudulent Transfers Act 1736 for an order that the petitioner could enforce a judgement against two Isle of Man companies. The Petitioner, a local Estate Agent (Realtor), Mr A, had sold out to a Purchaser, Mr W. The deal was structured so that the business was transferred to a new company, A Ltd, which was owned by Mr W. Because of local legislation, an Estate Agency business must have a qualified person in management. Mr A was so qualified. Mr W was not. Therefore, the services of Mr A were retained as a director of A Ltd.There was a disagreement between Mr A and Mr W, and the terms of the agreement were not carried out. Mr W, needing a qualified person, did a deal with Mr M, who was so qualified. Part of the business was transferred into one of the companies; the other part, which required a qualified person to be involved, was transferred to the second company with which Mr M was associated.Mr A obtained a judgement for specific performance of the agreement, but was unable to enforce it against A Ltd, since the asset had been transferred out of A Ltd to the two new companies. Mr A petitioned under the Fraudulent Assignments Act 1736 to have the transfers set aside as fraudulent transfers.The Deemster (as a High Court Judge is called in the Isle of Man) rejected the Petition.HELD

(1) For the 1736 Act to apply, there must be an intent to defraud creditors. This intent applies only to present debts, not contingent or future debts which may never materialise. Present debts include known and ascertained debts which are to fall due on a date in the future.

(2) At the time of the transfers to the two companies, the petitioner had not yet served his defence and counterclaim to the action. The judgement debt was not therefore a present debt. The transfers were bona fide and not contrived to defraud creditors.

The Deemster considered the implications of the ‘Statute of Elizabeth’ and the Fraudulent Assignments Act 1736 at great length. This included a judgement of the Judicial Committee of the Privy Council of 1859. He also considered the ‘obiter dicta’ of Deemster Kneen in the unreported case of Re Corrin’s bankruptcy (1908)19, which those who have followed the Isle of Man’s law in this area will be aware of.What does all this mean in practice. It means that Asset Protection Trusts or LLCs established in the Isle of Man are now safe in Manx law, provided that, at the time of establishment, the Settlor was solvent, was able to meet all his known and ascertainable creditors, and had no intent to defraud creditors.

The conclusion of this is that the options for asset protection planning have substantially changed in the last year or two. There is now more choice, not less. For would be fraudsters, the options have diminished, For everyone else, the options have expanded.

1. Very few jurisdictions doing substantial offshore business have such agreements with the USA. Very few are subject to the Brussels and Lugano Conventions on the Reciprocal Enforcement of Judgements nor the Rome Convention on applicable contract law. See also note 15, infra.

2. Treas.Reg 301.770 as amended and in force January 1, 1997

3. Internal Rev Code, s.957

4. Internal Rev Code, s.552

5. Internal Rev Code, s.1296

6. Internal Rev Code, s.671 through 679

7. Internal Rev Code, s.1361. The prohibition of a Non Resident Alien from being a shareholder in an S-Corporation was ended in 1982, P.L. 97-354 §2.

8. Under the previous classification regulations, an LLC failed, by design, to meet the definitions of a corporation set out in the former Treas. Reg 301.7701 – 1(a)(i) but this was changed by the new Regs adopted on January 1 1997 (the Check-the-box Regulations). An LLC is now be a default corporation, because all its members have limited liability, (Treas.Reg 301.7701-3(b)(2)(B)) but it can make a one-off election by filing Form 8832 to be treated as a Partnership, and thus obtain transparency (Treas. Reg 301-7701-3(c)(1)).

