The Process of Dissolution and Liquidation of Companies in the Dominican Republic: Legal and Tax Considerations for an Orderly Closure

Formally closing a company is as legally significant as its incorporation. However, in practice in the Dominican Republic, it is common to find companies that have ceased operations without completing the proper legal and tax closure processes, remaining formally active before public registries and tax authorities.

Maintaining inactive companies entails costs and risks for shareholders and administrators, such as the obligation to renew the commercial registry, file periodic tax returns, hold annual meetings, and the potential accumulation of tax or labor liabilities. Therefore, it is crucial to promote an orderly and legally compliant closure when the company has ceased operations or has fulfilled the purpose for which it was established.

Legal Framework

The process of dissolution and liquidation of companies in the Dominican Republic is primarily governed by Law No. 479-08 on Commercial Companies and Limited Liability Sole Proprietorships, as well as complementary regulations issued by the General Directorate of Internal Taxes (DGII) and the local Chambers of Commerce and Production.

This procedure ensures the formal termination of the legal entity and compliance with all legal and tax obligations. It applies to Limited Liability Companies (SRL), Corporations (SA), Simplified Stock Companies (SAS), and Limited Liability Sole Proprietorships (EIRL). While each type of entity may involve specific nuances, the fundamental steps of the process are generally the same.

Dissolution Agreement and Liquidation Process

The first step toward an orderly closure is for the partners or shareholders to reach an agreement to dissolve the company. This decision, which must arise from the consensus of the members, marks the starting point to formally initiate the legal and registry process that leads to the company’s liquidation.

For this purpose, an extraordinary general meeting must be held in which the partners or shareholders formally approve the decision to dissolve the company. During this meeting—if applicable according to the company’s structure—members of the board of directors must also be formally discharged from their responsibilities. Additionally, a liquidator must be appointed to oversee and execute the liquidation process. When necessary, a statutory auditor (comisario de cuentas) must also be appointed to ensure the proper handling of accounts receivable and outstanding obligations.

Once dissolution is approved, the company enters a liquidation phase. The company’s name must include the designation “company in liquidation,” and the managers or directors cease to represent the company, transferring that role to the appointed liquidator.

The liquidator is responsible for carrying out the liquidation process, which includes:

• Preparing, together with the outgoing administrators, an initial inventory and balance sheet;
• Managing corporate and accounting records;
• Completing pending or necessary business operations;
• Liquidating the company’s assets;
• Collecting receivables;
• Paying creditors (tax, labor, and commercial);
• Distributing the remaining assets among the partners or shareholders in proportion to their ownership.

It is important to emphasize that, from the beginning of the liquidation phase, the company should not issue new fiscal receipts (NCFs), except for transactions strictly related to the liquidation process.

Upon appointment, the liquidator must file the relevant documents regarding the company’s dissolution and their own designation with the Mercantile Registry. It’s essential to note that the dissolution will only be effective against third parties once it is registered with the Mercantile Registry. Furthermore, within one month of their appointment, the liquidator must publish a notice of dissolution in a national newspaper, informing third parties and creditors about the start of the process. This notice must include a summary of the registered documents and indicate the address for receiving any related notifications.

After liquidating assets and paying off liabilities, the liquidator must present a final report during a second extraordinary general meeting. At this meeting, shareholders or partners will approve the liquidator’s report, formally discharge them, and declare the liquidation process officially closed. If a statutory auditor was appointed, they must also submit their final report and receive formal discharge.

Registry Procedures with the Chamber of Commerce

Following the approval of the final accounts, the liquidator must file them with the Mercantile Registry in the company’s jurisdiction and publish a second notice in a national newspaper, this time announcing the closure of the liquidation process. This publication is a mandatory step to complete the registry procedures and officially cancel the Mercantile Registry.

This registry process usually takes between 7 to 15 business days, depending on the local Chamber of Commerce.

Tax Procedures with the DGII

Once the registry closure is completed with the Chamber of Commerce, the company must fulfill its tax obligations before the Dominican Tax Administration (DGII) to formalize its final disassociation from the tax system.

Before requesting the cancellation of the National Taxpayer Registry (RNC), the company must be fully up to date with all tax obligations and must have resolved any pending audits or discrepancies identified by the DGII.

To initiate this process, the company must submit Form RC-02, which is used to update data and request cancellation of the RNC. Additionally, the company must file its final Corporate Income Tax return (IR-2), marked as “final,” within 60 days after ceasing operations. This return must be submitted physically at the corresponding local tax office.

As part of the tax closure file, the DGII also requires a notarized letter of guarantee. This legalized document must be signed by the company’s president, shareholder, or legal representative, who expressly assumes responsibility for any future obligations or liabilities that may arise after the formal closure. Essentially, this letter acts as a surety to ensure transparency and compliance during the liquidation process.

During this stage, the company must declare and pay all taxes accrued up to the date of closure, including income tax, VAT (ITBIS), withholdings, and any other applicable levies. Only after verifying full compliance with these obligations will the DGII authorize the cancellation of the RNC.

This process typically takes between 45 and 60 days, depending on its complexity and adherence to formal requirements.

The Importance of an Orderly Closure

Failing to properly complete the dissolution and liquidation process may lead to serious consequences, including joint liability toward third parties, the accumulation of tax or labor debts, inability to formally cancel the company, and complications in future business ventures.

Therefore, obtaining specialized legal and tax advice is essential to properly plan and execute a safe, transparent, and legally compliant closure.