VI. TRADE REGULATIONS AND STANDARDS TARIFFS AND IMPORT TAXES: TAXES AND DUTIES FOR IMPORTED GOODS (AGRICULTURAL AND NON- AGRICULTURAL) ARE CALCULATED UPON THE "AD-VALOREM PRICE," I.E., CIF PRICE MULTIPLIED BY THE OFFICIAL FOREIGN EXCHANGE RATE (PRESENTLY US$1.00=RD$12.50). ALL DUTIES AND TAXES ARE COLLECTED IN DOMINICAN PESOS. THERE ARE GENERALLY FIVE TAXES ON IMPORTS EXCEPT FOR THOSE SUBJECT TO EXEMPTIONS PROVIDED BY LAW. THE TAXES ARE: A) ARANCEL: THE BASIC IMPORT TAX WHICH CAN BE AS LOW AS 3% AND AS HIGH AS 35%. B) RECARGO CAMBIARIO: A FOREIGN EXCHANGE SURCHARGE THAT MUST BE PAID TO THE CENTRAL BANK. IT IS CURRENTLY 3%, AND WILL BE ELIMINATED IN JUNE 1995. THIS TAX IS CALCULATED UPON THE CIF PRICE. C) IMPUESTO SELECTIVO AL CONSUMO: A CONSUMPTION TAX FOR LUXURY IMPORTS; E.G., WINE & BEER, CIGARS AND CIGARETTES PAY 30 PERCENT. FOR NON-AGRICULTURAL GOODS THIS TAX FOR "NON-ESSENTIAL" GOODS RANGES BETWEEN 15-60 PERCENT. THIS TAX IS CALCULATED UPON THE CIF PRICE. D) ITBIS: AN 8% TAX ON INDUSTRIALIZED GOODS AND SERVICES (IMPUESTO DE TRANSFERENCIA A LOS BIENES INDUSTIALIZADOS Y SERVICIOS) FOR PROCESSED AGRICULTURAL GOODS AND ALL NON- AGRICULTURAL GOODS WHICH IS CALCULATED UPON THE CIF PRICE PLUS THE AMOUNT PAID FOR THE TAXES AND DUTIES PREVIOUSLY MENTIONED; AND E) IMPUESTO CAMBIARIO: 1.5% TAX WHICH MUST BE PAID TO THE CENTRAL BANK FOR THE PURCHASE OF FOREIGN EXCHANGE. EXAMPLE: PRODUCT X A) CIF VALUE OF IMPORT IN US$ 300.00 B) CIF VALUE IN DOMINICAN PESOS (US$1-RD12.5) 3,750.00 C) TARIFF RATE PAID (EXAMPLE, 10% OF B) 375.00 D) IMPUESTO SELECTIVO (LUXURY TAX) PAID (30% OF B) 1,125.00 E) SURCHARGE TAX (RECARGO CAMBIARIO, 3% OF B) 112.50 F) INDUSTRIALIZED GOODS AND SERVICES TAX ("ITBIS" 8% OF B PLUS C, D, AND E) (3,750 + 375 + 1,125 + 112.50) (0.08) 429.00 TOTAL TAXES 2,041.00 EFFECTIVE TAX RATE 54 % CUSTOMS VALUATION: WITH ASSISTANCE FROM THE UNITED NATIONS DEVELOPMENT PROGRAM (UNDP) AND A TEAM FROM HARVARD UNIVERSITY, THE CUSTOMS SERVICE IMPLEMENTED A COMPUTERIZED VALUATION SYSTEM. IN ORDER TO COMPUTERIZE THE PROCESS, CUSTOMS ASKED FOR PRICE LISTS FROM ALL IMPORTERS. SEVERAL DOMINICAN REPRESENTATIVES OF U.S. FIRMS HAVE COMPLAINED THAT CUSTOMS RESULTS DO NOT REFLECT THE PRICES INDICATED IN THE MANUFACTURER'S LISTS. CUSTOMS HAS REPLIED TO EMBASSY INQUIRIES STATING THAT THE COMPUTERIZED LISTS WERE PREPARED TAKING THE LISTS PRESENTED BY THE IMPORTERS INTO CONSIDERATION AS WELL AS DISCUSSIONS WITH