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Free zones for
export. Considering that the Free Zones constitute a permanent job sources and income for the Dominican population, Law 8-90 establishes special tax treatement to encourage the establishment and development of new companies whose production would be destined to the outer market We could summarize the main aspects in the Law in the following points: • Concept. The concept included in Article 2 of the Law allow us to understand its activities and their speciality as far as its location since they constitute special a customs regime. In effect, Article 2 defines Free Zone as a geographic area of the country, established under special the customs and fiscal controls in this law, in which is permitted the installation of companies that destine their production or services towards the external market, by means of the granting of incentives necessary to foment its development On the other hand, the DGII (Directorate for Internal Taxes) defines the Free Zones in its Tributary Glossary like “a customs regime that allows receiving in a certain space or territorial enclave, merchandise without the payment of import tributes, since they are not in customs territory by having an extraterritoriality principle”. It is to say that, a Free Zone is an geographic area -administered by a company denominated “Operator” and, within which different companies settle after obtaining their license or permission to operate under the advantages offered by the Law 8-90 • Objectives. As it is indicated in the previous definition, the companies installed in the Free zones destine their production to the external market. Most of these companies they are dedicated exclusively to the manufacture, that is to say, to elaborate, to transform, and to make goods for the outer market. In the last years, licenses or permissions to numerous companies of Free Zones have been granted which destine services to the outer market. Although the great majority of Free Zones or Industrial Parks is located in the outside of the cities or in the towns -given the great land extensions that they require- in the City of Santo Domingo it was authorized the opening and operation of an extension of the Industrial Park of Itabo, whose main facilities are in the City of San Cristóbal. In this Park, that operates in a building of five plants, it is located most of the companies of Free Zones which offers services destined to the outer market. These companies do not require great land extensions, reason why, they are settled in this building to provide what we call as of technological support, and non-industrial or of manufacture like the ones settled in other Parks. Within this sort of companies of Free Zones, we can find services of trade, reservations, sale of hotels, resorts, services of promotion of telecommunications, sales of technological equipment, etc. It is to say that, in a relatively small infrastructure and with a reduced amount of employees, with the support of computers and communications equipment, they make activities of promotion and trade of services in the outer market; reason why they are described by the Law as providers of services to the outside. • Tributary and Customs regime. Advantages. The great advantage in obtaining the license or permission of installation an Industrial Free Zone or of Services is the customs and fiscal treatment that we can summarize in 100% of exemption in the payment of several taxes between which we emphasized the following ones: - Income Tax; - Tax on constitution of commercial societies or increment of capital; - Taxes of import, tariff, customs duties and other connected burdens, that affect the raw materials, equipment, construction equipments, equipment of offices, etc., all of them destined to construct, to authorize or to operate in the Free zones; - Tax on the Transference of Industrialized Goods and Services (ITBIS), that burdens with a 12% of the invoiced services; • Labour Regime. The companies installed in Free Zones must fulfil all the laws, regulations and effective dispositions established in the Labour Code and the labour laws, the ones established by the new Law that creates the Dominican System of Social Security; those imposed the Bank of the Workers and those established by the National Institute for the Technical and Professional Formation (INFOTEP). It is to say that, the companies that operate as Free zones do not enjoy of any special labour treatment or regime, with exception of the special minimum wage for the Free zones fixed by the National Committee of Wages. • Exchange Regime. The companies established in the Free Zones of Export are forced to exchange in the Central bank of the Dominican Republic, to the daily average change rate, the currencies necessary to cover their local expenses or costs and services in general, such as: expenses of installation, pays and wages, raw materials and, in general all product acquired in Dominican territory, insurances, retentions for the payment of taxes of the wage-earners, services of telephone, rents or purchases of lands, services of electrical energy and, in general all locally generated cost. Free Zones operate under the responsibility of the National Council of Free Zones of Export which is an organism integrated by representatives of the government (public sector) and, the enterprises (private sector). The Council is the organism that examines and approves the requests of installation permissions and regulates the relations between the Operators and the Companies located in the Free Zones. Within its multiple functions is, for example, to approve the sale or transference of licenses or permissions of operation, the sales of assets or machineries installed, that is to say, its retirement of the facilities and, to watch that the minimum sales to the local market authorized by the Law are fulfilled and, in general all the norms contained in the Law 8-90. At present time, in the Dominican Republic operate approximately 52 Industrial Parks or Free Zones in all national geography. Some of them are of property of the Dominican State and, others are private. The prices of leasing by square meter oscillate between the US$16.00-45.00 annual, depending on the park in which the company wishes to settle. At the moment, the greater concentration of companies is in the area of the manufacture and, in accordance with the last Resolution of the National Committee of Wages the minimum wage for the workers who serve in the companies of Free Zones is of RD$2,815.00 monthly, applicable from the 7 of January of the 2003. (USS1.00=RD$23.00, approximately).
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