Tax Benefits for Foreign Investors in the Dominican Republic
In the Dominican Republic, capital gains are generally taxed as ordinary income at a flat rate of 27%, applicable to both individuals and corporations. The gain is calculated as the difference between the inflation-adjusted acquisition cost and the sale price of the asset. However, the government offers several exemptions and reductions to attract foreign capital. For instance, long-term real estate holdings or reinvestments into qualifying projects may benefit from reduced tax rates. Gains from trades on the Dominican Republic Stock Exchange may be exempt or taxed at preferential rates, especially for publicly listed securities. Furthermore, double taxation treaties with countries such as Spain and Canada allow for reduced or eliminated capital gains taxes, depending on the investor’s residency and the nature of the investment.
The Dominican Republic imposes a standard corporate income tax (CIT) rate of 27% on all income derived from activities conducted within its jurisdiction. This rate applies uniformly to both domestic and foreign entities operating in the country. However, the Dominican fiscal framework incorporates a series of targeted tax incentives aimed at fostering foreign direct investment and stimulating growth in key economic sectors.
Under the provisions of the Tourism Development Law (Law No. 158-01), qualifying investments in designated tourism zones are eligible for a comprehensive tax relief package. This includes a 15-year exemption from corporate income tax, capital gains tax, and import duties on goods and equipment related to the development and operation of tourism infrastructure. The objective of this legislation is to enhance the competitiveness of the Dominican tourism sector and attract long-term capital inflows into hospitality, ecotourism, and related services.
In parallel, the country’s Free Trade Zone (FTZ) regime offers one of the most advantageous tax environments in the Caribbean. Enterprises operating within FTZs benefit from a full exemption — 100% — on corporate income tax, customs duties, value-added tax (VAT), and other local levies. These zones are strategically designed to support export-oriented industries, particularly in manufacturing, logistics, and information technology, and have become a cornerstone of the Dominican Republic’s industrial policy.
Additionally, the Renewable Energy Incentives Law (Law No. 57-07) provides substantial fiscal benefits to investors in clean energy projects. This includes a complete exemption from import duties and VAT on renewable energy equipment, as well as a corporate income tax holiday of up to 10 years, contingent upon regulatory compliance and project approval. These incentives are aligned with the government’s broader commitment to sustainable development and energy diversification.
Collectively, these sector-specific tax incentives reflect the Dominican Republic’s strategic approach to economic development — leveraging fiscal policy to attract investment, promote innovation, and enhance the country’s global competitiveness.
The pie chart below offers a visual representation of how the Dominican Republic strategically allocates its tax incentives across four key investment sectors: tourism, free trade zones (FTZs), renewable energy, and real estate. This distribution reflects the government’s targeted approach to economic development, prioritizing sectors that align with national growth objectives and international competitiveness.
Tourism, receiving the largest share at 40%, underscores its role as a cornerstone of the Dominican economy. Through legislation such as Law 158-01 (CONFOTUR), the government provides long-term tax exemptions to stimulate investment in hospitality infrastructure, eco-tourism, and resort development. This not only boosts foreign direct investment but also supports employment and regional development.
Free Trade Zones account for 30% of the incentive structure, highlighting the country’s commitment to export-led industrialization. These zones offer comprehensive tax relief — including full exemptions from corporate income tax, customs duties, and VAT — making them highly attractive to multinational manufacturers and logistics firms.
Renewable energy, with a 20% share, reflects the Dominican Republic’s growing emphasis on sustainability and energy independence. Incentives under Law 57-07 support the development of solar, wind, and biomass projects by offering tax holidays and import duty exemptions, thereby encouraging green investment.
Real estate, while comprising a smaller portion at 10%, remains a vital sector, particularly in tourism-linked developments. Incentives here are often tied to CONFOTUR and other property-related tax exemptions, which appeal to both institutional investors and individual buyers.
This distribution not only illustrates the government’s fiscal priorities but also signals to investors where the most favorable opportunities lie in terms of long — term tax efficiency and regulatory support.
The Dominican Republic has established a residency framework that is both investor-friendly and strategically aligned with its broader economic development goals. The country offers two primary residency pathways for foreign nationals: the Investor Residency Program and the Pensioner/Rentier Programs.
Under the Investor Residency Program, individuals who invest a minimum of US$200,000 in qualifying assets—such as real estate, businesses, or bank deposits—are eligible for fast-tracked residency. This program not only facilitates legal residence but also provides a pathway to citizenship within two years, making it one of the most efficient investor migration schemes in the Caribbean. In addition to legal status, participants benefit from a three-year exemption on foreign-sourced income, which significantly reduces their global tax liability during the initial years of relocation.
