Law 158-01 Tourism Development Promotion Act

This legislation provides for the promotion of tourism development in the areas and regions of the Dominican Republic which had previously only been marginally promoted as tourism hubs, and for the development of new tourism destinations in the provinces and other localities that have great potential for tourism development. Act 158-01 also sanctions the creation of the Tourism Promotion Trust Fund.

1- Tourism Area No.4, Jarabacoa and Constanza (Decree Nos.1157 and 2729 of 07/31/75 and 09/02/77 respectively);

2- Tourism Area IV Extension: Barahona, Bahoruco, Independencia and Pedernales; (Decree No. 322-91 of 08/21/91);

3- Tourism Area V Extension: Montecristi, Dajabón, Santiago Rodríguez and Valverde (Decree No. 16-93 of 01/22/93);

4- Tourism Area VIII Extension: Province of San Cristóbal and the Municipality of Palenque; the Provinces Peravia and Azua de Compostela:

5- Tourism Area comprising the Municipalities of Nagua and Cabrera (Decree No.199-99);

6- Tourism Area comprising the Province of Samaná (Decree No.91-94 of 03/31/94);

7- The Province of Hato Mayor and its municipalities; the Province of El Seybo and its municipalities; the Province of San Pedro de Macorís and its municipalities; the Province of Espaillat and its municipalities: Higüerito, José Contreras, Villa Trina and Jamao al Norte; the Provinces of Sánchez Ramírez and Monseñor Nouel; the Municipality of San José de Las Matas; the Province of Monte Plata; and Guiguí, La Vega.

INCENTIVES GRANTED

Companies doing business in the Dominican Republic, and to which this legislation applies, shall be granted a 100% tax-exempt as follows:

a) National and municipal taxes for the use and issuance of construction permits, including the purchase of real estate, inasmuch as these are directed associated with the objectives of Act No. 158-01;

b) Import tax and other levies, duties, and surcharges, including the value-added tax known as ITBIS (Tax on the Transfer of Industrial Goods and Services) as may be assessed against or apply to equipment, materials, fixtures and furniture necessary for the infrastructure that will facilitate the launching of the specified tourism project or venture;

c) National and international financing, if these are tax-exempt, will not be subject to penalties or taxation on the interests that may be generated;

d) Natural persons and legal entities will be able to deduct or reduce taxes up to 20% of their annual profits, as long as the same are reinvested in a project related to this act;

e) The machinery and equipment necessary to achieve a high quality product (ovens, incubators, production and treatment plants, among others) will remain exempt from the moment of implementation of this legislation;

f) No new taxes, arbitrary charges or levies will be imposed during the tax exemption period; and

g) The benefits and incentives mentioned in this act are limited to projects that are implemented and/or constructed after this act has been passed;

EXEMPTION PERIOD

Qualifying tourism projects, businesses or companies will enjoy a tax-exemption period of ten years, beginning from the date when construction work commences until such a time that the entire project is ready and the incentives can be implemented. There is a three-year deadline for initiation of permanent and uninterrupted operations of the approved project.

ELIGIBILITY REQUIREMENTS

To be eligible for the incentives and benefits outlined in this act, all project proposals must provide documented proof of the following:

1- An environmental impact study that takes into account the type of project, the required infrastructure, the impact zone, and the environmental effect on the area. Small-scale tourism projects are exempt from this requirement.

2- A project blue-print as well as the preliminary engineering details of the same, prepared by a professional or by a certified firm of Dominican professionals. The counseling, consultations or participation of foreign specialists must be offered through local professional firms, which must be duly authorized and which will be legally responsible for the foreign expert.

3- Projects that involve the handling of large amounts of petrochemicals, and/or large-scale maritime transportation of same, must have a contingency plan to prevent and control any spillage.

4- Urban and municipal planning institutions and offices in the specified development jurisdictional areas must authorize such projects. In addition, applicants must submit a bank warranty to cover the expenses associated with environmental recovery if, through the project promoter's negligence, any harm is caused to the environment. Finally, no project may be located in any of the protected areas in the national parks, unless a study confirms that such a project does not endanger the preservation of natural resources or threaten the natural flora and fauna.

SANCTIONS

The businesses that are established in accordance with the benefits and incentives of this act must guarantee the preservation of all natural resources and due protection for the environment.

The State Agency for Tourism shall be responsible for ensuring and enforcing compliance with all provisions pertaining to the preservation of all natural resources and the environment during the construction and operational phases of the project. Said office shall also be responsible for informing the project promotion firms should they fail to maintain service quality and quantity levels that allow said firms to enjoy the tax exemption status, and may make due recommendations for the suspension of the aforementioned incentives and benefits as necessary.

Copyright © 2001 OPI-RD