Tourism is one of the major pillars of the Dominican economy. Located within close proximity to North America, rippled with breathtaking beaches along approximately 800 miles of coastline, and actively marketed by private and government interests, the Dominican Republic offers visitors a convenient and diverse tourist haven. As the first point of colonization in the Western Hemisphere, the capital city, Santo Domingo de Guzmán, is rich with historical significance, housing the first cathedral, hospital, customs house, and university in the Americas, and is designated as a Cultural World Heritage Site. Today, the country is the number one tourist destination in the Caribbean islands, capturing a record number of 4.1 million visitors in 2010 and bringing over US$4 billion in revenue to the economy in 2009.

The Dominican government and private interests have dedicated decades to developing modern infrastructures, airlifts, and hotels. The results have been impressive:

1. Worldwide access to the major tourist areas within the country via six strategically placed international airports, and a recent increase in the frequency of U.S. direct flights through the Casa de Campo La Romana International Airport, placing New York and Miami a few hours away from the internationally popular Southeast Coast;
2. Modern and direct travel corridors connecting the north and south and east and west, reducing internal travel time to the country’s diverse tourist attractions, including whale watching in the Samaná Peninsula, whitewater rafting and kayaking down the Yaque del Norte river in the Central Mountains; Cabarete and Sosua’s world-renowned conditions for kiteboarding and windsurfing, and Sosua’s reputation as the best place for snorkeling and scuba diving in the Dominican Republic;
3. Modern accommodations at all price points in all major tourist regions of the country including Punta Cana, Bavaro, and Macao; Juan Dolio, San Pedro de Macorís and La Romana; Las Terrenas, Samaná and Las Galeras in the Samana Peninsula; Puerto Plata, Sosua, Cabarete, Playa Grande, Río San Juan and Cabrera on the North Coast; and the metropolitan areas of Santiago, in the heart of the central valley (Cibao), and Santo Domingo. In 2009, the estimated number of hotel rooms in the country was over 67,000. As of 2010, over 1000 world-class rooms have been added to the exclusive Southeast Coast, and more are planned for 2013; and
4. A commitment of US$53 million to continue the preservation of the historic Colonial Zone in the capital city, Santo Domingo, including the installation of high-tech surveillance monitors to increase safety.

This development and continual growth have spurred several tourism-centered enterprises regulated by law including: hotels and lodging, gift shops, restaurants and food and beverage operations, travel agencies and tour operators, ground transportation, casinos and gambling halls, and timeshare regimes. Central to these regulations is Law #541 of December 31, 1969, which created the Ministry of Tourism. In addition, Law 158-01 provides attractive incentives to investors in the tourism industry.

Organic Law #541 designates the Ministry of Tourism as the official government agency to record tourism activity, supervise compliance with regulations, and guarantee the correct application of the law. This agency reports directly to the President and has the authority to establish regional or provisional agencies. The National Tourism Commission, whose members are appointed by the Minister of Tourism and represent government agencies, private business, and labor organizations involved in tourism, assists the Ministry in achieving the objectives established by law.

The Ministry is empowered to regulate: (a) hotel and lodging establishments (Regulation 817-03); (b) restaurants (Regulation 816-03); (c) gift shops (Regulation 813-03); and (d) travel agencies and tour operators (Regulation 815-03); and (e).all tourism-related transportation (Regulation 817-03).

Hotels

Regulation No. 818-03 governs the registry, classification and operation of tourism lodging establishments, widely defined as any establishment open to the public that offers lodging upon payment of a price. To begin operations, a hotel must obtain a license from the Ministry of Tourism, after submission of proper documents and fee payments. Licenses are effective for one year and subject to periodic rate adjustments. Renewals are based on a hotel’s ranking, its infrastructure, and service offerings.

Minimum standards and infrastructure installation and operation are set by the Ministry of Tourism and include: (a) visibly displaying in each bedroom the room rates and the meals included; (b) regularly providing the agency with tourism-related data; (c) strictly complying with reservations; and (d) keeping records of travelers’ identity and arrival and departure times.

Hotels are classified by a special commission comprising the Minister of Tourism, two members appointed by the Ministry and two members appointed by the National Hotel and Restaurant Association (ASONAHORES), according to quality criteria and compliance with regulatory requirements and conditions.

Restaurants

Regulation No. 816-03 governs the classification and regulation of restaurant and food and beverage services. A Classification Committee reviews the application for operation and classifies the establishment based upon its characteristics, equipment, furnishings, and quality of service.

Gift Shops

Regulation No. 813-03 governs the registry, establishment and operation of gift shops in the Dominican Republic. Gift shops are defined as commercial entities dedicated to selling gifts and Dominican crafts primarily to tourists.

To begin operations, a gift shop must obtain a license from the Ministry of Tourism, after submission of proper documents and fee payments. Licenses are effective must be renewed annually. Agency-appointed inspectors verify health conditions, prices, locale classification, and product origin and authenticity.