The Pensioner and Rentier Programs are tailored for retirees and individuals with stable foreign income streams. While these programs do not require a capital investment, applicants must demonstrate a consistent income from pensions, annuities, or other passive sources. Like the investor program, these residents also enjoy a three-year exemption on foreign income, making the Dominican Republic an attractive destination for tax-conscious retirees.
From a taxation standpoint, the Dominican Republic distinguishes between residents, who are taxed on their worldwide income, and non-residents, who are taxed only on Dominican-sourced income. The transitional exemption for new residents serves as a buffer, allowing individuals to restructure their financial affairs and adapt to the local tax environment without immediate exposure to global taxation.
These residency — linked tax incentives are codified in national legislation and supported by administrative guidance from the DGII and ProDominicana. They reflect the government’s commitment to attracting high-net-worth individuals, retirees, and global entrepreneurs while maintaining fiscal competitiveness in the region.
The timeline provided below is a visual representation of the structured progression available to foreign investors under the Dominican Republic’s residency framework. The process begins with a qualifying investment—typically a minimum of US$200,000—which grants access to the Investor Residency Program. Within approximately six months, the investor can obtain legal residency.
Following the acquisition of residency, the individual benefits from a three-year exemption on foreign-sourced income, a key fiscal incentive that significantly reduces global tax exposure during the initial years of relocation. This exemption is available under both the Investor Residency and Pensioner/Rentier Programs, making it attractive not only to entrepreneurs but also to retirees with verifiable foreign income.
After two years of continuous legal residency, the individual becomes eligible to apply for Dominican citizenship, completing the investment-to-naturalization pathway. This structured and time-bound process reflects the Dominican Republic’s commitment to attracting high-net-worth individuals and global entrepreneurs through a combination of legal certainty and fiscal competitiveness.
The withholding tax rates applicable in the Dominican Republic for 2025 are officially outlined by the Dirección General de Impuestos Internos (DGII) and confirmed in investment documentation published by ProDominicana. These rates apply to payments made to foreign entities and are structured as follows:
- Dividends paid to foreign shareholders are subject to a 10% withholding tax, a rate that aligns with international norms and is designed to encourage foreign equity investment while ensuring a modest revenue stream for the state.
- Interest payments to foreign lenders or financial institutions are also taxed at 10%, making the Dominican Republic a competitive jurisdiction for debt financing and cross-border lending arrangements.
- Royalties and technical service fees, however, are taxed at a significantly higher rate of 27%, which corresponds to the standard corporate income tax rate. This reflects the government’s intent to tax income derived from intellectual property and specialized services at full value, unless otherwise mitigated by treaty provisions.
These rates may be reduced under double taxation treaties (DTTs) that the Dominican Republic has signed with countries such as Spain, Canada, and Chile. These treaties are designed to prevent the same income from being taxed in both jurisdictions and often provide for lower withholding rates depending on the nature of the payment and the residency of the recipient.
In addition to the primary incentives offered to investors in the Dominican Republic, there are several other notable programs that significantly enhance the country’s appeal, particularly for those in tourism, technology, and renewable energy sectors.
One of the most impactful is the CONFOTUR Law (Law 195-13), which provides a suite of tax exemptions aimed at stimulating investment in tourism-related infrastructure. Under this law, individuals and companies investing in approved tourism projects are granted 100% exemptions from property tax and transfer tax. This means that buyers of qualifying properties can save the 3% transfer tax typically required upon purchase, as well as the 1% annual property tax for up to 15 years—especially beneficial for properties valued above approximately US$148,000.
These incentives are particularly attractive to real estate investors and developers, as they significantly reduce the cost of acquisition and ownership, thereby boosting the profitability of tourism-related ventures.
Additionally, the Dominican Republic offers customs and tax exemptions for startups operating in specific high-priority sectors such as technology and renewable energy. These incentives often include exemptions on import duties for equipment and raw materials, as well as reductions or waivers on income and corporate taxes during the early stages of business development. These measures are designed to foster innovation, attract foreign direct investment, and support the country’s transition to a more diversified and sustainable economy.
Together, these incentives create a highly favorable environment for both domestic and international investors looking to capitalize on the Dominican Republic’s growing sectors.
The Dominican Republic stands out as a tax-efficient gateway for foreign investors in the Caribbean. With generous exemptions across capital gains, corporate income, and import duties—especially in tourism, renewable energy, and free trade zones—the country offers a compelling blend of profitability and policy stability. Investor-friendly residency programs and double taxation treaties further enhance its appeal. As the government continues to prioritize innovation and sustainability, the Dominican Republic is well-positioned to attract long-term, strategic investment across emerging and traditional sectors.
