Guia Del Inversionista 2014 Eng

THIRD EDIT ION 1

INVESTORS GUIDE

THIRD EDITION DOMINICAN REPUBLIC

2014

INVESTORS GUIDE DOMINICAN REPUBLIC2

William MalamudExecutive Vice President

Mary FernndezDirector

Carmen Roa and Gustavo Meja-Ricart Del R.General Coordinator

Fabio GuzmnEditor of the Spanish version

William HeadrickEnglish Translation and Adaptation

Huscar ValdezDesign and Layout

Piedad Mndez OradelPhotography

Istock and 123rf.comPhoto Banks

Investor's Guide to the Dominican Republic is published by the American Chamber of Commerce of the Dominican Republic (AMCHAMDR).

All rights reserved. AMCHAMDR not responsible for changes in the regulations cited in this text.

Reproducing of the Investors Guide to the Dominican Republic is authorized by prominently displaying the following sentence on the report:

"Investors Guide to the Dominican Republic is republished with permission of AMCHAMDR."

http://www.amcham.org.do/guiaInversionista

3rd edition, 2014

TEAMWORK

THIRD EDIT ION 3


CONTENT

Foreword 9

Special thanks 10

Our collaborators 11

CHAPTER 1. 20

I. About AMCHAMDR 21

CHAPTER II. AN INTRODUCTION TO THE DOMINICAN REPUBLIC 25

A. History of the Dominican Republic 27

B. Economic structure of the Dominican Republic 30

CHAPTER III. THE CONSTITUTION OF THE DOMINICAN REPUBLIC:

THE ROAD GOVERNABILITY 35

A. The Constitution Of The Dominican Republic: The Road To Governability 36

B. Foreign Investment 42

C. The Single Counter For Investments 46

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D. Film Industry 48

E. Free Zones 52

F. Telecommunications 56

G. Civil Aviation 60

H. Port Authority 66

I. The Energy Sector 68

J. Tourism Sector 76

K. The Construction Sector 86

L. Real Estate Law 90

M. Law No. 189-11 on Mortgage Market Development and The

Creation of Trusts in the Dominican Republic 98

N. The Mining Sector 104

O. The Agricultural Sector 108

P. Pharmaceutical Sector 112

Q. Investment Guarantees And Financing 116

CHAPTER IV. A LEGAL FRAMEWORK FOR BUSINESS ACTIVITY 123

A. Types of business organization 124

B. Taxation 134

C. Labor law 140

D. Social security 146


E. Special benefits for pensioned or retired

Persons receiving income from abroad 150

F. Industrial property 152

G. Copyright and related rights 160

H. Legislation on electronic commerce, documents and digital signatures 164

I. Technological crimes and misdemeanors 168

J. Egislation on agents and distributors of imported goods and service 170

K. Legislation on government procurement 172

L. Legislation on environment and natural resources 176

M. Family law and law of sucession 182

CHAPTER V. COMPETITION AND COMPETIVENESS 187

A. Legislation on unfair business practices and on means to achieve competition 188

B. Consumer and user protection law 192

C. Legislation on competitiveness and industrial innovation 196

D. Legislation on corruption in business and investment 198

CHAPTER VI. CROSS-BORDER COMMERCIAL TRAFFIC 201

A. Customs clearance 202

B. Law on international financial zones 206

C. The World Trade Organization (WTO) 210

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D. Position of the Dominican Republic in the System of Multilateral and

Regional Preferences 214

E. Free trade agreement among the Dominican Republic, Central America

and The United States (DR-CAFTA) 216

F. Economic association agreement between the

European Union and the Cariforum 224

G. Other treaties and international agreements 228

CHAPTER VII. THE MONETARY AND FINANCIAL

SYSTEM OF THE DOMINICAN REPUBLIC 233

A. The monetary and financial system of the Dominican Republic 234

B. Legislation regarding the stock exchange 240

C. Regulation of systemic risk 248

D. Laws on insurance and bonding 252

CHAPTER VIII. LEGAL RULES RELATIVE TO FOREIGN NATIONALS ENTERING

THE DOMINICAN REPUBLIC AND OBTAINING RESIDENCE

PERMITS AND NATURALIZATION 257

A. Foreign national can enter the country and remain

there under several legal categories 258

CHAPTER IX. CONFLICT RESOLUTION 263

A. Structure and Organization of the Courts 264

B. Access to the courts 266

C. Alternative means of dispute resolution 272

D. Enforcement of creditors rights 276

FOREWORD

THIRD EDIT ION 9

The Legal Committee of the American Chamber of Commerce of the Dominican Republic (AMCHAM-DR) is pleased to present this third edition of its Investors Guide to the Dominican Republic. This publication, made available to current and poten-tial investors, both local and foreign in origin, is a practical guide outlining the steps to be taken and the services available in connection with invest-ments made in the Dominican Republic.

The American Chamber of Commerce of the Do-minican Republic (AMCHAMDR) understands that the promotion of foreign direct investment is essential to the development of the Dominican Republic, and that public and private initiatives should seek to facilitate the flow of capital into our country. In addition, AMCHAMDR seeks to high-light provisions of current laws that either encour-age or constrain business activity and investment in a country. Through the publication of this Guide, AMCHAMDR offers a reliable, complete and up-to-date summary, which guides the entrepreneur or investor in his investment decision

As we noted in the second edition of this Guide, the Dominican Constitution promulgated on Janu-ary 26, 2010, introduced many changes to existing legislation. These changes made it necessary to revise and update the first edition of this Guide, originally published in 2009. Similarly, a number of framework laws required by constitutional man-date, new areas opened for investment (such as the film industry), the development of the local mortgage market, a new trusts trust, the creation

of a one-stop-shop for regulatory approvals for in-vestments, the new intellectual property strategy and innovation 2012-2022, and the innovations in the banking sector, with new regulations for credit cards and the creation of bank subagents, have all made necessary this third edition of the Guide.

This edition consists of 9 chapters and 67 sub-chapters, each one of which has been prepared and reviewed by the law firms affiliated with the Legal Committee of the AMCHAMDR. In total, 15 independent professionals, mostly lawyers but also some economists, participated in this work, as well as associate lawyers and partners of 14 of the most highly regarded law firms in the country. Each chapter of the Spanish version was reviewed by Fabio Guzmn; the English version is a trans-lation and adaptation by William C. Headrick with the participation of William Malamud. The overall editorial work of this third edition was undertaken by Carmen R. Roa Gernimo, with the support of the Legal Committee and the administrative per-sonnel of the AMCHAMDR.

This Guide is not intended to replace professional counseling by advisory firms. It is nevertheless our hope that it will provide an overview of the essen-tial of the investment opportunities offered by the Dominican Republic.

Mary Fernndez

President of AMCHAMDRs Legal Committee


The completion of the third edition of the AMCHAMDR Investors Guide has been made possible through the collaboration of many people and institutions. The Board of Directors of the American Chamber of Commerce of the Dominican Republic (AMCHAMDR) would like to give special thanks to:

The Legal Committee of AMCHAMDR, to whom we owe the conception of this important initiative and whose members, representatives of the best law firms in the country, selflessly gave of their vast knowl-edge and experience to ensure the quality of this project.

Mary Fernndez, president of the Legal Committee of AMCHAMDR, a tireless collaborator of this insti-tution, who took on this task for herself and is responsible for the end result being a true instrument for anyone who wants to invest in the country.

Also invaluable was the collaboration from:

Carmen Roa Fabio Guzmn William C. Headrick

The Board of Directors also thanks our sponsors for their support:

AES Dominicana Alburquerque & Alburquerque

Banco del Progreso Banco Popular

Castillo & Castillo Grupo Punta Cana

Guzman Ariza HeadrickRizikAlvarez&Fernandez

JJ Roca Jimenez Cruz Pea

LegalExport, LawFirm Luis Soto Abogados

Maritima Dominicana Medina &Rizek

Odebrecht OMG

Orange Ros&Asociados

RussinVecchi& Heredia Bonetti Scotiabank

Troncoso & Caceres Ulises Cabrera Oficina de Abogados

SPECIAL THANKS

THIRD EDIT ION 11

OUR COLLABORATORS CABRAL & DAZ

Founded in March 1994 by Eduardo Daz, Jose Mara Cabral and Claudia Cabral. Since its incep-tion, Cabral & Diaz has been dedicated to building an alternative legal service with a dedication to excellence for local and international clients. The firm is committed to meeting customer needs, for which it maintains a personalized rapport, inter-acting continuously with clients to ensure that they are aware of all their legal options and able to de-termine in an informed manner, the best strategy to meet their needs. Cabral &Daz is organized by departments and specialty groups, and invests in the continuing education of its professional staff.

