Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

There are no restrictions with respect to the ownership of project companies. The Dominican Constitution accords foreign and local investors equal treatment under the law, stating expressly that foreigners in the Dominican Republic are entitled to the same rights as Dominican nationals, except for participating in local political activities. At the same time, foreign investors are bound by the same rules and regulations applicable to local investors. Foreign investors can freely hold equity in local businesses and joint ventures, as well as buy real estate in their names.

Foreign Investment Law 16-95, enacted on 20 November 1995, and its enabling regulations, eliminated all barriers formerly imposed on international investments in the Dominican Republic. Investors contributing capital to companies operating in the Dominican Republic are granted unlimited access to all sectors of the Dominican economy, except to those related to national security and certain sensitive industries.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

Insurance in the Dominican Republic is regulated by Law 146-02. Pursuant to this law, insurance policies on assets and interests located in Dominican territory have to be issued by companies authorised to operate as insurance companies in the country. However, insurance policies issued by local companies may be reinsured by foreign insurers.

Insurance policies issued for assets located in the country may be paid, as instructed by the owner of the asset, into the hands of the secured creditors, local or foreign without restriction. Assignments of proceeds to both insurance and reinsurance policies are common practice locally.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

There are no restrictions on bringing foreign workers to work on a project in the Dominican Republic; however, article 135 of the Dominican Labour Code requires that at least 80 per cent of a company’s work force be Dominican. Likewise, no less than 80 per cent of the payroll, with the exception of salaries for technical or executive positions, must correspond to wages earned by Dominicans. These rules do not apply to employees carrying out executive or managerial duties, or occupying technical positions for which there is no available Dominican substitute.

Equipment restrictions

What restrictions exist on the importation of project equipment?

There are no restrictions applicable to the importation of project equipment to the Dominican Republic, provided that the applicable custom duties are paid. There are laws, such as the Competitiveness and Industrial Innovation Law 392-07, that grant classified and registered companies exemptions to import equipment and machinery necessary to carry out their industrial processes.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

Article 51 of the Constitution of the Dominican Republic states that no person can be deprived of property rights unless there is a public utility or social interest need, in which case, the owner will be entitled to receive payment for the property at a fair value determined by a competent court. Any expropriation process followed by the Dominican government must comply with this and other constitutional and legal provisions, including the guarantee of due process. There are no forms of investment specially protected from expropriation.