Benefits of the CONFOTUR Law in the Dominican Republic

The CONFOTUR Law, officially known as Law 158-01 on the Promotion of Tourism Development in the Dominican Republic, is an initiative that seeks to promote tourism development in the country. This law has created a favorable environment for investors in the hospitality and real estate industry, offering significant tax incentives. Here are some of the benefits that project buyers can obtain under the CONFOTUR Law.

1. Exemption from Real Estate Property Tax (IPI):

Under the CONFOTUR Law, approved tourism projects are exempt from Real Estate Property Tax (IPI) for a period of 15 years. This can result in huge savings for buyers, increasing the return on their investment. The Annual Property Tax for individuals consist in 1% per year of the value of the property that exceeds RD$9,520,861.00 (around US$167,000). For companies that own a real estate property there is no exemption so they pay 1% of the value of the property no matter the value is.

2. Property Transfer Tax Exemption:

Project buyers are also exempt from paying property transfer tax, which is typically 3% of the property value. This can represent significant savings, especially for higher value projects. The 3% transfer tax is mandatory for all changes made to the title registration and the CONFOTUR is the only exemption that applies.

3. Income Tax Exemption for the project:

Projects approved under the CONFOTUR Law also receive a full exemption from income tax for a period of 10 years. This not only improves the return on investment, but also makes it easier to reinvest in the project.

4. Customs tax exemption:

Project developers and buyers are exempt from paying customs taxes on the import of equipment, furniture, vehicles and other goods necessary for their project. This can be especially beneficial for projects that require a large number of imports. In many cases the developers that have CONOFOTUR approved for their projects offer furniture packages to the buyers, which usually are high quality items at very good prices due to the import tax exemptions.

5. Access to preferential financing:

The CONFOTUR Law also facilitates access to preferential financing for project buyers. This can include lower interest rates, more favorable loan terms, and greater access to investment capital.

In conclusion, the CONFOTUR Law offers a wide range of tax incentives and financial benefits for buyers of projects in the Dominican Republic. Whether you are considering investing in a hotel, a resort, a residential project or any other type of tourism project, the CONFOTUR Law can be an excellent way to improve the profitability of your investment and promote the success of your project.

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