Contributors:

Jos Mara Cabral

Suzanne Berges

Airam Morel

Mariel Taveras

Contribution: Drafted and reviewed sections of guaranties and financing; and environmental and natural resources legislation;

AIME PRIETO-CABRERA

Partner in Legal Export, Law Firm. Law degree from the Universidad Iberoamericana in 2001. Master in International Digital Businesses, Uni-versitatPompeuFabra, Barcelona, in 2003. She has taken courses on Legal Methods in the Unit-ed States and Introduction to American Law at the Institute for U.S. Law at George Washington Uni-versity, Washington, DC, in 2005, also courses in International Negotiations and Intellectual Prop-erty at the United Nations Institute UNITAR, and in E-Government at the Technological Institute of Monterrey, among others. From 1999 to 2006 she developed her career at the law firm Russin, Vecchi& Heredia Bonetti. From 2006 to 2008, she served as Legal Manager of the Presidential Of-fice of Information and Communication Technolo-gies, serving there until 2010 as Legal Advisor. Since 2008 she has served as a founding partner of LegalExport, Law Firm. AimePrieto focuses her practice on business law, corporate and com-mercial law, technology, intellectual property, for-eign investment, free zones, real estate and ad-ministrative law. aprieto@legalexport. com.do

Contribution: General coordination and general editing of the first and second editions of the In-vestors Guide to the Dominican Republic. Drafted the topic of legislation on import agents for goods, products and services of the third edition.

FELIPE ISA CASTILLO

Partner in Arthur & Castillo, a law firm specializing in Business Law, Customs and Foreign Trade and a partner of the foreign trade company Drexport. Mr. Castillo focuses his practice on Commercial Law, Customs, TAXATION, Business Law and Foreign Trade. As part of its practice, Mr. Castillo advises local and international companies on their operations and transactions in and with the Dominican Re-public. As a qualified legal adviser, Mr. Castillo regularly provides advice on the establishment of new businesses, obtaining licenses and permits, export free zones, transportation, telecommunications and tourism infrastructure projects and their financing.

Contribution: Drafted and reviewed section on customs regime.


CENTER OF EXPORTS AND INVESTMENTS OF THE DOMINICAN REPUBLIC

The Center pursuits to be a leader institutionpro-viding customers satisfaction, continuously im-proving its services in the areas of Exports and Investments, Technical Assistance, Promotion, Incentives, Commercial information, legal asis-tance, and logistics, achiving the highest stan-dars of quality, according the law and regulations. Through its Department of Commercial Policies and Investment, it is pursued the developmentof initiatives with the aim to improve and guarantee the sustaintability of the business environment in Dominican Republic.The Center also participates in topic related to investment and markets Access.

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

Contributors:

Maricell Silvestre Rodrguez, Commercial Poli-cies Manager and

Gerson Prez, Single Window for Investments Manager

Contribution: Drafted the topic of Single Win-dow for Investments (VUI).

CHAMI ISA LAW FIRM

Founded in 2002 as Chami Isa & Associates by Dr. Samir Chami Isa. The firm is noted for the efficiency, quality and professionalism of their legal services. In 2007, the firm was renamed the Law Offices of Chami Isa, and relaunched with a new image, a new infrastructure and reorganization by areas of prac-tice. This repositioning, combined with the excep-tional talents and experience of the firms partners, has earned Chami Isa a reputation as one of the countrys premier client-driven firms, dedicated to providing tailored solutions in all areas of the law to companies and individuals, local and international. Prominent among these are Civil and Commercial Law, Corporate Law, Foreign Investment Law, La-bor Law, Immigration, Intellectual Property, Admin-istrative Law, Criminal Law and Constitutional Law.

Contributors:

Samir Chami Isa

Jeremas John

Susana Prez De Len

Contribution: Drafted and reviewed subject of legal rules relative to foreign nationals entering the Dominican Republic and obtaining residence permits and naturalization.

JORGE MERA & VILLEGAS

Specialists in Intellectual Property, Foreign In-vestment, International Arbitration, Electronic Commerce, Franchise, Free Zones, Privati-zation, International, Constitutional, Banking, Commercial, Civil, Administrative, Tax, Corpo-rate, Labor and Criminal, Construction, Family Law Adoptions, Litigation. Carmen Prieto Ville-gas is a lawyer with a Masters in Intellectual Property and Information Technology from the University of Alicante, Spain. She teaches As-pects of Intellectual and Industrial Property to postgraduates of International Trade Law at the University APEC, as well as a course on Intellec-tual Property sponsored by FINJUS-PUCMM.

Contribution: Drafted and reviewed section on Intellectual Property.

GISELLE A. PEREZ REYES

Contributor to the third edition of the Guide. During her professional career she has centered her prac-tice on Environmental, Tourism, Construction, Real Estate, Administrative, Energy, Intellectual Property and Telecommunications Law. As advisor to NGOs and government institutions she has participated in projects with significant social and environmental impact. Has a Postgraduate Degree in Sustainabil-ity and Environmental Assessment (2011), Universi-dad Complutense de Madrid, Spain; Diploma in Ad-vanced Studies under the Program: Contemporary Issues in the Information Society, (2007), Instituto Ortega y Gasset, Spain; Diploma in Environmen-tal Management within the Tourism Industry (2007) (IDARD), Dominican Republic; Bachelor of Law from Universidad Iberoamericana (UNIBE), Domini-can Republic.

Contribution: Co-drafted the chapter on Single Window for Investment (VUI).

THIRD EDIT ION 13

GUZMN ARIZA

GuzmnAriza, founded in 1927, is the first and only national law firm in the Dominican Republic, with seven fully-staffed offices in Santo Domingo, Bavaro (Punta Cana), Las Terrenas, Saman, Sosa, Cabrera and San Francisco de Macors. Our multilingual staff attends to the business needs of international and national clients in mul-tiple practice areas including: Business and Cor-porate Law, Foreign Investment, Tourism Law, In-ternational Tax Law, Securities Law, Government Relations, Public Procurement Law, Contracts, Litigation, Real Estate and Condominium Law, Labor Law, Trademark and Intellectual Property, Corporate Immigration and Renewable Energy.

Guzman Ariza is the exclusive member for the Dominican Republic of the State Capital Group, a global network of more than 140 top, independent law firms comprising 11,500 attorneys in nearly 450 offices around the world. Through this net-work of legal professionals, our firm is able to as-sist clients effectively in a wide range of interna-tional transactions. http://www.drlawyer.com/

Contributor:

Fabio Guzmn Ariza

Contribution: Proofing of the various topics for the Guide. Drafted overview of the Dominican Re-public.

DE MARCHENA KALUCHE & ASSOCIATES

Founded in 1992 in the province of Puerto Plata, by Mr. Enrique De Marchena, Mr. Jesus Almn-zar Rojas and Dr. Sergio Federico Olivo. The firm specializes in Tourism, Real Estate, Environment, Labor Law, Alternative Energy, Mining, Telecom-munications and Aeronautics. Its services include advice on Mergers and Acquisitions, Franchising, National and International Financing, Construc-tion, Public Works Concessions, Corporate Law, Immigration Law, Tax Law, Intellectual Property and Litigation. Central Law Attorneys-DMK has been actively involved in the development of the tourism industry over the last ten years and has more than twenty years experience in the tourism sector. Its offices in Santo Domingo, Puerto Plata, Las Terrenas and Bvaro represent many of the leading resorts, tour operators, timeshare compa-nies, airlines, theme parks and other related com-panies.

Contributors:

Natalie Santos

Leticia Caminero

Contribution: Drafted and reviewed section on tourism sector and on special benefit for pen-sioned or retired persons receiving income from abroad.

LUIS SOTO

Luis Soto began his legal career in 2000 at the law firm Abogados&NotaraUlises Cabrera, S.A. He also serves as a professor in the departments of Commercial Law and Tax Law at the Universidad Catlica Santo Domingo and at the InstitutoTecnolgico de Santo Domingo. He graduated from the Universi-dad Autnoma de Santo Domingo, where he also completed a Masters degree in Criminal Law. He completed a postgraduate degree in Civil Procedural Law at the Pontificia Universidad Catolica Madre y Maestra and has two specializations in Criminal Procedure Law and Constitutional Litigation from Padre Hurtado University in Chile and the University of Costa Rica. He is a member of the Bar Associa-tion of the Dominican Republic, the Association of Young Entrepreneurs and Legal Committee of the American Chamber of Commerce of the Dominican Republic (AMCHAMDR).

Contribution: Drafted subject on structure and organization of the courts; and on civil, commercial and criminal litigation. Reviewed topic on litigation involving land; and enforcement of creditors rights.


