Tourism in the Dominican Republic

Introduction

With about 1300 kilometers (800 miles) of beaches, the oldest colonial settlement in the Western Hemisphere, and spectacular mountains and landscapes, the Dominican Republic is the single most-visited tourist destination in the Caribbean.  In 2014, the country received 26% of all tourists visiting the region. In 2015, 5.6 million visitors traveled to the island, hotel capacity grew to some 70,000 rooms, and 32 world-class golf courses were in operation. For many years tourism has been the primary source of foreign currency for the Dominican economy: 6.2 billion dollars in 2015.

Investment in the industry is broadly diversified across various sub-sectors such as leisure (hotels, vacation homes, cruise ports, spas, etc.), health and ecotourism. From 2012 to 2014, just the direct investments in the industry benefiting from tax incentives reached 6.9 billion dollars.

Incentives for Investors in the Tourism Industry

The inflow of tourists to the Dominican Republic began with the enactment, in 1971, of a special statute granting incentives to investors willing to risk their capital in what was then the last tourist destination in the region. Nowadays, when the country is the undisputed tourism leader in the Caribbean, companies still benefit  from very attractive enticements to invest in the industry. Law 158-01 on Tourism Incentives, as amended by Law 195-13, and its regulations, grants wide-ranging tax exemptions, for fifteen years, to qualifying new projects by local or international investors.

The projects and businesses that qualify for these incentives are: (a) hotels and resorts; (b) facilities for conventions, fairs, festivals, shows and concerts; (c) amusement parks,  ecological parks, and theme parks; (d) aquariums, restaurants, golf courses, sports facilities, and any other tourist facility; (e) port infrastructure for tourism, such as recreational ports and seaports; (f) utility infrastructure for the tourist industry such as aqueducts, treatment plants, environmental cleaning, and garbage and solid waste removal; (g) businesses engaged in the promotion of cruises with local ports of call; and (h) small and medium-sized tourism-related businesses such as shops or facilities for handicrafts, ornamental plants, tropical fish, and endemic reptiles.

As for existing projects, hotels and resort-related investments that are five years or older are granted 100% exemptions from taxes and duties related to the acquisition of the equipment, materials and furnishings needed to renovate their premises. In addition, hotels and resort-related investments that are fifteen years or older will receive the same benefits as a new project if the renovation or reconstruction involves 50% or more of the premises.

Finally, individuals and companies get an income tax deduction for investing up to 20% of their annual profits in an approved tourist project.

The Tourism Promotion Council, known by its Spanish acronym of CONFOTOUR, is the government agency in charge of reviewing and approving applications by investors for these exemptions, and, generally, of supervising and enforcing all applicable regulations. Once CONFOTOUR approves an application, the investor benefitting from the incentives must start and continue work in the authorized project within a three-year period to avoid losing all benefits under the program.
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Ministry of Tourism

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.

GUZMÁN 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.