Travel Agencies and Tour Operators

Regulation No. 815-03 governs the registry and supervises services related to travel agencies and tour operators. Agencies are classified as (a) wholesale, (b) reservations and ticketing, or (c) tour operators for either incoming or outgoing tourism, or local tourism. Travel agencies must obtain civil liability insurance to cover bodily injury, material damage, and business operations, including cancellations and breaches of contract.

Ground Transportation

Regulation No. 817-03 governs tourism-related ground transportation, including cars, taxis, minibuses, and buses. The Ministry of Tourism sets the rates charged to passengers pursuant to article 20 of Law No. 541. Licenses are granted for a year and are renewable. All vehicles are subject to inspections for mechanical safety and operating conditions.

Casinos

Law 351 (1964), as amended, governs casino and gambling hall licensing and operations to complement the strength and diversity of the country's tourism industry. Slot machines are permitted, and bets made and winnings cashed must be in U.S. dollars. All collections derived from these operations must be deposited with the national Central Bank, and their income is subject to a single tax based on their geographical location and number of tables in operation.

Applications for casino licenses are submitted to the Ministry of Tourism and evaluated by the National Casino Commission, which forwards its recommendations to the Executive Branch. Casinos must operate in connection with a hotel categorized as "first class." Applications must include a description of the games of chance to be offered and how each one will function; and a description of how the gambling halls will be managed, including the maximum bets that will be accepted and the hours that related tourist attractions and hotel accommodations will operate.

Timeshare

Regulation No. 9-2001 governs lodging establishments dedicated to selling timeshares. The regulation governs the terms of the timeshare contract, and relations between consumers and service providers, and their respective rights and obligations.

A resort owner must formally create a timeshare regime by making a declaration before a notary designating the property as a timeshare operation prior to any sale. The declaration must be accompanied by the property's Certificate of Title evidencing legal ownership, all required construction licenses and permits, and a general plan for the construction and operation of the facility including a land description, the number, type, and cost structure of the units to be sold, and the facility's proposed internal regulations.

Before timeshare sales begin, the Ministry of Tourism must approve the formal declaration, the internal regulations, and the timeshare contract. Internal regulations must be provided to every user of the service upon execution of the contract.

Law 158-01, Tourism Development Promotion, dated October 9, 2001, complemented by its enabling regulations Decrees #1125-01 and #74-02, and amended in some minor details by Law #184-02, provides tax incentives to investments in underdeveloped regions that offer the most tourism potential in the Dominican Republic. These incentives, targeting primarily underdeveloped provinces and municipalities around the country but also including developed areas such as Punta Cana and Puerto Plata, grant priority to infrastructure construction, and provide channels for international financing and selling or leasing state-owned land for tourism. Tourism operations such as hotels, convention centers, cruise companies, theme parks, port and tourist infrastructure, golf courses, and complementary activities benefit from these current government incentives.

Tax exemptions extend for ten years from the date of completion of construction or project installation, and include the following:

• Income Tax;
  
• Incorporation taxes and capitalization increases;
  
• Real property transfers upon presentment of a guarantee bond at 3% of the tax due;
  
• Real estate property tax (IPI);
  
• Contractor fees, duties, and quotas for project oversight;
  
• International financing taxes and withholdings granted to beneficiary companies;
  
• Import taxes and other import fees; and
  
• ITBIS (value added tax) on machinery, equipment, materials, and personal goods necessary for the project start up.

An additional incentive is a tax deduction of up to 20% on annual net taxable income on approved investments.

Projects must respect the environment, show sustainable and rational development, and be classified by the Ministry for Tourism to benefit from the tax exemptions and deduction. Classification requires an application, an approved environmental impact study, preliminarily approved architectural design and engineering details, a description of the promotional entity or investor, a marketing and promotion plan, and bank and commercial references. The submission is evaluated and recommendations are sent to the Tourism Promotion Council (CONFOTUR) which justifies its decisions with a formal resolution.

GUZMAN ARIZA ON TOURISM

Guzman Ariza is positioned to assist you in meeting the legal requirements of any tourism-related activity because we are present, knowledgeable, and cost effective. When the Dominican Republic's tourism industry first took root along the North Coast, we were there in 1985 opening an office in Sosua and focusing on tourism-related activities as a main practice area, the first large law firm in the country to do so.

Since that start, the country's tourism industry has exploded beyond the North Coast, flourishing throughout the country including Punta Cana, Bavaro, and Macao; Juan Dolio, San Pedro de Macorís and La Romana on the Southeast Coast; Las Terrenas, Samaná and Las Galeras in the Samana Peninsula; Puerto Plata, Sosua, Cabarete, Playa Grande, Río San Juan and Cabrera on the North Coast; and the metropolitan areas of Santiago in the heart of the central valley (Cibao) and Santo Domingo.

We have grown with it. We are the only law firm to have established an office in every important tourist destination in the country. This permits us to provide you with first-hand knowledge about the local players, opportunities, and pitfalls in a particular area. We also save you money. With an office in the capital, Santo Domingo, you stay local working through our area office, and we coordinate our network of legal resources to meet your objectives. There is no need for you to travel.

Guzman Ariza's service is always client-focused. We aim to save you time and money by being present and well-informed where you need us, when you need it.