HEADRICK RIZIK LVAREZ & FERNNDEZ

Celebrating 25 years as a leader in the market-place, HeadrickRizik Alvarez &Fernndez con-tinues to distinguish itself as one of the largest law firms in the Dominican Republic while offer-ing hands-on service by its partners to clients of every size. The Firm is known for its practical experience, responsiveness and commitment to providing high quality legal services at cost-effec-tive rates. HRAF was founded in 1985 by William Headrick, Roberto Rizik, Francisco Alvarez and Mary Fernndez. Marisol Vicens, Toms Hernn-dez, Sarah De Len, KirsysReynoso, Luis Nuo, Julio Camejo and HiplitoGarca, complete the team of 10 partners, along with 38 associates, more than a dozen paralegals and a highly quali-fied administrative staff. Most of the firms law-yers speak several languages (English, French, German and/or Italian) in addition to Spanish and have specialized academic training and vast ex-perience in different areas of law. Chambers & Partners, IFLR1000 and Latin Lawyer recognize HRAF as the best lawfirm in the Dominican Re-public in the year 2012. www.hrafdom.com

Contributors:

Mary Fernndez

Sarah De Len

Toms Hernndez,

AnnalisaJquez

Carolina Sili

KirsysReynoso

Karla Balccer

Eileen Jimnez

Contribution: Co-authors of the section on The Constitution of the Dominican Republic: The Road to Governability. Drafted sections on Phar-maceutical Sector issues; Legal Framework for Business Activity: Business Organization; Labor Law; Law on Copyright and Related Rights and Legislation on Insurance and Finance. Review of Monetary and Financial Arrangements sections; Regulation of Systemic Risk in the Dominican Republic; Family Law; Probate and other Territo-rial Application; Law on Securities Market and the

Legal Framework for Foreign entry and establish-ment in the Dominican Republic, Review of Tax Regime and Intellectual Propriety, Authors of the section on New Strategies of Intellectual Property and and New Initiavies in the Bank Sector of the Dominican Republic.

JIMNEZ CRUZ PEA

A consulting firm with a global presence through a network of relationships with leading firms world-wide. Jimnez Cruz Pea was founded in 2003 by three partners with 20 years of combined experi-ence, and has quickly established itself as one of the countrys top firms, recognized for the qual-ity, timeliness and sophistication of its consulting and legal services. Jimnez Cruz Pea provides counseling and legal assistance in: structured fi-nancing, foreign investment, real estate develop-ment, corporate, arbitration, new technologies, economic regulation, and more. The exposure of these lawyers to various legal cultures enables them to quickly assimilate new legal structures that interrelate both businesses and individuals around the world. The firm is recognized for the quality and efficiency of its services by offering creative solutions and high value-added.

Contributors:

Manuel Pea

HeiddyMoronta

Brenda Recio

Galina Tapia

Giselle Valera

Contribution: Drafted and reviewed sections on Competition and Competitiveness.

OLIVO A. RODRIGUEZ HUERTAS

Lawyer and founding member of the firm Escobal, Perez, Rodriguez & Associates.Professor of Ad-ministrative Law at the Universidad Iberoameri-cana and the Pontificia Universidad Catolica Madre y Maestra.Member of the Iberoamerican Forum of Administrative Law.

Contribution: Drafted sections on litigation against the government; and administrative court.

THIRD EDIT ION 15

J. J. ROCA & ASSOCIATES

J. J. ROCA & ASSOCIATES is a renowned law firm in the Dominican Republic, endowed with a team of highly trained professionals that offers personalized legal services. The firm takes a team approach to meeting client needs, drawing from a broad set of skills and experience. The firms culture instills a passion for excellence, efficiency and accountability, allowing them to anticipate risks and deal with problems in a practical and creative fashion. J.J. Roca & Associates values are characterized by a strict adherence to profes-sional excellence and integrity in all aspects of its legal practice, and has allowed them to earn the trust of their clients. The practice has grown pri-marily through client references, which is a testa-ment to the firms integrity.

Contribution: Drafted and reviewed sections on monetary and financial system; and law on mon-ey laundering.

JOCHI VICENTE

Managing partner at Macroanalit, a consulting firm specializing in Corporate Finance and Eco-nomics. Mr. Vicente graduated Summa Cum Laude in Economics from the Pontificia Univer-sidad Catolica Madre y Maestra, with a Masters in Business Administration (MBA) from the Ander-son Graduate School of Management at UCLA. Specialization: corporate finance and entrepre-neurial strategy. Former lecturer for the Masters Degree in Financial Management at the Pontificia Universidad Catolica Madre y Maestra. Has been a speaker and moderator at various seminars and panel discussions conducted by the National Association of Young Entrepreneurs (Asociacion Nacional de Jovenes Empresarios - ANJE), Insti-tutionality and Justice Foundation (Fundacion In-stitucionalidad y Justicia - FINJUS) and the Amer-ican Chamber of Commerce.

Jochi Vicente has published several articles re-lated to financial and economic issues in the print media in the country.

Contribution: Drafted and updated the chapter on the economic structure of the Dominican Re-public.

MARIA WALESKA ALVAREZ

Graduated from the Pontificia Universidad Catli-ca Madre y Maestra, Magna Cum Laude; Diplo-ma in Intellectual Property in the Dominican State University (UASD), Masters in International Busi-ness and Business Law at the University Pom-peuFabra, Barcelona; coursework in Negotiation at Harvard University; diploma in Technology and E-Government from the Virtual University of Monterrey Institute of Technology. She began her professional career at the Dominican Ministry for Industry and Commerce, practiced law in the firms Headrick, Rizik, Alvarez & Fernandez and Biaggi& Messina. In 2004 she worked as Legal Manager for the Presidents Office of Information and Communication Technologies, participating in national and international negotiations related to technology and telecommunications issues. In 2006 she joined the Terremark team and since then is working in the International Division as General Manager for the Dominican Republic.

Contribution: Drafted sections on legislation on electronic commerce, documents and signatures; and technological crimes and misdemeanors.

PEREYRA & ASSOCIATES

Founded in October 1990 in Santo Domingo, Pereyra& Associates is a firm that provides all types of legal services with extensive experience in assisting corporations and individuals, domes-tic and foreign, with a well-earned reputation for providing efficient services to its clients. The firm has seventeen highly qualified lawyers that pro-vide personalized service across a wide range of specialties. It also has excellent relationships with a variety of law firms around the world, al-lowing them to provide clients with local exper-tise worldwide. Areas of practice include Civil and Commercial Law, International Trade, Business, Foreign Investment, Free Zone Law, Banking Law, Trademark and Copyright Law, Telecom-munications, Administrative Law, Regulatory Law, Environmental Law, Real Estate Law Labor Law, Litigation, and Arbitration, among others.

Contribution: Drafted section on foreign invest-ment, free zones and social security legislation.


MEDINA & RIZEK, LAWYERS (MRA)

MRA can be summed up in a single word: trust-worth. The firm is committed to its customers, and dedicated to building lasting relationships with strategic partners, providing a fair and hon-est defense of their interests. Core values are reliability, a passion for excellence, dedication to service, and genuine respect for the interests of the client. MRA specializes in all aspects of cor-porate law and has a keen business sense. By providing strategic advice and ongoing planning, the firm helps its clients anticipate and manage potential legal risks, obstacles, contentious nego-tiations, allowing its clients to focus their efforts on strengthening and growing their business. Practice Areas include: Mergers and Acquisitions, TAXATION, Arbitration and Litigation, Adminis-trative and Regulatory Law, Banking and Capital Markets, Telecommunications and New Tech-nologies, Competition, Tourism and Real Estate Investment, Consumer Protection, and Environ-mental Law.

Contributors:

Fabiola Medina

Jos Alfredo Rizek

Laura Cass

CheryZacarasVerdeja

Contribution: Drafted sections on the Telecom-munications Sector, Fiscal System, and devel-opment of alternative means of resolution. Re-viewed of sections on the legislation on electronic commerce, documents and signatures; and tech-nological crimes and misdemeanors.

MANUEL DAZ FRANJUL

Graduated in 1962 from the Universidad Autno-ma de Santo Domingo.Doctorate in Political Sci-ence in 1972 from the UniversitaDegliStudi di Roma, Italy.Specialization in Foreign Trade from the Italian Foreign Trade Institute (ICE) in Rome, between 1965 and 1966.International Economic Studies at the University of Geneva in Switzer-land from 1973 to 1975.Counselor of the Domini-can Delegation to the International Organizations in Geneva, Switzerland, in the periods 1966-1969 and 1972-1975.Counselor, Economic Section of the Dominican Embassy in Washington, D.C., USA.Foreign Trade Specialist at the Organization of American States (OAS). At the Dominican Min-istry for Industry and Commerce he has served as an adviser on Foreign Trade; chief negotiator for Market Access; Supervisor of the legal review of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA); President of the Ad-Hoc Group on Rules of Origin; and Group Vice President for Market Access negotiations for the Free Trade Area of the Americas, FTAA. Associ-ate of Rivera & Rivera since 2002.

Contribution: Drafted sections on the World Trade Organization and the position of the Do-minican Republic in the System of Multilateral and Regional Preferences. Reviewed the economic association agreement between the European Union and the Cariforum, other treaties and inter-national agreements; and Competition.