9. Fraudulent Conveyances Act 1571 (13 Eliz I Cap 5)

10. Re the Petition of Christopher Jollian Heginbotham 1999 2ITELR 95

11. 515 South Orange Grove Owners Association and Others v. Orange Grove Partners and others (No.1) (1995) CA 1/95 and CA 1./96, Cook Islands, and 515 South Orange Grove Owners Association and Others v. Orange Grove Partners and others (No.2) (1997/98) 1 OFLR3)

12 Re Stephan Jay Lawrence, Debtor, Case no 97-14687, BKC-AJC-Chapter 7, 2ITELR283

13 Federal Trade Commission v Affordable Media LLC, Denyse Anderson and Michael Anderson, Case no 98-16378, US Ct of Appeals 9th Circuit, 2 ITELR 73

14 A bailment is a relationship created when there is no intention on the part of the baillor (equivalent to the settlor) to lose control. (cf. handing a coat into a hotel cloakroom for safe keeping.) See Clough Mill Ltd v. Martin - Court of Appeal [1948] 3 All E.R. 982

15 There is no Reciprocal Enforcement of Judgement Agreement between the Isle of Man and the USA. In the Isle of Man, the Judgements (Reciprocal Enforcement) (Isle of Man) Act 1968 provides for reciprocal agreements, but there has never been such an agreement with the USA.

16 The LLC has filed Form 8832 and elected to be taxed as a partnership. As a consequence, the income and gains of the LLC is attributed directly to the Members. If a Members’ interest is taken over by a successor, so also is the tax liability, irrespective of whether actual distributions are being made by the LLC.

17 Trustee in bankruptcy.

18 Published by Butterworths, London UK. In the USA available from Lexis Law Publishing, Charlottesville, Virginia ISSN 1464-7125.19 Re Corin Bankruptcy, Kermode Trustee of Corin’s bankruptcy v Craig (1908), see Asset Protection Trusts – Grundy, Briggs & Field, 3rd Edition, at p.12 (ISBN 1 870070 80 1)

INTERNATIONAL BUSINESS COMPANIES (AMENDMENT)

2007-07-25T18:29:00.000-04:00

Finally, the BVI legislature has approved and released the much awaited provisions dealing with the immobilization of Bearer Shares and the definition of “Custodian” that is incidental to the restrictive use of bearer shares. As expected, the Bearer Shares changes came as an amendment to the BVI International Business Company Law. The “Custodian” legislation came as a modification to the Financial Services Commission Act.

Although some of these provisions are yet to formally be made public in the BVI Gazette, such publication is expected in the coming weeks. Below is a summary of the most relevant aspects, for your reference:

1. INTERNATIONAL BUSINESS COMPANIES (AMENDMENT) ACT, 2004.Amendments to the International Business Companies (IBC’s) will ultimately require that all bearer shares in BVI IBC’s be held by a custodian and thus immobilized. Companies formed after 1 January 2005 must comply with these requirements from their date of formation. Alternatively, BVI IBC’s may be issued with registered shares.

However, Section 2 of the International Business Companies Act is amended to move back the deadline for the immobilization of bearer shares that are in existence prior to 1 January 2005, from the initially proposed date of 31 December 2004, to 31 December 2010. Thus, you will not need to be concerned about the restrictions on bearer shares for those companies formed previously, and up to 31 December 2004, at least until the year 2010.

2. FINANCIAL SERVICES COMMISSON (AMENDMENT) ACT, 2004:
a. Authorized Custodian of Bearer Shares
This amendment act introduces a new section 50A to the BVI Financial Services Act that provides for the approval of authorized custodians by the BVI Financial Services Commission (“FSC”).

An Authorized custodian will be either (i) the holder of a license under any financial services legislation; or (ii) a body corporate formed outside the BVI that is not resident in, and does not have a place of business in the BVI. In both cases, an applicant for approval must satisfy the FSC that it is a fit and proper person to act as an authorized custodian, and that it has the necessary security and compliance systems and procedures in place.

In determining whether a body corporate incorporated and operating outside the BVI is fit and proper to act as an authorized custodian, the FSC will also consider the prudential regulation exercised over, and anti-money laundering obligations imposed on such corporate body outside the BVI.

The amendment act provides in its new section 50C that the FSC may establish conditions for the approval of an authorized custodian and to vary or revoke said conditions. Also, under section 50D, the FSC is enabled to issue Guidance Notes specifying the practices and procedures it expects authorized custodians to follow.

