Doing business in DR.

Have you ever been here before??? If not I suggest a month or two here before you try to start anything.  Starting a business can very hard and there are many hoops to jump though. Most fail at start up businesses. It is said that if you want to leave the DR with  a million dollars in your pocket then come here with two million.

Bob K

Hello Bob,
Thank you for answer. I went to Punta Cana for 10 days and  I liked.
I'm not thinking to make that kind of money in DR. But some money that allow me to live a decent life in there and save some.
As I live in USA, I'm thinking to ship my equipment from USA to DR.
My big concern is to Find a resort who allow me to explore that business on the beach.
I'm not thinking to buy any real estate in the beginning, just to rent some small 1 or 2 bedroom apartment in some safe area.
I'm planning to go back to DR and stay for couples weeks.
I appreciate any help.
Thank you,
Jr.

All of the resorts have a water sports center at the hotels so starting a fresh one will be very difficult.
There will also be multiple tax people to "pay" and permits to obtain.
I would think that you should plan on more then a couple of weeks here to explore your oppertunities. In fact I would rent an apt for month and see how you do at living here before you jump in with both feet.

Bob K

realtorgrady wrote:

Bob, what are you referring about the tax man. What is the overall tax structure? Individuals, business, etc. In Costa Rica, unless married to a Tico, or a resident there, one can own a business, but noot work in it, other than management.  What about the DR? What about a dual passport, residence, citizenship? If you want to send me an email, please do s

Here the tax structure varies from 16% to 28% depending on the services or products being provided. To get permits for various things one needs to pay taxes as well which sometimes seem to be made up figures.  Plus for permits and such many times a few pockets need to be "lined".  Import taxes can run up to 50% of the value of the product being imported as again many times it seems the "value" is inflated.
To work here in the DR legally one needs to obaina cedula which is a national identity card and at the same time get your residency which allows you to stay here as well.  Both are easy to get but can be time consuming. Cost for this with the aid of a lawyer is about  $1000
Hope this helps, let me know if you need more info.

Bob K

Hello everyone I'm Alexandra and i want to ask you a few things about a company I want to open in DR.
I'm a professional fashion designer and i need to start my own label there, BUT i don't have a clue what to do first and how much money will i have to have in order to start.
I'm not willing to start out big just a small production and i already have a store to supply with the clothes that i'll be making.
I also need to know if there are manufacturing companies to handle your samples and production ?!
Also most luckily we open the company at my husband's name sa he is Dominican and I'm European (I'm informed that the tax has some quite big difference for the locals to the foreigners if you know different pls tell me so).

If any of you can help me ,It would be life saving!
thanxx

I would suggest you contact a lawyer here who could answer your questions.
You might want to start wtih Guzman and  Associates. This is one the  largest firms in the country and they would have answers for you.  drlawyer.com

Bob K

I'm sure that you have been suspended in anticipation of your impending success as a business owner/operator in the DR....But!

I am one of four Americans who were equally anxious to do business here. We found the previous advice to be excellent...legal twists and turns are an ever-changing map and could be costly.\\

It's the Dominicans that come in contact with you, your money and your future that must be regarded the most difficult hurdle you will face. Few expatriate business owners are successful here and I suggest you visit Sosua and talk to a few before you launch your campaign... Have lunch at Britannia and talk to the owner... his is successful but only after a long hard voyage .... You'll find several others with 'boots on the ground' advice for you in Sosua... mine is "Don't Do It!"

well my business here has doing well before the crises, but Greece is one of the first and most hit countries from this crises.
   I was thinking on starting in DR ,set my roots and then expand by selling on line . Right now to do this in Greece where i live is simply stupid and madly expensive!!
  Also i know how Dominicans work there, all willing to help you until your money end and of course none of the jobs that you supposingly need to be done,will actually take place! that's what i'm most affraid of but i dont want to spend 2000 or more $ to lawyers there!
thank though both of you for your time and advice...
best regards

Yes, that's what you may expect of Dominicans in general. There are exceptions but they might be hard to find... the screening process is most difficult Alexandra.

I know dear that's why I postpone doing something in DR for the last 3 years

Doing business here is both simple and complex.  You do not have to be a citizen or married to one, in fact you do not even need your residencia  to open a business.  BUT I would recommend getting your residencia.

Companies have various structures - you need to look at your options.  It can be as inexpensive as US 1,000 to get a company set up,  then depending on the type of business you operate or intend to operate additional things need to happen.  ANY business owner needs to be aware of the labor law here -  it is not easy and is full of landmines.