MARA DE LOURDES NEZ CUERVO

Coordinator of the Trade Logistics and Facilitation department of the National Competitiveness Coun-cil (CNC), department responsible for coordinating the transversal initiatives aimed at improving the development of logistic activities, both at a public policy level and of the clusters that the CNC is work-ing on as well as encourage actions aimed at contributing to the trade development in the Dominican Republic. Her work focuses on issues such as: cargo security, customs and transportation, as well as the import and export formalities that need changing to make Dominican foreign trade more dynamic.

www.cnc.gov.dowww.cnc.gov.do / www.competitividad.org.do / www.forodecompetitividad.org

Contribution: Reviewed Chapter on the Agricultural Industry

THIRD EDIT ION 17

MARIO E. PUJOLS ORTIZ

Law degree from the Universidad Iberoamericana in 1996, Summa Cum Laude.Masters in Business Law and Economic Law at the Pontificia Universi-dad Catlica Madre y Maestra (PUCMM) in 1999. Masters in International Legal Studies at the Wash-ington College of Law at American University in 2000 as a Fulbright Scholar. Postgraduate Degree in Business Economics, PUCMM in 2006. MBA from Barna Business School / University of Barcelona in 2009. He has taken courses on trade policy at Har-vard and Columbia universities, as well as courses in Finance at the University of Pennsylvania. He cur-rently serves as Manager of Governmental Affairs for Len Jimenes Group, focusing on regulatory is-sues, TAXATION and free trade. Since 2006 he is Professor of Private Law at UNIBE. Arbitrator for the Mediation and Arbitration Board of the Chamber of Commerce and Production of Santo Domingo. He is a member of the Commission responsible for im-plementing the Law on Unfair Trade Practices and Safeguard Measures, and has been a consultant on regulatory issues for Chemonics under a U.S. Agency for International Development program for DRCAFTA implementation.

Contribution: Drafted sections on the economic association agreement between the European Union and the Cariforum; and other treaties and international agreements. Reviewed sections on Competition; the World Trade Organization; and the position of the Dominican Republic in the sys-tem of multilateral and regional preferences.

NATALIA M. POLANCO ABREU

Attorney with a Masters in Business Law and Economic Law. Cum Laude Degree in International Negotiations.International consultant for the U.S. Agency for International Development, the European Union, the Inter-American Development Bank, and others. Legal advisor on international trade issues to leading business associations and private companies in the Dominican Republic. Extensive ex-perience in negotiation, management and implementation of trade agreements. Negotiated various chapters of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), relating to the legal and administrative framework of the agreement, as well as the chapter on dispute resolution. Negotiated the chapter on dispute resolution in the Free Trade Agreement of the Americas (FTAA).Responsible for the legal review of entire DR-CAFTA text prior to signing.Legal Review team member of free trade agreements between the Dominican Republic and CARICOM, and with Central America. In the public sector, has served as Manager for Legal and Administrative affairs at the Foreign Trade Administration division of the Ministry for Industry and Commerce, and as Manager of International Treaties at the Dominican Foreign Ministry. She is also a Notary Public and Judicial Interpreter. [email protected]

Contribution: Reviewed the chapter on the Free trade agreement among the Dominican Republic, Central America and the United States (DR-CAFTA).

MIRNA AMIAMA NIELSEN She specializes in economic, regulatory and ad-ministrative law, national and international busi-ness, contracts, legal strategy and conflict man-agement. Provides legal, strategic advice, as well as comprehensive support that customers require through: A unique capacity for continuous in-depth analysis of the legal aspects of business, seeking to reduce legal liabilities and minimize the risks to operations; dedication to personalized service, quality, professionalism and reliability, converting legal needs into innovative strategies that have positive impact in the development of business activity; and, the ability to provide flexibility and breadth in the scope of legal services through strategic partnerships with leading national and international associates.

Amiama Nielsen understands that its success de-pends on the success of its clients, which can best be accomplished by providing them with ongoing project support, staying focused on business ob-jectives, and providing them with the best legal protections available under the law.

Contribution: Co-author of the topic on the Con-stitution of the Dominican Republic: The Road to Governability.


OFFICE OF MELO GUERRERO

OMG is one of the leading consulting firms in the Dominican Republic, offering a full range of ser-vices in the areas of legal, strategic, managerial and financial consulting. A general practice firm, OMG specializes in strategic business planning and is known for its involvement in high profile projects with a great degree of sophistication.

Monika Melo Guerrero, a contributor to this edition of the Guide, is Partner and Head of the Regulatory and Intellectual Property Departments. Graduated Magna Cum Laude from the Pontificia Universidad Catolica Madre y Maestra (PUCMM), Santo Domin-go in 1994, and a Masters Degree in Business Law and Economic Legislation from the same university in 1998, she has also completed several postgradu-ate courses. She specializes in regulated markets, focusing on social security, securities market, finan-cial regulation, electricity and telecommunications, as well as intellectual property with a focus on li-censing, geographic indications and entertainment legislation. Collaborated on the review and amend-ment of several laws and regulations such as the new film industry law, the commercial restructuring law, security market regulations, competition regu-lations, among others, and has also published sev-eral articles on these topics. Member of the Domin-ican Intellectual Property Association (Asociacion Dominicana de la Propiedad Intelectual ADOPI), the International Trademark Association (INTA) and was appointed member of the Geographical Indica-tions Subcommittee in 2010. http://www.omg.do

Contribution: Drafted and updated the chapter on the Film Industry in Dominican Republic.

RUSSIN VECCHI & HEREDIA BONETTI

(RV&HB)

Founded in 1969, RV&HB is the Dominican af-filiate of Russin&Vecchi, an international law firm with offices in Asia, Europe, North America and the Caribbean. RV&HB is comprised of a spe-cialized team of multilingual professionals, pre-pared to meet the legal needs national and inter-national clients. RV&HB is actively involved in a variety of major transactions projects, including mergers and acquisitions, financing, develop-ment infrastructure projects, tourism and real es-tate, concessions and tenders, and has extensive knowledge in the fields of Aviation, Banking and Financial, Commercial, Energy, Telecommunica-tions, Intellectual Property, Foreign Investment, Litigation, Alternative Dispute Resolution and Ar-bitration.

www.russinvecchi.com

www.meritas.org

Contribution:

Maria Esther Fernandez

(Civil Aviation Sector / Port Sector)

Jose Maldonado (Stock Market)

Miguel Angel Heredia Bonetti (DR-CAFTA)

Contribution: Co-writing the chapter on In-vestment Single Window (VUI).

SHIRLEY ACOSTA LUCIANO

Executive Vice President of the Legal Department of BHD Bank

Ms. Shirley Acosta specializes in Banking Law. Graduate of Universidad Nacional Pedro Hen-rquez Urea (UNPHU). Well known in the area of financial legal advice. [email protected]

Contribution: Drafted and reviewed the chapter on Law No. 189-11 on the Mortgage Market De-velopment and Creating Trusts in the Dominican Republic

THIRD EDIT ION 19

YUDITH CASTILLO NEZ

Graduated Cum Laude from the Universidad Na-cional Pedro HenrquezUrea. Graduate degrees in Labor and Social Security from the Universidad Autnoma de Santo Domingo, and Consumer Law from the University of Valencia. She holds an Masters in Business Administration from the Uni-versity of Quebec. Additional studies include spe-cialty courses in Latin American Labor Law at the International Labor Organization (ILO), and the Universities of Bologna and Castilla La Mancha. Currently specializing in Aviation Law at Yale Uni-versity. She has worked as legal director of Co-detel, legal director of OPITEL, and legal counsel to Verizon International Teleservices, as well as Country Counsel for the International Labor Or-ganization. She is currently Director of the Legal and Regulatory department for the Punta Cana Group. Serves as a representative before the Na-tional Social Security Commission, the Board of Occupational Safety and Health, and the Labor Advisory Council. She coordinates the Tripartite Dialog Program of COPARDOM, a national labor relations entity of which she is a board member, and serves as President of the Legal Committee of the CONEP, the countrys umbrella business association.

Contribution: Drafted sections on construction sector, Real Estate Law and land disputes. Re-viewed the tourism sector.

We want to thank the collaborations of:

Dilia Jorge Mera

Eduardo Rodriguez

Enmanuel Cedeo

MariaCarbuccia

Michelle Abreu

Oliver DOleo

Special thanks to Biaggi& Messina and Rivera & Rivera for having collaborated in the first edition (2009).

SQUIRE, SANDERS

PEA, PRIETO & GAMUNDI

Squire Sanders & Dempsey Pea Prieto Gamun-di is the local office of Squire Sanders & Dempsey LLP a global law firm that has about 1,400 pro-fessionals, spread over 36 offices located in 16 countries around the world. The Dominican team of Squire Sanders is composed of a group of lawyers licensed to practice in the country, fully bilingual in English and Spanish, with extensive experience in the energy sector, the management of international Transactions, and foreign invest-ment, among other practice areas. www.ssd.com

Contribution: Drafted sections on the energy and hydrocarbon sector, the mining sector and Law on international financial zones. Reviewed sections on legislation on environment and natu-ral resources.

TRONCOSO & CACERES

Troncoso y Caceres provides the full spectrum of legal services. The firm serves a broad base of local and international clients, and is organized into 5 major areas: Commercial and Corporate; Real Estate and Construction; Litigation and Al-ternative Dispute Resolution; Administrative Law and Government Contracts; and Intellectual Prop-erty. Founded on March 2nd, 1915 by Manuel de JessTroncoso de la Concha under the name of OficinaTroncoso. Since then it has become one of the leading law firms offering the full range of legal services in the Dominican Republic, includ-ing the largest and oldest intellectual property de-partment in the country (since 1917). Currently the firm maintains a successful leadership in this area. In 1983, it changed his name to TRONCO-SO AND CACERES.