To assist potential applicants for custodian status, the FSC has issued a new Aide Memoire, entitled Criteria for Approval of Authorized Custodians of Bearer Shares of BVI Incorporated Companies. In addition to providing an outline of the criteria that will be used by the FSC when approving custodians, the Aide Memoire addresses, inter alia, the duty of custodians and the grounds on which the FSC may revoke approvals. Based on the stringent requirements and compliance obligations, it is unlikely that many non-BVI companies, offices, trusts or firms, will be willing to apply for a custodian license.

Further, section 50E of the amendment act allows for the automatic revocation of an authorized custodian’s license by the FSC if such person is no longer fit and proper to act as an authorized custodian, breaches any conditions to which its approval is subject, breaches any Guidance Notes issued by the FSC, or being a non-resident corporate body operating outside the BVI a person becomes resident or establishes a place of business in the BVI.

b. Recognized Custodian of Bearer SharesUnder a new section 50B, the FSC is also empowered to acknowledge as a recognized custodian of bearer shares, an investment exchange or a clearing organization operating securities clearance or settlement systems in a jurisdiction that is a member of the Financial Action Task Force (“FATF”).

c. Other ProvisionsThe principal Financial Services Act is amended such as to clarify that only courts of competent jurisdiction in the BVI are empowered to make an order for the disclosure of privileged information held by the FSC.Additionally, the amendment extends immunity from being sued to persons who disclose information pursuant to a request from the FSC under the Financial Services Act.

JP MORGAN FORECAST ON DOMINICAN REPUBLIC PAYMENT

2007-07-25T18:28:00.000-04:00

The umbrella of the grace period is a bad signal.

The present is a free summary of the information released by Dominican newspaper Diario Libre

The Dominican authorities requested an extension to start accommodations with the Club of Paris regarding the payment of the external debt of the Dominican Republic. The meeting for renegotiation of bilateral debt repayment was scheduled for march, and now it will take place on April. The experts of JP Morgan said that is a fact that the payment of the US$11-million due on 28 February for the PDI Brady Bond will not be made on time. They stress nevertheless that the Dominican Republic is entitled to a 15 days grace period.

According to Morgan, DR still has a considerable limitation on resources, giving rise to the theory that the Paris Club was putting a lot of Pressure over the Country to display its equal treatment with private investors. Morgan confirmed that the IMF recommended to DR to keep up to date in payments until it reaches an agreement with the Paris Club.

The postponement of accommodations until April, “further complicates the things”, because there is another payment in the amount of US$23.74 millions on the 06 bonds due on March 27 (with a 30 days grace period). Finally according to JP Morgan the late payments on 06 bonds would be used to negotiate with Paris Club. The goal is to postpone payments to private creditors, and odds are that private creditors will no receive more payments on 2004.

COSTASUR DOMINICANA TO WITHHELD LUXURY TAX IVSS

2007-07-25T18:27:00.000-04:00

In January, specifically the 27th, Direccion General de Impuestos Insternos, similar to Internal RevenueService enacted an special resolution converting Costasur Domnicana, S.A. in a sort of Agency in charge of collectingthe property tax or IVSS from owners. Therefore IVSS (property tax) is changing its form to a withholding tax. It is still a levy or contribution over the property but from this year Casa de Campo would be responsible for the collection of the levy.

onsequently Costasur may charge the luxury tax (IVSS) directly to those clients with balances outstanding with Internal Revenue Office (even if they don’t want to pay the IVSS) because Costasur is liable to pay the property tax on its expenses. In other words Costasur is liable (jointly and severally liable) for owner’s obligations. The purpose of the resolution then, is to enable enforcement of legislation 18-88 relative to property tax or IVSS.

We may say: “then I am not going to pay the property tax through them I am going to do it by myself”, because I don’t consider appropriate to live my property on their free will. Or perhaps because you may think that they may retain the funds (I don’t think they can) and then do not report it to Internal Revenue Office. The answer is that yes you can pay the property tax directly to Internal Revenue Office. However in my opinion from now on it is almost impossible to default property tax payment; provided that Costasur is bound by the resolution above mentioned, in a short period of time if they are required to make a payment on behalf of an owner that went into default, they may cut out the services to this client, such as telephone, electricity, if said owner does not fulfill his obligations with respect to the property tax.