As a business and HR consultant I can tell you I have seen some horror stories but I have also seen some excellent opportunities. Anyone needing help can reach me at  [email protected] 

For the person interested in the  beach sports company you need a company, an  excursion license,  great insurance and  then you need to negotiate a deal with a hotel or business owner on the beach!  As well you will need to pay a series of "fees" to the right people.  It can be done but it won't be easy.  There are import credits available  for tourism related companies as well.

the fashion designer - you have been misinformed. there is no difference in tax  whether in your name of his!  yes there are manufacturing companies here crying for work!  Depending on where you set up it can be done as a free zone company,  material  comes in tax free,  created, assembled and  exported tax free!!! And you get other breaks being in the Free trade zone too.

Dear Jrbh63 and alexandra_kompseli

We have 4 types of companies: Personal, Limited, Joint Stock, and  Public Joint Stock. You can freely switch between company types, considering you meet the capital requirements.

For your needs, the type of company you must go for is Sociedad de Responsabilidad Limitada (SRL), which would translate as a limited liability company. It costs one thousand one hundred dollars (USD$ 1,100) to set up. 

Why is limited liability company the best one for you?

1. Low start up capital, consisting on two thousand six hundred dollars (USD$ 2600 dollars). Do you have to pay this 2600 dollars, no at all,  but it is required that the articles of incorporation state the start up capital amount, and pay the incorporation tax, which is 1% of the start-up capital. (your lawyer takes care of this)
2. Fast Incorporation, the registration process can take as little as twenty days.
3. At least two shareholders
4. Little government intervention.

Why I do not recommend Personal (Sociedad Individual de Respobsabilidad Limitada) even though it only takes one person?

First because it costs the same as a limited liability company, and second because, the patrimony of the company tends to get confused with the patrimony of the owner, meaning, the owner might be responsible for the company's debt in case it does not meet it's payments. (This is not fun if the business fails)

Why joint stock companies are not for you?

1. Minimum Start up capital is Thirty million pesos, which is at today's rate USD$ 778,210 and the government obligates you to prove availability of 10% of this amount, which is  USD $77,821, and have the rest of the USD$ 778,210 available within a year, this amount, in my consideration, is a lot of money for a start up company, so this company type is reserved for big companies that have been doing business for a while.
2. These companies are heavily supervised and regulated by the government.(it is the government's interest these big companies do not fail); Public Joint Stock Companies are the same, but they  receive capital from the public. (Dominican Stock Market). Joint Stock Companies are so complicated, you can actually do a LLM and spend two years studying them. Some people actually do the LLM.

About the taxes:

It does not matter who is married to who or where you are from,  it does not matter if you are in free trade zone or volcanic zone, if you do business here you must pay taxes, equally, not more, not less than the law says, foreigners pay the same than Dominicans. Unless your industry is favored by a special law that either exempts it from paying taxes or blesses it with tax credit. (These industries are: Cinematography, Hotels (not necessarily tourism), Renewable Energy, Mining, Telecommunications, and Financial Sector -licensed by the central bank-)

Oh but what about Free Trade Zones, didn't it have law No. 8-90? Yes they where tax exempt, like ten years ago! The truth is the tax exemption for Free trades zones has been gradually lifted.  So much, that by 2008,  Free Trade Zones were paying all the taxes except income tax. But in 2009, the government reasoned that paying taxes is such a good thing, that why not pay Income tax too, in some form or another, and this is what they came up with:
If your production is set up in a free trade zone, you do not pay income tax if all your production is sold abroad (you do pay all the other taxes though), but if you sell here (even if it's just one pencil), then you have two options: Either your products pay a tariff proportionate to the income tax paid by Dominican Companies in your industry sector last year, or you simply pay income tax like everybody else. The point is equal grounds for all Companies.

The main taxes we ALL  have to pay are:

1. Personal and Company Income Tax
2. Real State Property Tax for people or Asset Tax for Companies
3. Tax Over Manufacture Good (ITEBIS)
4. Selective Consumption Tax

Anyone that makes less than nine thousand sixty three dollars (USD$ 9,063) a year,  is exempted from paying income tax.
Don't be discourage by the fact you have to pay taxes, they are low in DR, but to explain each tax would make this post longer than it already is.