TRADE ASSOCIATIONS AND THEN ESTABLISHING ITS OWN PRICES FOR EACH ITEM. THESE LISTS ARE NOT COMPLETE. WHEN THE PRODUCT IS NOT FOUND IN THE LIST, THERE IS MORE DISCRETION LEFT TO THE INSPECTOR MAKING THE EVALUATION. IMPORT LICENSES: A) COMMERCE/INDUSTRY: IMPORT LICENSES ARE NOT REQUIRED FOR MOST PRODUCTS. HOWEVER, IMPORT LICENSES ARE REQUIRED FOR PHARMACEUTICAL PRODUCTS AND AGRO-CHEMICALS. FOR PHARMACEUTICAL PRODUCTS A LICENSE MUST BE OBTAINED FOR EACH TRADEMARK/PRODUCT IMPORTED BY THE COMPANY, AT THE SECRETARIAT OF STATE FOR PUBLIC HEALTH. IT IS VALID FOR A PERIOD OF 5 YEARS. AGRO-CHEMICALS AND FERTILIZERS REQUIRE AN IMPORT LICENSE FROM THE SECRETARIAT OF STATE FOR AGRICULTURE. B) AGRICULTURE: "NO OBJECTION" AND OTHER TYPE OF PERMITS ARE OFTEN REQUIRED TO IMPORT AGRICULTURAL COMMODITIES INTO THE DOMINICAN REPUBLIC. PHYTOSANITARY CERTIFICATES ISSUED BY COMPETENT AUTHORITIES IN THE COUNTRY OF ORIGIN MUST ACCOMPANY LIVE PLANTS AND AGRICULTURAL MATERIAL USED IN PLANTING. IMPORTS OF ANIMALS NORMALLY REQUIRE CERTIFICATES OF ORIGIN AND OTHER VETERINARIAN DOCUMENTATION TO ASSURE THAT UNDESIRABLE DISEASES ARE NOT BROUGHT INTO THE COUNTRY. THERE ARE NO QUOTAS ON AGRICULTURAL GOODS, BUT THE IMPORTATION OF FOOD AND AGRICULTURAL PRODUCTS DO REQUIRE A LOCAL DISTRIBUTOR. UNLESS OTHERWISE INDICATED, THE DOMINICAN REPUBLIC TENDS TO FOLLOW U.S. STANDARDS CONCERNING CHEMICAL TOLERANCES IN FOODS, PACKAGING AND LABELING REQUIREMENTS. EXPORT CONTROLS: A) COMMERCE/INDUSTRY: NO EXPORT LICENSES ARE REQUIRED. HOWEVER, THERE IS A FORM THAT EXPORTERS SHOULD FILL OUT FOR EVERY SHIPMENT. IT IS CALLED THE SWORN DECLARATION OF EXPORTS (DECLARACION JURADA DE EXPORTACION) WHICH SHOULD BE PRESENTED AT THE PORT OF DEPARTURE. FREE ZONE COMPANIES DO NOT NEED TO FILL OUT A DECLARATION, BUT SUBMIT A CERTIFICATE FROM THE NATIONAL FREE ZONE COUNCIL TO CEDOPEX FOR IT TO REGISTER THE EXPORTS. B) AGRICULTURE: UNTIL 1993, LICENSES WERE REQUIRED FOR MOST AGRICULTURAL EXPORTS. THE REQUIREMENT WAS LIFTED IN 1993. AT THE PRESENT TIME, THE DOMINICAN GOVERNMENT SUBSIDIZES THE EXPORT OF RICE, COFFEE AND COCOA. THE SUBSIDY RANGES FROM RD$80-100 PER 100 LBS. (OR US$6.40-8.00 PER HUNDRED WEIGHT AT THE OFFICIAL EXCHANGE RATE OF US$1.00=RD$12.50). IMPORT/EXPORT DOCUMENTATION: ALL IMPORTS INTO THE DOMINICAN REPUBLIC REQUIRE A CONSULAR INVOICE FROM A DOMINICAN OVERSEAS CONSULATE APPROVING THE TRANSACTION. MANY U.S. EXPORTERS COMPLAIN THAT