The resolution is no doubt against the Dominican constitution for a lot of reasons, but only in the event of a judgment from the Supreme Court against the resolution owners are bound by said, and so far I don’t see a loophole to bypass it.

PUNTA CANA GETS THE MOST VISITORS

2007-07-25T18:26:00.000-04:00

SANTO DOMINGO. Almost half the total number of tourists who came to this country arrived through the Punta Cana airport, according to the most recent report of the Central Bank on tourists flow. This past January, 46.8% of the foreigners and non-residents who arrived in this country came in through that terminal.

Puerto Plata ranked second, having received 25.6% of the visitors during the first month of the year, whereas Las Americas terminal recorded 15.9%.

La Romana Airport mobilized 10.0%, and the remaining 1.7% came in through the Cibao and the Herrera terminals, according to the official report.

The report states that, although it took second place for the number of tourists mobilized, Puerto Plata is the most dynamic, with a growth of 26.0%. In Punta Cana, the increase amounts to 7.8%, but Las Américas, La Romana, Cibao and Herrera, reported a decline of 4.5%, 5.6%, 9.6% and 38.3%, respectively.

BRAZILIAN COMPANY BUYS 51% IN PEPSI RD AND WILL ESTABLISH BREWERY

2007-07-25T18:22:00.000-04:00

AmBev is the number 1 brewery in that South American country and the fifth largest in the world.

SAO PAULO. AmBev, the largest beer company in Brazil, will expand its operations in Latin America after paying US$100 million for the control of the only distributor of Pepsico in the Dominican Republic, and for establishing a brewery.

AmBev will pay US$60 million for 51% of Pepsi shares in Embotelladora Dominicana CxA (Embodom), and it will eventually increase its participation to 66%, after establishing a brewery and contributing US$10 million more in cash. Embodom distributes Pepsi Cola, 7up, Mirinda, Red Rock and Mont Pellier water.

Scope
Juan Vergara, Ambev's International CEO considered that "the Dominican market is very promising." According to Ambev's estimations, the Dominican beer market is approximately 3.2 million hectoliters per year (35 liters per person, per year), and it generates over US$430 million.

Expansion
This agreement marks the beginning of AmBev's operations in the Caribbean. In the last three years, this company took over the major beer company in Argentina, Uruguay and Paraguay, introduced itself in Guatemala, and made investments in Ecuador and Peru.

MORE ON FREE TRADE AGREEMENT TLC.

2007-07-25T18:18:00.000-04:00

The Free Trade Agreement (TLC) with the United States is the most important topic on financial matters in the Dominican Republic. Its importance lies in the structural changes that it could produce, such as reduction of tariff bariers, not volumes, and duties. Other probable changes might affect the legal structure, particularly Law number 20-00 on Industrial Property, regarding the time granted for patent protection and information disclosure, and Law 173 ton the protection of import agents.

A corollary of these changes would be (in connection with the two laws above mentioned) that the domestic pharmaceutical industry would be totally unprotected against the possibility of a massive incursion of foreign markets with medicines priced apparently higher than those made in this country. With respect to legislation 173, its derogation would imply in theory the entry to the Dominican Republic of products and trademarks from any region, wich would affect the local industry.

The agreement has been criticized mostly by those who believe that it would not be advantegeous for this country which (according to the view point of this group) already had preferential tariffs for export volumes to the United States, not for individual items, as are currently being negociated. For those who share this opinion, a change of government might result in stagnation for the agreement, because the new government will not have the support of the Dominican Congress.

Nevertheless, the agreement seems to be a done deal, and this country should proceed to submit its letter of intent before March of this year, with a schedule of those products and items that would be the subject of customs liberalization. However, statements made by Ms. Sonia Guzmán, the Chief of the negociating team of the Dominican Republic, seem to indicate that the tariff structure will be affected within a range of 60% to 80%. This will undoubtedly represent a sacrifice in terms of government income and will probably be compensated by amending the Tax Code. According to the information received, the labor aspect of the agreement and intellectual property were left pending for the round in Washington.