Contribution: Drafted section on enforcement of creditors rights.


CHAPTER 1

INSTITUTIONALPROFILE

THIRD EDIT ION 21

CHAPTER I. About AMCHAMDR

The American Chamber of Commerce of the Dominican Republic (AMCHAMDR) is a non-profit organization incorporated in the Dominican Republic, accredited by the US Chamber of Commerce, and affiliated with the Association of American Chambers of Commerce of Latin America (AACCLA).

Our membership is comprised of more than 2,000 firms operating in the Dominican Republic from the United States, the Dominican Republic, and other countries. Our main office is located in the nations capital, Santo Domingo, and there are 9 branch offices located in the countrys major commercial centers: Santiago, Puerto Plata, La Vega, Moca, San Francisco de Macoris, San Pedro de Macoris, La Romana, Higuey and Bani. AMCHAMDR is the only business organization in the country with such a national presence, representing companies from virtually all sectors of the economy.

Our members share a common vision for the Dominican Republic, and that is the consolidation of sustain-able economic development based on open and transparent markets, respect for the rule of law, and socially responsible corporate behavior.

Our mission is to enable our members to achieve their maximum economic, professional and civic potential by providing access to knowledge, opportunities and best practices, and creating a culture of corporate social responsibility.

AMCHAMDR is able to advance its institutional agenda in large part thanks to the work of a number standing committees including:

Legal Committee

Economic Committee

Energy Committee

Trade Facilitation Committee

Corporate Social Responsibility Committee, and

Information and Communications Technologies Committee


AMCHAMDR has an active work plan, organizing and carrying out more than 100 events and activities each year, including:

Monthly lunches with leading national and international opinion leaders

Seminars and Workshops

Briefings on current events of interest to the business community

Trade Missions to and from the United States and other regional trading partners

Trade Shows and Expositions

Golf Tournaments and Gala Fund Raisers in support of our

Corporate Social Responsibility programs

AMCHAMDR provides a variety of services to our membership, as well as potential investors, including:

Leading bi-monthly Business Magazine with national circulation

Business Facilitation (targeted appointments with business or government officials)

Customized briefings on Economic and Key Business Indicators

Discount plans with select providers

Market research

Membership Requirements

We welcome applications for full active membership from companies legally incorporated in the Dominican Republic, and that are aligned with our institutional vision and mission.

For companies that are not yet incorporated in the Dominican Republic, but interested in staying informed on current events and accessing leaders in business and government, we have a special Overseas Member category. For more information on how to join, please visit our website at www.amcham.org.do

THIRD EDIT ION 23

THIRD EDIT ION 25

CHAPTER 2

AN INTRODUCTION TO THE DOMINICAN REPUBLIC

a. History of the Dominican Republic

b. Economic structure of the Dominican Republic


AINVESTORS GUIDE DOMINICAN REPUBLIC

GENERAL INFORMATION ABOUT THE DOMINICAN REPUBLIC

THIRD EDIT ION 27TERCERA EDICIN 27

1. A brief history

The territory of what is now the Dominican Republic forms a part of an island discovered by Christopher Columbus in 1492 and later given the name of La Espaola. The following year, Columbus established the first European settlement in the New World and named it La Isabella. The city of Santo Domingo was founded in 1496. In 1509 it became the first Vice-Kingdom of America and in 1511 it became the seat of the first Royal Court. The University of St. Thomas, first University in America, was founded there in 1538. The first Bishop was appointed and the Church of St. Nicolas became the first church in America.

The Island became the center from which the Span-ish colonization spread over large portions of the Continent. Less than a century later, attacks by cor-sairs made it necessary for the Spanish population to concentrate in the Eastern part of the Island. French corsairs settled in the Western part (in what today is Haiti), which Spain was compelled to cede to France in the Treaty of Ryswick of 1697.

The Spanish colony prospered during the rule in

Spain of the Bourbon monarchs. During the French Revolution, the Spanish part of the Island was ceded to France, but the French did not establish control. The Spanish colonists seized their part of the Island between 1808 and 1809 and nominally returned the territory to Spanish sovereignty, while the slaves in the western part, led by Toussaint lOuverture, revolt-ed against their masters and proclaimed the Republic of Haiti. In the eastern part, in 1821, Jos Nez de Cceres seized power from the Spanish Crown and proclaimed the first Independence of the Dominican Republic, known as the Ephemeral Independence, which lasted only until 1821, when Haitian armies of liberated slaves overran the eastern part and unified the Island under Haitian rule. The Spanish settlers who remained on the Island, led by the three so-called Fathers of the Fatherland (Juan Pablo Duarte, Ramn Matas Mella and Francisco del Rosario Sn-chez) were able to overthrow the Haitian domination in 1844 and restore the countrys independence.

The United States has played an important role in the history of the Dominican Republic. During the 1860s there was talk of annexation. In 1905, to ensure collec-


tion of the countrys very large foreign debt, the United States took control of the Dominican Customs. In 1916, U.S. forces invaded the country and maintained their presence until 1824. Soon after their departure, the gen-eral in command of the Dominican National Guard, Ra-fael Leonidas Trujillo, seized power in a murderous and fraudulent election and maintained a dictatorship until he was murdered in 1961. After a short period of instability, during which the U.S. forces again intervened, the coun-try has enjoyed a long period of democratic government and economic prosperity, which continues to the present day.

2. A convenient location

With an area of 48,442 square kilometers, the Do-minican Republic is the second largest country in the Caribbean. It has 1,575 kilometers of coastline, four mountain ranges and numerous fertile valleys. Thanks to its location between Cuba and Puerto Rico, the Dominican Republic is a convenient point of access to markets in the United States, Canada and Europe.

3. A pleasant climate

The country enjoys a pleasant climate, with a mean temperature of 26 degrees Celsius (77 degrees Fahr-enheit). There are two short rainy seasons, from May to July and again in October and November. As a part of the Caribbean Basin, the country is exposed to tropical hurricanes, but its topography tends to re-duce the intensity of these phenomena and in some instances to deviate their course.

4. The Dominican population

Approximately 9.3 million people reside in the Do-minican Republic. According to the most recent sta-tistics, the annual growth rate of the population is of 1.47% per year. The life expectancy is of 63.9 years for men and 68.1 years for women.

5. The Dominican Government: democracy in action

The Dominican Republic has a civil, republican, democratic and representative form of government

THIRD EDIT ION 29

divided into three independent branches: the Legis-lative, the Executive, and the Judicial. The President of the Republic, elected every four years, is the head of the Executive Branch. He is elected by an absolute majority of the eligible voters. If no candidate were to achieve an absolute majority, there would be a run-off election. The President is barred from seeking re-election at the end of his term, but can run again 4 years later.

The Legislative Branch, known as the National Con-gress, is composed of a Senate and a Chamber of Deputies. There are 32 Senators, one from each Province and one from the National District, and 190 Deputies. Senators and Deputies are elected by di-rect election for a period of 4 years.

The Dominican Judiciary is similar to the French sys-tem. It consists of the following courts:

Justices of the Peace, who decide claims involving small amounts and other matters con-sidered to be of lesser importance.

Courts of First Instance, which handle all matters not specially attributed to another court.

Appellate Courts, which hear appeals, both on the law and on the facts, from judgments rendered by the Courts of First Instance.

The Supreme Court of Justice, composed of 16 Justices, whose main function is to decide appeals of cassation against final judgments ren-dered by the lower courts.

The Constitutional Tribunal composed of 13 Justices, recently created by the Constitution of 2010 to ensure the supremacy of the Constitu-tion and to enforce human rights.

There are also specialized courts, which handle la-bor matters, litigation involving registered real estate, cases involving minors, and administrative matters.

The Justices of the Supreme Court and of the Consti-tutional Tribunal are appointed by the National Coun-cil of the Magistracy, which is made up of representa-tives of the three branches of the State, with the aim

of guaranteeing the independence of the Judiciary. The judges of the other courts are appointed by the Supreme Court from lists of candidates proposed by the Council of the Judiciary, composed of members of the various courts.

6. The Dominican legal system:

origin and evolution

The original Spanish legislation was repealed and the French codes were put into force during the Haitian Occupation (1822-1844). These codes remained in effect throughout the 19th century. The revised versions of these codes, as they existed in France around 1880, were translated into Spanish and for-mally adopted in 1884. Later laws on special subjects have deviated from the French model, often following trends in other Latin-American countries. Since the turn of the millennium, there has been an outburst of new legislation and a considerable increase in the number of cases decided by the Supreme Court, which influence the decisions of the lower courts, although technically they do not constitute binding precedents. A new Constitution, proclaimed on 26 January 2010, is likely to lead to still more changes.


ECONOMIC STRUCTUREOFTHE DOMINICAN REPUBLICB

INVESTORS GUIDE DOMINICAN REPUBLIC

THIRD EDIT ION 31

1. Gross Domestic Product

Between 1992 and 2011, the Dominican economy ex-perienced an average growth rate of 5.9% per year, sig-nificantly above the rest of Latin America and the Carib-bean, which grew by 3.4% per year during the same period. The impact of the recession in the United States and the European debt crisis on the Dominican econo-my has been relatively mild. During 2011 the economy grew by 4.5%, while growth in the third trimester of 2012 was 3.9%.

