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The Dominican Republic is the second largest country in the Caribbean region by area. Tourism, agriculture, mining and textiles are among the key sectors of the economy making it an attractive location to start your business. But, there can be challenges if you don’t know the specifics of the local processes.
In the Dominican Republic, there are four types of entities that you may choose for your business, a Limited Liability company, Individual Enterprise of Limited Liability company, a Joint Stock company or a Simplified Joint Stock company.
Types of entities
The most common type of entity is a limited liability company (Sociedad de Responsabilidad Limitada, SRL). A SRL must have at least two members and at most 50 members. The liability of the members is limited to their capital contribution. A minimum capital of DOP 100,000 at least 1% of which must be paid-in at the time of incorporation.
Another type of entity is an Individual Enterprise of Limited Liability (Empresa Individual de Responsabilidad Limitada, EIRL). This is a limited liability company that can only be incorporated by one individual. There are no minimum or maximum capital requirements.
A Joint Stock Company (Sociedad Anónima, SA) requires at least two shareholders at the time of incorporation. The liability of the shareholders is limited to their capital contribution. The capital is represented by freely transferable shares of a nominal value of at least DOP 1 will a minimum capital of DOP 30 million.
Lastly, a Simplified Joint Stock company (Sociedad Anónima Simplificada, SAS) needs at least two shareholders. The liability of the shareholders is limited to their capital contribution. The capital is divided into nominative shares whose value is established by the bylaws. A minimum capital of DOP 3 million is required, at least 10% of which must be paid-in at the time of incorporation.
A foreign company can also establish branches in the Dominican Republic. They must register with the Mercantile Registry of the Chamber of Commerce and obtain a taxpayer ID.
The process for incorporation has many steps but they are the same for all types of businesses. It is important to know that all documentation must be in Spanish.
All limited liability companies must first check online or locally at the National Office of Industrial Property (Oficina Nacional de la Propiedad Industrial) to make sure that the company name is available and once the name is picked, it must be purchased. The name must be published in the monthly publication of the National Office of Industrial Property (Oficina Nacional de la Propiedad Industrial) which can take 10 days.
The next step is registering the company with the Chamber of Commerce, in person. This must be done by a local resident and commonly a lawyer is present. An incorporation tax must be paid to the Internal Revenue Service (DGII) which is equivalent to 1% of the capital, after which the identification number (RNC) can be obtained.
Afterward you must file for the National Taxpayers Registry at the DGII and apply for fiscal receipts which can take about 25 days. Without the fiscal receipts, the business cannot invoice clients. At this point, the DGII will make sure that the company is a real operation and domiciled in the Dominican Republic. After this step, a document will be provided that allows for the company to operate in the Dominican Republic.
If your business will have employees, your business must be registered with the Department of Labour. This process can be done online or in person. You must also register employees at the main social security office (Consejo Nacional de Seguridad Social, CNSS). This must be done by a local resident with a copy of the incorporation documentation and the Tax ID.
Each step in the incorporation process takes varying amounts of time bringing the total time to 30-45 days to full incorporate a business in the Dominican Republic.
All incorporated companies in the Dominican Republic are required to prepare their financial statements in accordance with the IFRS and all companies that have a gross income greater than 100 minimum wages of the public sector, must be audited.
Setting up a bank account
There is a new law to combat money laundering which states that the person who will be the individual signing on the account must be present to set up the bank account. They must also have the tax ID number and copies of every document needed for incorporation of the business plus the forms filled out in the bank. This process can take 20-30 days depending on the procedures needed and validation of the UBO.
The process of starting a business in the Dominican Republic can be time-consuming and complex without the help of a local partner. You could make critical mistakes that can cost your company before you have even started your operations in the country. Corcons has the local experts to support your business in the country. We can help with registration procedures, preparation of tax returns, billing and all reporting. Get in touch with us today.