THE AGREEMENT MADE WITH IMF INVOLVE CHANGES IN THE TAX SRUCTURE.

The Dominican Republic breached the first agreement made with the IMF when it bought the energy companies Union Fenosa, Edenorte and Edesur, which resulted in a huge financial deficit for the government, because it had to apply large sums to such purchases. Under the new agreement concluded with the IMF the government is commited to strengthening its tax controls and its receipts structure, and to work on preventing tax evasion, as well as to curb monetary emissions in order to control, among other things, the increase in the rate of exchange of foreign currency. The government should als refor the energy sector in order to recuperate the energy distribution companies and stabilize the system. This will result, no doubt, in higher electricity bills, which are already too high.

In 2004, the government should implement financial policies equivalent to 205% of the Gross Domestic Product; increase taxes in 0.5%, and reduce its expenses by 2%. The projections for the external account is that there should be a surplus with a financing need of more than US$1,000,000.00.

PURPOSES OF THE AGREEMENT

To ensure the reduction of the public sector debt in order to arrive at 40% of the GDP in 2008, through strong financial growth and the sale of public assets (real estate, mines, shares of stock and securities in the Central Bank) equivalent to 6% of the GDP.

To reduce public deficit to 3.75% in 2004, and to further another reduction of 1.8% of the GDP in 2005, after the tax reform becomes effective.

To eliminate tax exemptions to the ITBIS (tax on the transfer of goods an services) and other Income Tax exemptions, and to review tax rates including ITBIS and Selective Consumption Tax.

To stablish an independent tax authority for customs and for internal revenue.

To criminalize tax evasion.

To prepare a reform proposal by the end of March, to be submitted to Congress before July, in close consultation with the IMF. This should focus on extending the internal revenue tax base, revising the rates, eliminating distortions, and compensating for tariff reductions.

After learning of such objectives, some risk analysis entities have concluded that the Dominican Republic will not offer an appropriate enviroment for investing until after this coming May, when presidencial elections will be held. British corporation Fitch estimated that the political problem weakens the conditions for investing in the Dominican Republic. According to these analysts, at a time like this, disbursements of loans by international credit institutions may be delayed. According to this company, a change in the financial conditions of the Dominican Republic will depend to a great extent on the execution, without further interruptions, of the agreement with the IMF.

TLC. FREE ACCESS OF 99% OF ITS MARKET TO THE DOMINICAN REPUBLIC

2007-07-25T18:09:00.000-04:00

Pressure continues.
Us team of negotiator kept their pressure on Dominican team which persist in maintaining its list of protection.
San Juan Puerto Rico.
United States reaffirmed yesterday its interest in closing, as soon as possible, the agenda of free commerce with Dominican Republic.
In just two days of accommodations has offered to his Dominican partners free access to 99% of its market, 10% more of what has been given in the Cuenca del Caribe agreement. It just leaves out of the agreement 17 lines of shoes, two of canning Atun, and peanuts.

It is the most generous offer that has been made by the United States to any Country, remarked the chief leader of the negotiation team of Dominican Republic, Sonia Guzman. Although the letter of Dominican Republic continues to be a sort of secret, Guzman pointed out that the United States cannot pretend that the Dominican Republic will open its market in the same proportion. Acknowledges the need of protection.

The supposed list of priorities of the United States of access to the market circulated unofficially. Nevertheless, Mr. Jesus de los Santos and Osmar Benitez, coordinator and negotiator respectively, of access to Agriculture market and Sanitary measures denied the status of official of the document and that the same is the matrix of the accommodations. Is going to be today when the negotiators will start to work with the list of product that will enter as a part of the free commerce with the private sector. A hard task, considering that the Country has approximately 10,000.00 items. Guzman denied the rumors of pressure on her to eliminate duties for the products within technical rectification.

For more details on TLC, go to www.fgasoc.com.do, www.dominican-realestate.com.do.