The size of the economy, measured by gross domestic product, was RD$2.1 trillion (equivalent to US$55.6 bil-lion) for the year 2011. It is estimated that in 2012, the GDP will have increased to RD$2.2 trillion (equivalent to US$58.6 billion).

Local manufacturing is the largest sub-sector of the economy, representing approximately 20.2% of the GDP, followed by trade at 9.3%. The service industry represents 60.2% of GDP.

2. Inflation

The inflation rate for the past 5 years (2008-2012) has averaged an annual 5.6%. During 2012, the rise in the price of oil on the global market was one of the most important factors behind the increase in the cost of living in the Dominican Republic. The cost of transportation (accounting for 15%) and the cost of electricity (sundry goods and services ac-counting for 5.3%) accounted for more than 20% of the inflation rate, which was 3.91%.

Its important to point out that food and non-alco-holic beverages had the biggest impact on inflation in the Dominican Republic, making up 41% of the 3.91% rise at the end of 2012.

3. The Exchange Rate

The Dominican Peso is freely convertible and has a long-term trend of devaluation against the U.S. Dollar. The Central Bank occasionally intervenes in the currency market to avoid sudden peaks in the exchange rate and maintain a controlled de-

valuation rate. By the end of 2011, the selling rate for the Dollar, ie., the rate at which banks sell Dol-lars to the public, had depreciated by 3.3% com-pared to December 2010 (in December 2011 it was RD$38.62); meanwhile by December 2012, when the rate had reached RD$40.71 to the Dol-lar, it had depreciated by 5.4% compared to De-cember 2011.

4. Balance of Payments

Imports continue to grow at a higher rate than ex-ports and therefore, the current account deficit of the balance of payments has been increasing in re-cent years. The current account deficit during 2011 was US$4,409 million, while for the third quarter of 2012 it was US$3,014 million.

At the same time, the trade balance of the current account reached US$8,824 million and US$6,454 million in September 2012. These numbers reflect the huge scale of imports, the most significant item among them being the cost of crude oil and other petroleum products, representing 27.3% of the total cost of imports up to September 2012, while 57% of exports (up to September 2012) originated in the Free Zones, whose production is directed towards the U.S. and European markets.

Furthermore, the service industries portion of the balance of payments showed a surplus, highlighting the performance of revenue from tourism (US$3.5 billion) which increased by 5.6% in the third quarter of 2012 compared to the same period in 2011.

As for current transfers, it should be noted that fam-ily remittances fell 3.9%, meaning US$91 million less, for the period January-September 2011.

5. Foreign Debt

Up to September 2012, the public sectors ac-s ac- ac-crued foreign debt amounted to US$ 13.784 bil-lion equivalent to 23.6% of the GDP (US$1.636 billion more than in September 2011). Of this


debt, US$12.7 billion belonged to Non-Financial Public Sector and US$1 billion to the Central Bank (21.9% and 1.8% of GDP respectively).

The numbers provided by the Public Credit Bureau (NFPS debt only) up to December 2012 show an increase of US$19,247.7 million, of which 67% cor-respond to the foreign debt and 33% to the national debt.

6. International Reserves

As a result of the suspension of disbursements by international agencies as provided in previous years by the Stand-by agreement with the IMF, as of De-cember 2012 net international reserves amounted to US$3.2 billion, a number 12% below the level of net international reserves for December 2011, i.e., US$428 million less.

The inflation rate for the past 5 years (2008-2012) has averaged

an annual 5.6%. During 2012, the rise in the price of oil on the glo-bal market was one of the most

important factors behind the in-crease in the cost of living in the Dominican Republic. The cost of

transportation (accounting for 15%) and the cost of electricity (sundry goods and services ac-

counting for 5.3%) accounted for more than 20% of the inflation

rate, which was 3.91%.

THIRD EDIT ION 33

Odebrecht is a Brazilian organization composed of diversified business, with global operations and quality standards. Since 2002, Odebrecht works at the Dominican Republic executing engineering and construction projects, mainly in the infrastructure segment, encompassing engineering design and implementation of hydropower, roads, aqueducts, tunnels, viaducts, bridges, among others.

www.odebrecht.com.do

Bridge over the Chavn river - Coral EspresswayMerit Award, Best Global Projects - Category Bridges / Tunnels

ENR magazine (Engineering News-Record)

THIRD EDIT ION 35

CHAPTER 3

LEGAL FRAMEWORK FOR INVESTMENTS

a. The Constitution Of The Dominican Republic: The

Road To Governability

b. Foreign Investment

c. The Single Counter For Investments

d. Film Industry

e. Free Zones

f. Telecommunications

g. Civil Aviation

h. Port Authority

i. The Energy Sector

j. Tourism Sector

k. The Construction Sector

l. Real Estate Law

m. Law No. 189-11 On Mortgage Market Develop-

ment And The Creation Of Trusts In The Dominican

Republic

n. The Mining Sector

o. The Agricultural Sector

p. Pharmaceutical Sector

q. Investment Guarantees And Financing


AINVESTORS GUIDE DOMINICAN REPUBLIC

THE CONSTITUTION OF THE DOMINICAN REPUBLIC: THE ROAD TO GOVERNABILITY

THIRD EDIT ION 37

A new Constitution was proclaimed on 26 January 2010 and published in Official Gazette No. 10561. Instead of amending its Constitution, each time a change was desired the Dominican Republic gave itself a new Constitution. This is the 39th Constitution the country has had in the last 167 years.

Although the present Constitution preserves a large part of the contents of earlier constitutions, it also contains numerous changes, some of which are of great importance in the organization of the State. Of special interest for this publication are those provi-sions which have a direct bearing on the economy, on business and on investment.

1. The Fundamental Principle of Supremacy of the Constitution

The underlying principles of the new Constitution are aimed at achieving a government by the people, a respect for human dignity and the submission of all acts of the State to the precepts of the Constitution.

2. A Socially-Conscious Democratic Govern-ment Respectful of the Rule of Law. The National Territory

The Constitution envisions a socially-conscious Gov-ernment organized in the form of a unitary republic founded on the principle of the separation of powers and respect for fundamental civil rights.

The territory of the Dominican Republic is defined in the same way as it has been in earlier constitutions, except that the territorial sea and the electromagnetic field of the upper atmosphere are expressly limited and subjected to regulation in a manner consistent with the Law of the Sea and International Law.

3. Natural Resources

Articles 14 and 17 of the Constitution, for the first time in the history of Dominican constitutions, deal with the subject of natural resources. Water resources are given strategic importance. Free access is given to rivers, beaches, lakes and other waterways without interfering with the rights of owners of private proper-

ty. Public rights of way in these places will be subject to legislation which will have to respect vested rights.

The Constitution recognizes the importance of pro-tected natural areas and, to ensure their continued existence, it provides that any reduction of their limits must be approved by a special majority of 2/3 of both Houses of the National Congress.

It also provides certain basic rules for the preserva-tion of the environment. These rules are already embodied in Law No. 64-00 and placing them in the Constitution puts them on a higher level.

4. Dominican Nationality

According to the Constitution, the following persons are Dominican nationals: a) the children of a Domini-can mother or of a Dominican father; b) those who enjoyed Dominican nationality prior to the entry into force of the present Constitution; c) those born in the national territory, with the exception of the children of foreign diplomats, the children of persons in transit and the children of persons residing illegally in the country; d) those born abroad of a Dominican father or mother, notwithstanding that such persons may also have acquired another nationality through their place of birth; e) persons who are married to a Do-minican if they opt for Dominican nationality; f) the direct descendants of Dominicans residing abroad; and g) persons naturalized according to the proce-dures established for that purpose. The Constitution recognizes the fact that a Dominican national may acquire a foreign nationality without losing his Do-minican nationality.

5. Equal treatment of foreign nationals

According to Article 25, foreign persons enjoy the same rights and have the same obligations as Do-minicans with certain exceptions set forth in the Con-stitution and in the laws. Article 221 declares that for-eign investments shall receive the same treatment as domestic investments, again with certain exceptions.

6. Membership in the international commu-nity and submission to arbitration


An important innovation of the present Constitution is the ability of the State and its agencies to submit contract disputes to local or international arbitration.

Article 26 is a recognition of the fact that the State is a part of the international legal order and is com-mitted to act in a manner consistent with General In-ternational Law and Inter-American Regional Law to the extent that their precepts have been adopted by existing treaties.

It is also declared that the Dominican Republic shall promote regional integration, which in fact it has been doing in the past.

