This article gives an overview of key recent developments affecting doing business in Dominican Republic as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives and business vehicles and their relevant restrictions and liabilities. The article also summarizes the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law, data protection, and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency, and intellectual property rights over patents, trade marks, registered and unregistered designs.
In the Dominican Republic, it's not what you know, it's who you know! This is why networking, name-dropping, and doing and collecting favors are important aspects of doing business in the Dominican Republic. It is important that you put a lot of work into building trusted relationships. In this endeavor, show your business partners respect and pay close attention to hierarchies.
Whether you're traveling to the Dominican Republic for a few days or a week, understanding the local business culture can help you build a trusting relationship with local professionals. For the most part, the business culture is fairly relaxed. However, the way locals conduct business might be slightly different from your home country. Therefore, it's important that you master the business etiquette before arriving.
Five centuries after Christopher Colombus, Seedstars set up foot on Santo Domingo for the very first time, adding the Caribbean to its map of emerging tech hubs. Great news!
Traveling to a paradisiac island to look for promising startups across beaches, coconut and colorful fishes sounded like a dream.
And while we were very excited to go to the Dominican Republic for its incredible bio-ecosystem and fairytale landscapes, we never expected to find an El Dorado of opportunities for innovation and entrepreneurship as well.
Understandably, the Dominican startup ecosystem is still at an early stage. For example, you will not yet find many investors willing to bet on the island’s talent pool, nor established public and private support structures for entrepreneurs.
But things are starting to move, and besides those shortcomings, the Dominican Republic is definitely a place to consider for doing business.
Are marketing agreements regulated?
Contractual relations between the parties to any agency agreement in the Dominican Republic are regulated by Law No 173 of 6 April 1966 for the Protection of Agent Importers of Merchandise and Products (Law No 173), if the contracts are registered in the Legal Department of the Central Bank of the Dominican Republic. Law No 173 protects local agents from untimely termination or breach of a contract on the part of their foreign counterparts by providing considerable compensation in these cases. However, Law No 173 does not apply to agreements involving a party from the US, entered into after the United States-Dominican Republic and Central America Free Trade Agreement (DR-CAFTA) came into force, unless the contract states otherwise.
Definition and legal requirements. For an invention to have patent protection, it must:
- Be novel.
- Involve an inventive step.
- Be capable of industrial application.
Registration. Patents must be registered at the Patent Department of the National Office of Industrial Property to be protected.
Enforcement and remedies. Patent rights can be enforced through a criminal or civil action before the relevant court. A person who breaches a patent can be subject to imprisonment and fines.
Length of protection. Protection lasts for a non-renewable period of 20 years from the date of filing the application.
The competition authority is the National Commission for the Defence of Competition.
Restrictive agreements and practices
All practices, acts and agreements between national or foreign economic agents, either tacit or expressly written or verbal, which have the purpose, or either produce or may produce the effect, of imposing unjustified barriers in the market are prohibited (Competition Law).
Tax resident business
A business entity is considered tax resident, in relation to Dominican-source income, when it qualifies as a permanent establishment. According to the tax laws, a "permanent establishment" is a fixed place of business in which a foreign undertaking, person or entity carries out all or a portion of its activities. This includes management seats, offices, branches and enterprise consulting services, if and when they are present in the Dominican Republic for more than six months within a 12-month period.
What are the main laws regulating employment relationships?
The main employment legislation is the Labour Code (No 16-22 of 1992). It applies to Dominicans and foreign persons working in the Dominican Republic. The employer and employee are subject to an employment contract, although its provisions can never release or limit rights under the Labour Code.
The Comptroller General, who is appointed by the President, exercises internal control of the administration and of public funds. The Court of Accounts, whose judges are nominated by the President and elected by the Senate, exercises external control. The President must submit each year’s accounts to the National Congress, which either approves or rejects the statement of earnings from taxes and fees and investment of revenues that the Executive Branch must submit to it.
It hasn't just been the tourism and travel sector but also the establishment of free trade zones that have given the economy a significant boost. The latter have attracted foreign investors, who have contributed to economic growth and created new jobs for locals and foreigners working in the Dominican Republic. These zones mostly focus on production in the fields of textiles, electronics, pharmaceuticals, and tobacco products.
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