OPTION TO PURCHASE AND EARNEST MONEY DEPOSIT

2007-07-25T18:05:00.000-04:00

Having been active in the real estate market in the Dominican Republic for many years, particularly in the tourist sector, we have at times noted a great confusion between the legal notion of the option to purchase and its effects when accompanied by a sum, which in our legislation is typified as earnest money.

First, we should point out that, although in practice an earnest money deposit usually consist of an amount of money, it does not neccesarily or indispensably have to be so. A financial instrument or any chattel that the parties deem of adequate value for entering into a contract may be considered as earnest money for the purpose of a real estate-operation. This leads to the conclusion that earnest money consitutes essentially a typical security for the fulfillment of such obligations as are normally established in an agreement of option to purchase, and it is therefore also known as handsel; and at the same time such term implies the granting of money or chattel as security or guarantee in a typical real-estate buying/selling deal.

The core of such constant confusion is the implementation of earnest money deposit in options to purchase. The option to purchase, also known as promise of sale, implies the unequivocal manifestation of one (or sometimes both) of the parties to sell a property to another in a given time. Therefore, in principle, an option to purchase should include a rescission period in order for the agreeement to be perfected and for the two wills to meet. What happens then, when a promise of sale has been made with earnest money or handsel? Such promise of sale implies the ability to retract because it gives both parties the right to withdraw from their commitment and to terminate their covenant sustaining a double penalty as established in article 1590 of our Civil Code, which reads as follows: "If a promise of sale has been made with an earnest money deposit or handsel, each of the contracting parties is entitled to rescind the contract, and the party who made such deposit shall forfeit it, and the party who received it should return such amount twofold" Many lawyers are wrong in understanding that a promise of sale always has the same force as a sale pursuant to article 1589.

In this case, the legislator has in fact introduced an extenuation to one of the effects of a consensual sale, i.e. the transmission of the premises and its risks. In other words, such effects are retarded pendente conditione until the parties waive their right to withdraw by executing a final contract. Thus, there is no actual sale until such time, the contents of article 1589 notwithstanding, since there con be no final agreement while a rescission is possible. Such misunderstanding is apparent when attempting to combine both articles. For many, a promise of sale has the same effect as a sale until it is rescinded.

This would imply that all risk of the chose would be born by th buyer. This notion is erroneous, according to our position regarding this matter. These two provisions may not be combined because they are antagonistic. The legislator´s intent was to sever one from the other. A promise of sale pure an simple, i.e. without earnest money deposit, has the same effect as a sale. A promise of sale with earnest money deposit involves the possibility to rescind such promise, to revoke it, to change one´s mind; it does not have the same effect as a sale until the parties involved give their final consent.

Freddy Miranda, Esq.
Former Professor Pontifical Catholic University PUCAMAIMA
Attorney at Law Figueroa Guilamo & Associates
www.fgasoc.com.do
fmiranda@fgasoc.com.do

DO IT YOURSELF IN REAL ESTATE IN THE DOMINICAN REPUBLIC

2007-07-25T18:00:00.000-04:00

During our more than nine years of experience in the real estate and tourist markets, we have been greatly surprised to learn that many buyers do not consider their acquisitions to be a true investment. As soon as the purchase of a house, an apartment or a villa is considered an investment, the legal treatment varies substantially.

The first difference is the manner of acquisition. A real investment involves planning. The second factor is the preparation of the mechanism of acquisitionÂin most cases we recommend forming a company.

What type of company is recommended for purchasing real estate in the Dominican Republic, particularly in the tourist market? Can a foreigner buy shares or invest in real-estate through a company in the Dominican Republic? What is the best option to organize an investmentÂa Dominican company or a foreign company?

The last question is the most important. It all depends on your priorities, and above all on your interest in the investment. If it is a totally passive or enjoyment investment, the best option would be an off-shore company. Such company would become a simple shareholder. On the other hand, for an active investment, it is best to form a Dominican company, since such investment would yield rentals from a domestic source, and filing an income tax form would be mandatory.

