Free zones are geographical areas within the Dominican Republic that are subject to special fiscal and customs regimes, within which companies dedicated to the production of goods or provision of services exclusively for the international market are located. The Free Zone system in the Dominican Republic is one of the most advanced in the world and the free zones are the source of 71% of the products exported by the Dominica Republic, besides being the main recipients of foreign direct investment in the country.
The Dominican Free Zone system has always been especially attractive to foreign investors for the advantages it offers, such as:
1. Incentives that exempt companies from the payment of a wide range of taxes, including subsidies for exportation and energy consumption;
2. Preferential access to the United States and European markets, without the application of customs tariffs;
3. The possibility of obtaining financing from local and foreign institutions; and,
4. Availability of capable workforce
Dominican law seeks to promote the establishment of free zones and the growth of those in existence. The law creates the National Free Zones Council (CNZF), the organization in charge of regulating and supervising free zone companies and free zone parks; defines and classifies free zones; indicates the requirements for their installation and the applicable incentives; and regulates, on an exceptional basis the importation and sale of their goods in the domestic market, which will be taxed under a special rate.
There are other laws that establish tax incentives for other types of special free zones, such as the law creating a special development zone near the Haitian border. This law establishes a preferential system that, subject to specific limitations, grants extensive fiscal incentives and exemptions for companies establishing operations in the area and which comply with the requirements provided by this law.
Additionally, there is a law that creates International Financial Zones, which are entities offering offshore financial services and related activities to individuals and companies living outside Dominican territory. However, at the moment, the same is still in process of implementation.