7. Human rights

Title II of the new Constitution relates to fundamen-tal rights and duties. It contains a list of internation-ally recognized human rights, which are declared to be binding on the Dominican Republic. In that re-gard also, the Constitution does no more than give constitutional rank to norms that are already found in statutes, treaties and Supreme Court decisions. Among these fundamental rights, the following are mentioned: the right to life, the right to treatment con-sistent with human dignity, the right to equality in the eyes of the law, the right to freedom and personal safety, the prohibition of slavery, the right to personal integrity and to the unhampered development of ones personality, the right of privacy and honor, freedom in the exercise of religion, freedom of movement, free-dom of association and public meeting, and freedom of speech and information.

The right to protection of ones personal data and the need of a procedural mechanism to make such pro-tection effective is another one of the innovations of the present Constitution.

8. Social and economic rights

The Section of the Constitution which begins with Ar-ticle 50 describes social and economic rights, which have an important bearing on business and invest-ment. It proclaims the right of free enterprise, the right of ownership, the right of intellectual property,

the protection of the consumer, the right to an ade-quate supply of food, the right to a family life, and the protection of minors and of persons with disabilities. The State reiterates its respect for private property and commits to pay just compensation in advance of any expropriation. It also guarantees the right of an owner of real property to hold a clear title.

9. New constitutional rights

Four new groups of provisions are worthy of mention:a) The constitutional guaranty of resources to defend indigent persons against abuses of Government power by means of a writ of am-paro;b) The acceptance of the concept of due process in all judicial and administrative matters, as well as the protection against illegal imprison-ment by means of the writ of habeas corpus;c) A writ of habeas data, aimed at protecting the right of privacy and personal data;d) The statement that all acts which subvert the constitutional order are null and void, including the seizure of property through military force.

10. The Legislative Branch

Title III of the Constitution deals with the Legislative Branch, which is exercised by a National Congress composed of two chambers, the Senate and the Chamber of Deputies. The new Constitution strength-ens Congress powers of supervision and control over the Administration, which already existed in the previous constitution.

The National Congress has the power to levy taxes, duties and imposts and to grant exemptions from the payment thereof; to approve or reject loan agree-ments made by the Government; also to approve or reject construction and other contracts submitted to it by the Executive; to ratify international treaties and conventions signed by the Government and to ap-prove contracts for the sale of Government land.

THIRD EDIT ION 39

The new Constitution also reiterates a cardinal as-pect of the Rule of Law, which is that the laws can be applied only for the future and can have no ret-roactive effect, except when they are favorable to a person involved in a criminal proceeding or serving a sentence.

The Constitution introduces the concept of an organic law for which a majority of 2/3 of the members pres-ent in both Chambers is required, with the purpose of compelling the achievement of a consensus of the political parties on these matters, which are deemed of special importance. They include those relating to human rights, to the structure and organization of the Government, to the granting of powers to the State; to the electoral system; to the economic and financial system; to the national budget; to public investments in new projects; to the territorial organization; to the procedures for the assertion of constitutional rights, and to national defense and security.

11. The Executive Branch

The Executive Branch is headed by the President of the Republic, who is elected every 4 years by direct suffrage. The Constitution provides that he cannot be re-elected for the following term.

The departments of the Government, which were formerly called Secretariats, are now termed Minis-tries, and a Council of Ministers is created. A list of basic principles is established, to govern the acts of all public officials. These principles are: efficiency, hi-erarchy, objectivity, equality, transparency, economy, publicity and coordination. All acts of the Government are subject to the Rule of Law.

Another novel provision is found in Article 46, which expressly condemns corruption and sets the guide-lines for the Legislative Branch to criminalize the cor-ruption of public officials.

The new Constitution seeks to protect the civil ser-vice and at the same time to render it responsible, not only criminally in cases of corruption, but also civilly vis--vis persons who have been injured by the illegal acts or omissions of public officials. The civil liability

can be asserted against the person who committed the wrong as well as against the agency which em-ployed him.

12. The Judicial Branch

Beginning with Article 149, the Constitution sets forth in a broader and more explicit manner the principles which had already been established in the Constitu-tion of 1994 and revised in 2002. The members of the Judiciary are independent, impartial, responsible and not removable. Nonetheless, every 7 years the Jus-tices of the Supreme Court are evaluated by the Na-tional Council of Magistrates, which has the power to remove and replace them as a result of its evaluation.

The Constitution also created a new institution, the Council of the Judiciary, whose function is to decen-tralize administrative matters which formerly were concentrated in the hands of the Chief Justice of the Supreme Court, thus taking one step further in the direction of reform of the Judiciary, which began in 1997. The Council of the Judiciary is composed of judges of the various courts who, with the exception of the Chief Justice of the Supreme Court, are per-manently employed by the Council and deal in mat-ters of judicial administration and discipline of judges.

A system of administrative courts is created in Article 164 and following. Their function is to pass on the legality of the acts of public officials.

13. The National Council of Magistrates

The National Council of Magistrates is responsible for the appointment of the members of the Supreme Court, of the Constitutional Tribunal and of the Supe-rior Electoral Tribunal, and is charged with evaluating the performance of the Justices of the Supreme Court.

The composition of the Council has changed, so that now it is made up of eight members, namely: the Pres-ident of the Republic, the President of the Senate, a Senator of the party with the second largest represen-tation, the President of the Chamber of Deputies and a Deputy of the party with the second largest representa-tion, the Chief Justice of the Supreme Court, another


Justice of the Supreme Court and the Attorney General of the Republic.

14. The Constitutional Tribunal

The Constitutional Tribunal is an independent body of the State, not tied to any one of its three Branches. Its main function is to safeguard the supremacy of the Constitution. Its decisions are final and binding on the regular courts and on all departments of the Gov-ernment. It consists of 13 Justices, of which a major-ity of at least 9 is required for a decision.

The Constitutional Tribunal takes cognizance of direct actions in which an allegation of unconstitu-tionality is presented relative to a statute, decree, regulations, or ordinance. Such actions can be brought by the President of the Republic, by one third of the members of the Senate or of the Cham-ber of Deputies, or by any person with a legitimate and legally protected interest. Cases of this kind involve what is called the concentrated control of constitutionality.

The Constitutional Tribunal also has the following powers: a) to exercise preventive control over the constitutionality of international treaties before they are submitted to the National Congress for ratifica-tion, b) to resolve conflicts that may arise between the Branches of the state, c) to resolve complaints of human rights violations, d) to review any final deci-sions which the Supreme Court may render on ques-tions of constitutionality after the proclamation of the Constitution on January 26, 2010.

As before, there remains the possibility of an ordinary court deciding, as an element of its reasoning in a civil or criminal case, that a particular statute, decree, reg-ulations, resolution or ordinance is unconstitutional. The decision in the case involving the constitutional claim can be taken to the Supreme Court, which must then bring the constitutional question to the attention of the Constitutional Tribunal and await its decision on that point before deciding the merits of the case. This type of case involves what is called a diffuse control of constitutionality.

15. Economic affairs

The economic and financial system envisioned by the Constitution is of special interest to investors. It seeks to achieve human development as well as economic growth, redistribution of wealth, social jus-tice, fair treatment, social cohesion and protection of the environment within a framework of free competi-tion and equality of opportunity.

The State is called upon to foment private economic initiative and the Constitution proclaims that business activity, both public and private, shall receive the same legal treatment. It also recognizes the possibility of giv-ing special treatment to investments in less developed areas of the country, such as the border provinces.

The regulation of the monetary and financial system is in the hands of the Monetary Board, which is the governing body of the Central Bank. The Central Bank is the sole issuer of coins and bills denomi-nated in national currency. Its other functions include regulating the exchange rate and stabilizing prices. Laws aimed at modifying the present monetary and financial system require a special majority of 2/3 of the members of both Houses.

16. Constitutional amendments

An amendment of the Constitution requires a bill sponsored by 2/3 of the members of both Houses or a proposal by the President. The need for a reform must be stated in a law which orders the convening of a National Reviewing Assembly. The law must state the purpose of the reform and the Articles to be amended. A vote in favor of an amendment requires a quorum of one half of the members of both Houses and a favorable vote of 2/3 of the members present.

A referendum is also required when the change in the Constitution relates to human rights, the territorial and municipal organization of the country, the rules on na-tionality, citizenship and the rights of foreigners, the monetary system, and the procedures for the amend-ment of the Constitution. It is also proclaimed that no amendment can alter the civil, republican, democratic and representative form of the Government.

THIRD EDIT ION 41


BINVESTORS GUIDE DOMINICAN REPUBLIC

FOREIGN INVESTMENT

THIRD EDIT ION 43

The words of this section are not an exhaustive treat-ment of the contents of the Constitution, but merely a summary aimed at giving potential investors a gen-eral idea of the form of the Dominican Government.

1. Laws Governing Foreign Investment

a. Law No. 16-95 on Foreign Investment in the Dominican Republic

The Dominican Republic grants special incentives to foreign nationals and companies, and to Domini-can nationals residing abroad, who invest capital in a business operating in the Dominican Republic un-der the terms of Law No. 16-95 on Foreign Invest-ment, dated November 20, 1995. This law governs the various types of foreign investment and the rights and duties of investors under the guiding principle of equal treatment between foreign and local invest-ment, subject to certain exceptions.

b. Law No. 98-03 , which creates the Cen-tro de Exportacin e Inversin de la RepblicaDominicana (CEI-RD).