There are no restrictions for foreigners wishing to purchase shares in the Dominican Republic, and, as regards the first question, in the case of a Dominican company, the best option is a stock company. If the formation of a foreign company is preferred, in our opinion it is imperative to form an IBC. These companies may be formed through our office. To obtain information about fees, please contact Freddy Miranda at fmiranda@fgasoc.com.do.

Let's take for example the case of an operation in the tourist market, focusing specially on the market of Casa de Campo, La Romana, on the eastern part of the Dominican Republic. In this market, the first element to consider is the construction time for the improvement and its boundaries. Then, it is advisable to verify the payment of common services, the absence of which could jeopardize the improvement, and finally the payment of property taxes which could cause a tax lien to be levied if the property purchased has an outstanding balance to the credit of the Internal Revenue Service.

Then, it is essential to make a formal examination of the title deed, particularly in the case of title deeds issued more than five years before. The ideal is to obtain a certification of liens and encumbrances from the Recorder of Deeds. In many cases, greater assurance may be obtained by means of a collateral on the property, to cover the risks.

If there is no title deed for the property, usually this type of resort has entered into a sales agreement with the buyer, which may be dissolved in order to make a direct sale to the new investor. In this case, it should be noted that in order to make the transfer, the buyer has to pay all appropriate taxes. Many unscrupulous lawyers misadvise their clients, saying that with this method there is no need to pay transfer tax, which is inexact. What is usual is for the seller to have his/her title deed so that the property may be purchased and transferred with no problems or difficulties. In practice, since the buyer has to pay transfer tax, the seller does not bear such taxes. For more information about the amount to be paid, please contact Freddy Miranda, at fmiranda@fgasoc.com.do.

Next, the sales agreement must be drafted. The final sales contract may be preceded by a free-look or due-diligence period, in order to allow the buyer to obtain a certification of liens and encumbrances, to inspect the improvement, to allow for the preparation and investigation by the insurance carrier, if the purchase was agreed upon condition that the property be insured.

Assurance that both parties (or the buyer) will honor their sale/purchase agreement may be obtained by executing a promise of sale. This promise of sale may be agreed to with or without a deposit. In our legislation, such deposit is called earnest money, and it may be considered as payment of part of the purchase price, or it may be kept as security for such sale. It is important to have sound legal assistance for executing a promise of sale with earnest money deposit, since various financial penalties apply in case of default. (Cf. Fgasoc.com.do, article "Promise of Sale with Earnest Money Deposit").

As mentioned above, a sale/purchase agreement is the classic contract for transferring a title deed and obtaining the warranty granted by it. The Internal Revenue Service established that the amount to be paid for transfer tax may never be based on the minimal credible value, or value assessed for property tax or luxury tax. Investors are advised to retain a good real-estate lawyer to avoid problems with the fiscal authorities.

Can transfer tax be avoided without incurring evasion? The classic ways of amortizing the weight of transfer tax are: buying shares of stock from the owning company if that were the case, and, if the property being transferred is the sole asset of such company, obtaining a loan through a savings and loans institution, and incorporating the property into the capital stock by making a contribution in kind.

Taxes are withheld on shares purchases. In the case of a savings and loans bank, the institution will charge a sum in addition to the closing value of the loan for the duration thereof. Finally, a contribution in kind is the most complex way of reducing transfer costs in a real-estate transaction. In most cases, any such contribution is subject to significant expenditures by the investor.

Upon receipt by the appropriate Recorder of Deeds, the sales contract will be duly registered and an entry to that effect will be made in the books kept for real estate transfers. The recorder of deeds or his/her deputy will formally audit the documentation to verify that it meets the requirements prescribed by law in order for a new title deed or an attesting letter to be issued guaranteeing the property. Such documentation should include, depending on the manner of transfer:

A) CONTRIBUTION IN KIND
1. A copy of the notarized declaration (attested copy).
2. A copy of the Company's Bylaws.
3. List of payments made by subscribers.
4. Minutes of the first Shareholders' Meeting, where the Contributions Officer was appointed.
5. Report of the Co

STARTING, OPERATING AND DOING BUSINESS IN THE DOMINICAN REPUBLIC

2007-07-25T17:55:00.000-04:00

As business owner you need to know the ground rules for playing in the Dominican Republic. Over the last five years, we’ve realized that foreign investors have lots of information on how to do business in Dominican Republic. Unfortunately most of it biased or wrong.

