Recently, the Council of the European Union published a new list of tax havens. For the first time, the Dominican Republic appeared on the list. It is a very investor-friendly country, and not only for locals. Foreign entrepreneurs enjoy equally favorable laws as residents. Among other things, it is in the Dominican Republic where 8% of foreign direct investment (FDI) from around the world is located. It is no coincidence that the largest economies of that region invest here, but not only them. In addition to the United States, Canada, and Mexico, Spain is also on the list.
What does this look like in numbers? In 2019, the Dominican Republic was the first choice in the Caribbean and second in Central America in terms of foreign investment. Over 10 years (up to 2019), more than $25.372 billion flowed in from FDI, averaging over $2.5 billion annually. Despite the pandemic, FDI in 2020 (from January to September) amounted to $2,066.4 billion! The first sector with the highest number of investments (in terms of money invested) was tourism (31.4%), and the second was real estate (16.2%). Telecommunications came in third, reaching 9%.
Let us focus, however, on real estate. Why do foreigners decide to purchase an apartment here? Above all, it is due to very favorable laws. In many investments, entrepreneurs as well as private individuals can benefit from the CONFOTUR law. This includes, among other things, exemption from the property transfer tax of 3% of the property value and exemption from the property tax, which amounts to 1% of the property value annually. The decision to invest money in the Dominican Republic is encouraged by the fact that returns from an apartment can reach up to 12% with good management. In 2019, the Punta Cana airport alone received over 5 million tourists! Another key element is the finish of the apartments, which are built to European standards. Moreover, most developers import RTV and household appliances from Europe.
The Dominican Republic is not stopping. New tourist centers will soon be established in the Miches and Pedernales regions. At the end of March, President Luis Abinader signed an agreement with entrepreneurs in which both parties will allocate a total amount of one billion dollars. The government has committed to providing the necessary infrastructure for this project. On the investors’ side, the construction of hotel facilities remains. At the end of April, a delegation of 20 representatives of Mexican investors visited the Pedernales region. All these companies are widely known in Mexico for their projects in the Cancún and Riviera Maya areas, as well as in the United States. Plans include modernization of the airport located there, construction of new roads, and hotels.
The Dominican Republic is a country that is constantly developing. Yesterday, the March report was published. It shows an 85% growth in exports compared to March 2020 and a 35% growth compared to March 2019. Most products went to the United States market, recording an increase of $255 million, India with $140 million, and Haiti with an increase of $50 million. The main products that reflected this growth were cigars, gold, and then jewelry items. The given example demonstrates the high resilience of the export sector, placing the Dominican Republic in a very good position.
In summary, the Dominican Republic is an unprecedented economic paradise, as indicated by the numbers and examples of planned investments provided above. It is primarily a country that is economically stable and open to entrepreneurs, which, with its friendly laws, encourages trying one’s hand here.
Jędrzej Pacak