Failure is Constant in Entrepreneurship, even in an economy as dynamic as USA, according to data of the U.S. Census Bureau, only  half of start ups survive 5 years, and they only count business that provide employment for at least one person. So failure happens despite of ourselves, despite nationality, despite the rain, despite the crooks, failure happens despite excuses, but it will not happen to you guys (my winning smile);

Before starting a business in Dominican Republic take into consideration the following facts about Dominican Population.

According to the Census July 2011 there are 9,956,646 human beings (all nationalities) living in Dominican Republic (depending on where you get your numbers, I get mine at http://censo2010.one.gob.do/index.php  and https://www.cia.gov/library/publication … os/dr.html ), 4,237,56 of these, which means 45.5 % live in three provinces which are: Santo Domingo, Santo Domingo National District (capital), and Santiago. This leaves 29 other provinces for the rest. So if we divide the remaining 5,719,079 into 29, that equals to 197,209 people per province, in an area of 44,206 km2, meaning Dominican Republic, except for Santo Domingo, Santo Domingo National Distritct, and Santiago, has a very low population density (I know there are areas more densely populated than others) If you take into account that 29% of the population living in Dominican Republic has less than 14 years old, and presuming that people that have less than 14 years old are not economically active, you better choose your territory, business and market carefully. Good Luck!


Sincerely,
[Moderated]

I will simply say this, never go into business with a Dominican.   Also be very very careful of the lawyer you choose.  These people are all smiles, but will take you for every cent you have.  Trust me on this.  It is fine to go there as a tourist but do not get your life and money involved with the local people.  We know from experience.   Best advice I could ever give an expat.

Karen Mary welcome to the forum.  It sounds like you have had a very bad experience and I am sorry to hear this.  However rather then blanket statements that serve no one,  can you tell us what went wrong, what you could have done differently?  That turns your bad experience into something useful.

I  tell people every single day - do not just come here and think you can open a business! Come here and learn the culture, the language and investigate what you want to do!  Learn who you can and cannot trust, keep your eyes OPEN all the time. 

It is not easy to be successful here - just as it is not easy in most other countries!  I know many many successful expats here! I have no idea if they outweigh those who did not succeed, but I do know it can be done!

Karen
Let me add my welcome to the the forum.  It does sound like you had a bad experience,  but the question is what did you do and how did you go about it.
If you are careful, pick your associates smartley, are not "wearing rose colored glasses" when getting started, take your time, investigate fully before jumping, think with your head and not your heart, dont jump in but take your time, you have a very good chance of being suscssful.

I know lots of folks (us included) who have done very well here but and a big but we did all the above.

BobK

Totally agree with you...doing business with a Dominican is a very risky proposition. They do not share the same ethical values, nor the same sense of integrity or responsibility. Even professionals have to have the upper hand and try to "win" or get the most out of every situation. And, when dealing with any foreigner, they have a sense of entitlement, they deserve what you have and what you give is never quite enough.
That is not to say, however, that foreigners can't be successful here. If you know what Dominicans are like, you don't lend them money or go into business with them, you can do very well. Punta Cana, Bavaro, Las Terrenas, etc. are full of success stories, opportunities are everywhere but first you should learn the lay of the land and not assume that things here are the same as what you know.

For all the people that say "don't trust Dominicans" ...... there are good people and bad people everywhere you go in the world.  There is nothing in the Dominican blood that makes them any different than other people.  I believe that you will attract what you put into the world.  I pride myself on being a straight shooter.  I am honest and forth coming in all my dealings with people.  As a result I tend to attract honest and forthcoming people in my life.  I live in Toronto Canada and I have set up a business in Jarabacoa with a local who I trust.  I haven't been screwed over or cheated and don't foresee it happening any time soon.  I have a symbiotic relationship with my business partner and we both need each other for the business to succeed.  If my partner screws me then they are screwing the business which screws them in return.  So my best advice for anyone starting a business here is find a local that you trust and finance the operation and take profits.  Painting with broad strokes and saying don't ever trust a Dominican helps no one.  Just because you got screwed doesn't mean everyone will.

Actually some of the worst people to trust here are other gringos. You just have to be careful as you know no matter who it is.

Bob K

Agree with Bob. Here everything is different you need to trust ONLY when it is earned, not before.