The present article is intended, and designed, to be a self-help tool for the business owner who wants an up-to date guide to the basic financial, legal, and tax ground rules that apply to most businesses operating in the Dominican Republic. You will find useful information on how to set up a Dominican corporation, a subsidiary, a branch, hiring personnel and more. For more and precise information, please contact us fmiranda@fgasoc.com.do. Also, for your queries relating to trademark (presently under construction)www.trademark-registration.com.do; for real estate, www.Dominican-real estate.com.do, for information about traveling or staying in Dominican Republic, www.Dominican-residence.com.do.

To invest in the Dominican Republic, you can form what we call a “per share” company, similar to LLCs of the United States, because your liability (responsibility in French legislation) is limited to the amount of your investment. It is possible, also, to enter into a partnership. In a partnership the associates have to face personally business liabilities during the life of same.

While considering, or doubting which form of corporation is easier to establish in the Dominican Republic, we suggest a branch. You may bring your foreign corporation to the Dominican Republic, and fix domicile, get tax payer ID, and registration with the Ministry of commercial concerns. You can also form your own “per share” company in the Dominican Republic. To set up said corporation you must pay taxes, have a minimum of seven members and obtain registration with Internal Revenue Office.

It is mandatory to have a minimum quota of national investment? Legislation 16-95 establishes equal treatment for nationals and foreign investors. Nevertheless we do have regulated fields, such as mining, insurance, telecommunication, etc.

Reporting issues.
When you do business through a corporation with a capital over RD$500,000.00, you must have an “organized accounting system”, which means that a certified Public Accountant must certify your financial statement for preparation of income tax. Taxes? What is my tax liability as foreign investor?

The rule. All income of Dominican source or income from sources outside the Dominican Republic that proceed from investments and financial profits are liable to Dominican taxes. And…home company’s expenses, are these, deductibles from the taxable income of a Dominican branch or subsidiary?

Branch’s expenses can be deducted from the taxable income. The subsidiary, however, is not allow to deduct home company’s expenses.

Am I liable to capital gains? Yes at 25% of your net income. However, your capital losses can be compensated when they exceed the capital profits obtained on a same fiscal year. The remaining balance can be compensated with the capital gains obtained in subsequent activities.

And…individual taxes? A) As a resident in the Dominican Republic, your tax will fall upon your income of Dominican source, or income of sources outside the Dominican Republic that proceed from investments and financial profits; B) For non residents, taxes will fall upon your income of Dominican source; C) residents are liable to taxes for the amounts perceived after the third year or taxable period after they have established their residence in the Dominican Republic.
You need the assistant of a good Attorney to set up your residence and to help you with your tax statement, because we do not have tax treaties to allow the foreigners to obtain a tax refund when they leave the Dominican Republic.

How long can I stay in Dominican Republic without paying income tax? If you stay in the Dominican Republic for more than 128 days, in a continuous or irregular manner, during a fiscal period, the Government will treat you as a resident and you are liable to personal taxes, for you income coming from Dominican sources. But…

I am just working in the Dominican Republic, am I still liable to pay taxes for benefits paid or received in my Country of origin?Services provided in the Dominican Republic and paid in your Country are subject to Dominican taxes. Only Christmas’s salaries are tax-exempt.

For information about hiring personnel in the Dominican Republic, free zones incentives, import and export, contact Freddy Miranda at fmiranda@fgasoc.com.do, and get a free consultation.

The author is an Attorney of Figueroa Guilamo & Associates. Dominican Republic. www.fgasoc.com.do www.Dominican-Residence.com.do www.Dominican-RealEstate.com.do, www.Trademark-Registration.com.do