Dominican Republic Free Zone Tax Exemptions: Full Breakdown (2026)

0%
Corporate Tax · 15–20 Years
0%
Import Duties on Inputs
0%
Export Taxes
100%
Profit Repatriation Allowed

Dominican Republic Law 8-90 gives free zone companies 0% corporate income tax for 15–20 years, 0% import duties on all inputs, 0% export taxes, and 100% profit repatriation with no currency controls — saving a $5M-profit manufacturer $1.5M annually vs. Mexico’s 30% rate.

Law 8-90 Tax Exemption Matrix

ExemptionRateDurationNotes
Corporate income tax (ISRD)0%15 years (20 for border zones)Renewable upon expiration
Import duties on raw materials0%Duration of licenseApplies to all inputs, machinery, equipment
Export taxes0%Permanent (no expiration)All exports from free zone to any market
ITBIS (VAT) on local purchases0%Duration of licenseOn goods/services acquired for free zone operations
Dividend withholding tax0%Duration of licenseFull profit repatriation permitted
Municipal taxes0%Duration of licensePatentes, local business taxes
Foreign exchange controlsNonePermanentOperate in USD; no currency conversion requirements
Real property taxes (on structures)0%Duration of licenseOn free zone facilities and infrastructure

Source: Law 8-90 on Free Zone Industrial Development; CNZFE Regulation; Dominican Republic Tax Authority (DGII).

Data Sources: Government wage & regulatory tables (CNZFE, National Wage Committee 2025–2026) · Mexico benchmarks: Tetakawi 2025 (cited) · Industry estimates: EGS internal calculation (labeled where used)

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15-Year vs. 20-Year Exemption: What Determines the Duration?

Law 8-90 grants a 15-year corporate income tax exemption for companies operating in standard free zone parks (coastal, metro, inland). Companies operating in border zone free zones — those within 40 kilometers of the Haitian border — receive a 20-year exemption, reflecting the government’s economic development priority for those regions.

After the initial exemption period, the tax incentive is renewable. Most operators have successfully renewed upon expiration, though renewal is not automatic and requires continued compliance with CNZFE regulations. For long-horizon manufacturing operations, EGS recommends factoring the post-exemption tax rate into proforma models after year 15.

What the Exemptions Do NOT Cover

The Law 8-90 exemption package does not eliminate all tax obligations. Free zone companies remain subject to: employer payroll contributions (SFS, AFP, SRL — approximately 15.4% of payroll combined), individual income tax on employee wages (withheld at source), and transfer taxes on real property sales. The exemptions apply to the operating entity; local sales from the free zone to the domestic Dominican market are subject to normal import duties and ITBIS.

DR vs. Mexico: Tax Burden Comparison

A manufacturer generating $10M in annual free zone profit in the DR pays $0 in corporate tax. The same operation in Mexico pays $3M (30% ISRM), plus 10% mandatory profit-sharing (PTU) distributed to employees, plus 10% withholding on dividends. The combined DR/Mexico tax delta for a profitable mid-size manufacturer can exceed $4M annually — not including import duty savings on raw materials.

How to Access These Exemptions

Tax exemptions under Law 8-90 are accessed through the CNZFE licensing process. A company must either: (a) operate within an existing authorized free zone park under the park’s master license, or (b) apply for its own single-company free zone designation for operations occupying a standalone facility. Most foreign manufacturers enter through an existing park. The CNZFE review and license issuance process typically takes 45–90 days.

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Frequently Asked Questions

How long does the 0% corporate tax exemption last in DR free zones?

Under Law 8-90, DR free zone companies receive a 15-year corporate income tax exemption in standard zones, or 20 years in border zones (within 40km of the Haitian border). After the initial period, the exemption is renewable upon continued CNZFE compliance. Most established operators have renewed successfully.

Can DR free zone companies repatriate profits tax-free?

Yes. Law 8-90 exempts free zone companies from dividend withholding tax and imposes no foreign exchange controls. Companies may operate in USD, repatriate 100% of profits, and transfer funds internationally without restriction. This contrasts with Mexico, where dividends face 10% withholding tax.

Are import duties waived on raw materials and equipment in DR free zones?

Yes. Under Law 8-90, all imports of raw materials, inputs, components, machinery, and equipment for use in free zone production are exempt from Dominican Republic customs duties for the duration of the CNZFE license. This is a full exemption — not deferral — unlike Mexico’s IMMEX maquiladora structure where duties are deferred but not eliminated.

How does a company obtain the Law 8-90 tax exemptions?

Exemptions are accessed through a CNZFE free zone operating license. Most foreign manufacturers enter by leasing space within an existing authorized free zone park — the park’s master license covers all operators within it. Standalone single-company free zones require a separate CNZFE application. The review process typically takes 45–90 days after submission of complete documentation.

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