What advice can be given to me as I want to start an internet cafe in punts cana? I've read the forum and understand what is being said but I'd like more specific tips. I've already spent a lot of time in this area over the years and have a pretty good understanding of the people. What specifically has made other businesses fail? Can you have gambling such as poker games set up in your business location? Can anyone recommend a lawyer who is trustworthy in this area? Thanks

thank you for a clear & succinct  post. it is this simple saying that says it all, "reality ruins fantasy"   apply the "kiss" principle to life & be content with it.  a roof that doesn't leak, food on the table, friends , love & laughter are all a person needs. a complex life breeds  complex problems. thanks again for telling the truth.

Some comments  - have you actually lived here? Until then you think you know the people and culture but you may not.  Do you have enough capital for everything and 6 months expenses?  Do you understand the labor law? The business law? your competitors?  Do  you know all the costs???? Have you run a business before?

NO you cannot gamble in your internet cafe!

Why do they fail?  Most didn't do their homework, don't know the country and the people, don't know how to run a business, dont speak Spanish,  etc etc.

there is much to do before you take the plunge.  Read more of the forums and you will get an idea. A good english and spanish speaking lawyer I trust is in Santo Domingo where you need to do your residencia etc.  AND you can own the business without residencia but you cannot WORK in the business without it.   

There is a lot to look at here!

Thanks for the advice. I already know everything you've told me.

So then what exactly is your question????

Basically why others failed. Thanks for your help.

Lack of planning lack of money and lack of skills

Planner that just about sums it up as well as studying market needs.  I know here in the Sosua area there is less and less of a demand for internet cafes as almost every is using their phones and tablets

Bob K

Well each one of you have put great input and good advice and very good scenarios there so many I can't even mention them or mentioned each one that that did them but they are so right doing business in Dr is nowhere the same as United States I follow one rule here in the Dominican Republic I trust no one basically the same one I had and United States but here it's even more I am force it greatly picadas People are after One thing you have work for it I like someone mentioned before they have a attitude n  believe they deserve everything without working for it that all they have to do is ask for it and you should give it to them that if you came from United States you're a millionaire and you can afford support them too don't get me wrong there's a lot of good people I've made a lot of good honest friends but I'm forward I tell it like it is I do not hide and I don't hold back punches. And people don't like anything that is not name brand or nice they feel that they deserve it in that you should give it to them you try to give them something from Walmart and I'll throw it back in your face has to be Nike Reeboks all name brands. I tell my wife that is a spirit of ungratefulness and that's why they're in the condition that they are are you my friends that are thinking of starting a business and getting employees be careful who you hire a lot of them don't like to work they may work one or two days and they quit I've encountered a bunch of them or until they know what you have in the inside and then they steal from you but then again I say they are good people and that people just like everywhere else except you have to do more homework you have to have more eyes or around your head and you have to pay attention to all the things that you do say and show. I believe most of you that he live here in the Dominican Republic can agree with me on a lot of points because you really have to live here and socialize with the people so that way you know exactly who they are what they are and what is their lifestyle. It's not just knowing the Spanish language you really got to know how these people think how they act and how they expect you to act with them. I surely hope this is helpful for somebody because I didn't have no one to tell me anything I went in there and I'm in school every single day of my life here learning the style learning the people learning how they think learning how to detect who to trust and who not to trust who's a liar who's the thief who is a gold digger including your own wife's family or husband family. So I hope the best to each one of you that trying to be business to trying to make a life here the tourist area to gorgeous or beautiful but you pay for what you get they're gorgeous but like everything else pros and cons you have to weigh are you willing to take the Cons with the pros or ship out before it all sinks.

Honey this thread is 3 years old.... i figure you didnt notice! 

Oopps

Three years old but still some good points.
At my age I am still in school every day as well.

Bob K

Hahahaha.

Yes its still good info.

I know its an old thread but thanks for the post

Greetings and my first time posting. I lived in the DR for five years in the past but planning to return in the future. Presently im running a succesful Auto-Marine Reconditioning business in Puerto Rico and thinking of starting one in the DR. The type of business I run constantly gets confused with detailing in which branches out but my niche is more complex since we specialize in high end exotic vehicles repairing paint scrape and scratches and restoring to exotic standards, also providing high definition type paint protection. I have been thinking to do a mobile type but spying up the land at the moment again. Any suggestions?

Welcome to the forums!  And welcome back if you decide to.  I can see this working here but more in  the Casa de Campo Punta Cana area then others.

Thank you for the quick reply, i am following up on this

Welcome and I too see this only working in very high end communities like Casa de Campo and some Punta Cana areas.
Most roads here are not exotic car friendly

Bob K