CEI-RD is charged withpromoting foreign investment in the country and of assisting exporters by facilitating business transactions with foreign countries.

c. Regulation No. 214-04 on the Registra-tion of Foreign Investments in the Do-minican Republic

Regulation No. 214-04 on the Registration of Foreign Investment in the Dominican Republic, dated March 11, 2004, establishes the requirements for the regis-tration of foreign investments, the remittance of prof-its, the repatriation of capital, and the requirements for the sale of foreign currency for such purposes. These regulations complement the provisions of Law No. 16-95 and of Law No. 98-03.

2. Sectors of the Economy Open to Foreign Investment

As a general rule, Dominican Law does not establish restrictions on the participation of foreign investment in local business activity. As exceptions to this rule,

Law No. 16- 95 does not allow foreign investment in the following areas: (i) disposal of toxic waste or of dangerous or radioactive substances not produced in the country; (ii) activities which endanger public health or are detrimental to the environment; and (iii) the production of materials or equipment directly re-lated to national defense or security, except with the authorization of the Executive Branch.

According to a report entitled Foreign Direct Invest-ment (FDI) per Target Industry published by the Central Bank of the Dominican Republic (www.ban-central.gov.do) on 4 December 2012 the main sec-tors open to foreign investment during the year 2012 were: transportation, real estate, commerce and in-dustry, mining, tourism, telecommunications, financ-ing, electricity, and free zones. The first three (Com-merce and Industry, Mining and Electricity), in that order, were the fastest growing industries.

3. Types of Foreign Investment

Law No. 16-95 distinguishes among three types of foreign investment:

Direct Foreign Investment, which is carried out in the form of placements of foreign assets by foreign parties (or by Dominicans residing abroad) in the capital of an enterprise doing business in the country;

Foreign Reinvestment, which is the investment of all or a part of the earn-ings generated by a registered foreign investment in the same enterprise in which such earnings were generated;

New Foreign Investment, which is the investment of all or a part of the earn-ings of a registered foreign investment in an enterprise different from the one in which such earnings were gener-ated.

Foreign investments can be undertaken in various forms, including:


In cash, i.e. in freely convertible foreign currency ex-changed at a bank or with a foreign exchange broker licensed by the Monetary Board.

In kind, namely tangible assets such as industrial equipment or machinery, which must be either new or rebuilt, spare parts, raw materials, intermedi-ate or finished goods, as well as intan-gible technological contributions.

Financial Instruments, namely securi-ties which the Monetary Board consid-ers suitable for foreign investment, ex-cept such securities as arise from the repurchase of Dominican foreign debt.

Intangible technological contributions, such as trademarks, production mod-els, service models, technical assis-tance and know-how, managerial as-sistance and franchises.

4. Benefits Obtained by Registering a Foreign Investment

Any person who makes a foreign investment in the Dominican Republic and registers it with the CEI-RD enjoys the following benefits:

Free convertibility of local money into foreign currency through the commer-cial banks and licensed foreign ex-change brokers;

The right to repatriate the full amount of the investment and of the dividends declared during each fiscal period;

The right to repatriate fees from service contracts and royalties from technologi-cal transfer agreements and the like; and

The ability to take advantage of an expeditious process for obtaining resi-dence rights in the country under Law No. 95 on Immigration.

THIRD EDIT ION 45

These provisions, which originated in Law No. 16-95, have lost much of their force since the passage of the Monetary and Financial Law (Law No. 183-02 of 12 November 2002), which in its Article 28 establishes the principle of free convertibility of the Dominican Peso. Registration of a foreign invest-ment is no longer a pre-requisite to the right to repatriate earnings and capital or fees of any kind. Registration re-mains mandatory for enterprises which require a special Government license, such as banks, insurance companies, electric companies, airlines engaged in domestic service and telephone com-panies. For other foreign businesses, it has public relations value and remains useful as a means of permitting the Central Bank to determine the extent of foreign investment in the country.

5. Procedure for the Registration of Foreign Investment

According to Law No. 98-03, an interested foreign in-vestor must file an application form at the offices of the CEI-RD together with the necessary attachments within 180 calendar days from the date on which the foreign investment took place. CEI-RD then has 15 working days in which to issue the corresponding Certificate of Registration.

6. Foreign Investment under DR- CAFTA

The Dominican Republic is a party to the Free Trade Agreement between the United States of America and the countries of Central America (DR-CAFTA), which in its Chapter X sets forth rules for the protec-tion of current or potential investors of any one of the Parties to the Agreement against unfair or discrimina-tory Governmental action.

The additional protections given by DR-CAFTA are: (i) Non-discriminatory treatment in comparison with local investors or investors of countries not parties to the

Agreement; (ii) Limits on performance requirements; (iii) Free transferability of funds generated by the in-vestment; (iv) Protection against expropriations which are in conflict with International Law; (v) A minimal level of treatment in accordance with International Law; (vi) The possibility of contracting managerial personnel regardless of nationality; (vii) A procedure for the resolution of investment disputes, under which the investor of one of the Contracting Parties can sub-mit a claim for damages against another Contracting Party to compulsory international arbitration.

Regulation No. 214-04 on the Registration of Foreign

Investment in the Dominican Republic, dated March 11, 2004,

establishes the requirements for the registration of foreign

investments, the remittance of profits, the repatriation of

capital, and the requirements for the sale of foreign currency

for such purposes. These regulations complement the

provisions of Law No. 16-95 and of Law No. 98-03.


CINVESTORS GUIDE DOMINICAN REPUBLIC

THE SINGLE COUNTER FOR INVESTMENTS

THIRD EDIT ION 47

1. General Outlines

The single counter for investments (VUI), created through Decree No. 626-12 dated 10 November 2012, is a centralized point providing the services, management and processes required for investment projects in the Dominican Republic. It operates in the facilities of the Center for Export and Investment of the Dominican Republic (CEI-RD) and is supervised by the Ministry for the Presidency.

The VUI centralizes the government procedures of various institutions, essential for developing any in-vestment related to sectors the counter is concerned with. Certificates, permits and licenses are among the documentation handled.

2. Aims and advantages of the VUI

Among other things the VUI is aimed at integrating and interconnecting the various public institutions in order to provide investors with a centralized point to apply for the various permits and certificates required to crystallize their investment plans in the country.

The VUI provides a single point of submission for the documents required to make an investment. It also monitors the processing flow set forth for such investment, in order to achieve better coordina-tion between acting institutions. This dual role trans-lates into time and money saved, not only for inves-tors but also for the public entities involved.

One of the main advantages to using the VUI is that it facilitates the execution of investment projects in a transparent, reliable and comprehensive man-ner for both local and foreign investors while allowing them to install and start operating quickly, ensuring a high level of legal certainty and transparency.

The VUI is aimed at providing effective service, sav-ing the investors time and travel costs and saving on running costs for the institutions concerned.

3. Investment sectors included in VUI

Initially, the VUI will cater to the tourism and real estate industry in projects with high impact for the national de-velopment. As work progresses, within less than a year,

other sectors such as the mining, telecommunications, agriculture, agro-industry, film and media and information and technology industries, as well as the incorporation of companies, will gradually be added.

4. Development Stages of the VUI

The VUI was conceived as a two phase development. The first phase and current phase, called Personal At-tendance Counter, seeks to provide information on services, procedures and formalities in a personalized manner through representatives qualified in customer service, investment and government processes. This stage foresees a digital monitoring system that al-lows the various procedures and permits to be tracked, guaranteeing investors a high level of security and transparency when registering with the institutions.

The second phase, to come about within less than a year of the first phase, will be called the Virtual Attention Counter, and will operate through a web page, providing the investor with a tool electronically downloading the information and documents required by the various government agencies, as well as the electronic payment of taxes and other fees associ-ated with the services.

At the moment during this first phase the applicant or his representative must present himself personally at the CEI-RD facilities to use the VUI. During the second phase, applications may be virtually processed, without having to personally go to CEI-RD to submit documents.

5. Virtual and physical location of the VUI

To verify the requirements to begin the necessary procedures or to follow up on applications the appli-cant may visit the website http://www.vuird.gob.do, which contains all the requirements and administra-tive fees that must be deposited to initiate processing and certification of the various investment projects.

The physical facilities for submission purposes and in-person monitoring at the VIU are in the Center for Export and Investment of the Dominican Republic (CEI-RD), located on the corner of Avenida 27 de Febrero and Avenida Gregorio Lupern, Plaza de la Bandera, in the city of Santo Domingo, phone num-ber 809.530.5505.


DINVESTORS GUIDE DOMINICAN REPUBLIC

FILM INDUSTRY

THIRD EDIT ION 49

1. GENERAL OUTLINES

The Dominican Republic inaugurated its film industry in 1923, when the first film, The Legend of Our Lady of High Grace (La leyenda de Nuestra Seora de la Alta-gracia), was shot. However, since then and until recently it lacked a legal basis that would launch the industry and persuade investors to invest their capital. This is why on July 29th 2010, Law No. 108-10 for the Promotion of the film industry in the Dominican Republic was enacted, and later a

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