Tax and customs incentives in the free trade zones of the Dominican Republic

Tax and customs incentives in the Dominican Republic’s tax and customs incentives in the free trade zones are one of the greatest attractions for investors and companies focused on the global market, which are granted incentives to foster their development. This special regime, established by Law No. 8-90 on the Promotion of Free Trade Zones for Exports, has made the free trade zones a pillar of Dominican industrial and export development.  

Tax and Customs Incentives in free trade zones

One of the greatest attractions of operating under the free trade zone regime is the tax incentives provided by Law 8-90 and its provisions. Companies authorized as free trade zones enjoy 100% exemption from most national taxes levied on normal business activities. Key tax benefits include: 

• Income Tax (ISR) exempt: Free zone companies’ profits do not pay ISR (income tax) while operating under this regime. This represents a significant savings, given that outside of the free zones, Dominican companies normally pay taxes on their profits. Law 8-90 guarantees 100% exemption from this tax to encourage investment in export activities. 
• Exempt Wealth/Asset Tax: In addition to ISR, companies in free trade zones are exempt from asset or wealth tax. Under the general regime, this tax would act as a minimum tax, but free trade zones do not pay it, which improves their cash flow. 
• Exemption from ITBIS on local inputs: The Tax on the Transfer of Industrialized Goods and Services (ITBIS) – equivalent to VAT or value-added tax – does not apply to free zone companies when purchasing inputs or goods locally, provided they are destined for their export operations. To exercise this exemption, companies obtain an ITBIS exemption card issued by the authorities (via the Ministry of Finance and the General Directorate of Internal Revenue) that allows them to purchase locally without paying this tax. This card is renewed annually and is exclusive to companies covered by Law 8-90.  
• Exemption from municipal and other local taxes: Free zone companies also do not pay municipal taxes or local fees that may be levied on their operations. 
• Exemption from incorporation and capitalization taxes: Free zone companies are 100% exempt from the tax on incorporation of commercial companies and taxes on capital increases.  

They are also exempt from taxes on construction or civil works related to their facilities, as well as taxes on loan contracts and the transfer of real estate. These benefits facilitate the establishment and expansion of companies in free trade zones by reducing initial and growth costs. 

In short, the free trade zone regime offers a comprehensive package of tax incentives. This substantial tax relief is directly reflected in the profitability of operations and is a key factor why many industries choose to operate under this special regime. 

Customs and tariff exemptions in free trade zones

In addition to domestic tax incentives, Dominican free trade zones offer complete tariff and customs exemptions to facilitate international trade for participating companies. Essentially, free trade zone companies can import inputs and export their products without paying import or export taxes, which is essential to their externally oriented business model. The main customs incentives contemplated in Law 8-90 and associated regulations include:  

• Exemption from import duties and taxes: All raw materials, intermediate goods, machinery, equipment, spare parts, packaging materials, and other inputs that a free zone company imports for use in its production process enter the country free of tariffs and customs duties. This means they do not pay the import taxes or customs duties that usually increase the cost of purchasing external inputs. Likewise, construction materials for building or adapting industrial warehouses within the free zone, office furniture, and other equipment necessary for operations also enjoy this total exemption. In practice, this advantage allows companies to acquire global inputs at international cost, making them more competitive. 
• Exemption from export taxes/duties: Although the Dominican Republic generally does not impose significant export taxes, the law ensures that any existing export taxes or duties do not apply to foreign sales made from free trade zones. All exports or re-exports made by a company under this regime are exempt from customs duties. Thus, products leave the country without additional tax costs, fulfilling the principle that the free trade zone is an export promotion area. 
• Exemption from duties and consular fees: Traditionally, some imports pay consular fees or other administrative fees. Imports made by operators or companies in free trade zones are exempt from consular fees or other similar fees associated with consular import procedures. This eliminates minor but significant import costs, further simplifying imports. 
• Facilities for transportation equipment and employee services: The regulations extend exemptions even to certain support goods. For example, cargo vehicles, garbage trucks, minibuses for employee transportation, and other transportation equipment necessary for the company’s operations may be imported duty-free, subject to approval by the National Council of Free Trade Zones. Likewise, equipment for cafeterias, clinics, or daycare centers intended for the well-being of free trade zone workers may be imported duty-free. These provisions allow companies to develop comprehensive infrastructure at their facilities at reduced costs. 

In short, the free trade zone customs regime gives them a crucial advantage for integrating into global supply chains, as they can bring in raw materials from any source and re-export finished products without incurring additional tariff costs.  

Import and export facilities under the free trade zones regime

In addition to tax exemptions, free trade zones offer operational and administrative facilities that streamline international trade and business operations. These facilities aim to simplify procedures, promote logistical efficiency, and provide a degree of flexibility for interacting with the local market under established controls. Some of the most relevant are: 

• Simplified Customs Procedures: Imports and exports of companies in free trade zones are subject to special customs controls, generally more streamlined than in the general customs territory. Goods entering the free trade zone do so under the supervision of the General Directorate of Customs (DGA), but with less bureaucracy, as no taxes are required. Customs documentation is simpler and is closely coordinated with the free trade zone administration. This regime facilitates, for example, the rapid entry of containers into industrial warehouses for immediate unloading and the expedited clearance of exported goods at ports or airports, reducing waiting times. 
• Storage and Handling within the Zone: Companies can freely introduce, store, handle, and process goods within the free zone without the usual restrictions that a regular bonded warehouse would have. They can handle raw materials, assemble products, pack or repackage, classify, etc., all within the perimeter of the zone, under customs supervision, but without tax procedures. This allows flexibility to manage inventories and production lines adapted to external demand without incurring tax costs for each movement. 
• Transfers between Free Trade Zones: It is possible to transfer raw materials, inputs, or products between companies within the same free trade zone, or even between different free trade zones in the country, without losing exemptions, provided they comply with transit regulations and have the corresponding authorization. In other words, a company in one free trade zone can supply components to another company located in another free trade zone, with a simplified customs procedure. This has allowed for the creation of local supply chains within the free trade zone regime, benefiting various specialized operators.
• Limited Access to the Local Market: Although the primary objective is export, the law allows companies in free trade zones to sell up to 20% of their production in the local market, subject to certain conditions and procedures. For these local sales, the company must pay the corresponding taxes and tariffs as if the product were imported into the country. The conditions for this local sale to proceed include that the good is not produced in the local market by manufacturers outside the free trade zone, or that at least 25% of its added value comes from national inputs, thus incentivizing linkages with local industry.  
• Dedicated Support Services: There are one-stop shops or special coordination with government institutions to address the needs of companies within this regime. For example, the National Council of Free Trade Zones and the DGA ( General Directorate of Trade) often have a presence in the parks to expedite inspections, export certifications, etc., providing an environment where import and export logistics are faster and more predictable than outside the regime. 

Together, these facilities make the free trade zone regime friendly for the import of inputs and the export of products, minimizing bureaucratic obstacles. Companies can focus on producing efficiently and with quality for international markets, confident that the regulatory framework provides them with simpler procedures and institutional support designed for export activities. 

An attractive regime 

The tax and customs incentives offered by Dominican free trade zones constitute an extremely attractive regime for investors and companies oriented toward the global market. The complete exemption from key taxes, combined with customs and administrative facilities, allows for operating at lower costs and with greater agility than under the standard regime. In turn, the country benefits from job creation, technology transfer, and increased exports.