BECAUSE THERE IS NO STANDARD FEE FOR THE CONSULAR INVOICE THEY HAVE TO PAY AN ARBITRARILY-DETERMINED FEE FOR EVERY SHIPMENT TO THE DOMINICAN REPUBLIC. HOWEVER, ALL GOODS ENTERING THE FREE TRADE ZONES THAT ARE DESTINED FOR RE-EXPORT ARE EXEMPT FROM THIS REQUIREMENT AS WELL AS ALL IMPORT LICENSES, REGISTRATION REQUIREMENTS, AND PAYMENT OF CUSTOMS DUTIES COMMERCIAL INVOICE, BILL OF LADING IF BY SHIP OR AIR-WAY BILL FOR AIR CARGO. TEMPORARY ENTRY: A) COMMERCE/INDUSTRY: TEMPORARY ENTRY IS PERMITTED FOR EXHIBITION OR DEMONSTRATION PURPOSES. NO CUSTOMS DUTIES ARE PAID TO CUSTOMS AND THE GOODS MUST BE SHIPPED BACK. IF THE COMPANY WISHES TO SELL THE PRODUCTS OR MACHINERY AFTER THIS TEMPORARY ENTRY HAS BEEN PERMITTED, IT ONLY HAS TO GO TO THE CUSTOMS OFFICE AT THE ORIGINAL PORT OF ENTRY AND PAY THE NECESSARY TARIFFS AND DUTIES. B) AGRICULTURE: THERE ARE NO PROVISIONS FOR THE TEMPORARY ENTRY OF AGRICULTURAL PRODUCTS. HOWEVER, AGRICULTURAL COMMODITIES AND FOOD PRODUCTS MAY BE IMPORTED UNDER BONDED WAREHOUSING AND FOR TRANSSHIPMENT. LABELING, MARKING REQUIREMENTS: THE DOMINICAN REPUBLIC DOES NOT HAVE LABELING REGULATIONS FOR PRODUCTS ENTERING THE COUNTRY. THE DR TENDS TO FOLLOW U.S. STANDARDS AND REQUIREMENTS. PROHIBITED IMPORTS: NONE. HOWEVER, OTHER IMPORT PERMISSIONS ARE USED TO EFFECTIVELY BAR THE IMPORTATION OF CERTAIN PRODUCTS, USUALLY FOR REASONS OF OVERSUPPLY IN THE COUNTRY. AGRICULTURAL COMMODITIES IN WHICH THE DOMINICAN REPUBLIC IS CONSIDERED TO BE SELF-SUFFICIENT, SUCH AS GARLIC, ONION, POTATOES, PINTO BEANS, WHOLE POWDERED MILK (IN BULK) AND RICE, ARE OFTEN RESTRAINED, BUT WILL BE ALLOWED ENTRY DURING PERIODS OF DOMESTIC SHORTAGES. STANDARDS (E.G. ISO 9000 USAGE): THE DOMINICAN REPUBLIC TENDS TO FOLLOW U.S. STANDARDS AND REQUIREMENTS. FREE TRADE ZONES/WAREHOUSES: FREE ZONE OPERATORS (FZO) AND ENTERPRISES ARE ENTITLED TO 100% EXEMPTIONS FROM: - THE PAYMENT OF CORPORATE INCOME TAX - THE PAYMENT OF CONSTRUCTION TAXES, TAXES ON LOAN AGREEMENTS, AND ON THE RECORDING AND TRANSFER OF REAL PROPERTY FROM THE DATE OF FORMATION OF THE FZO. - THE PAYMENT OF THE TAX ON FORMATION OF CORPORATIONS AND ON THE INCREASE IN THEIR CAPITAL. - THE PAYMENT OF ANY MUNICIPAL TAXES WHICH MAY AFFECT THEIR ACTIVITIES. - THE PAYMENT OF IMPORT DUTIES AND RELATED TAXES ON RAW MATERIALS, EQUIPMENT, CONSTRUCTION MATERIALS, PARTS FOR BUILDINGS, OFFICE EQUIPMENT, ETC. DESTINED FOR CONSTRUCTION, PREPARATION OR OPERATION WITHIN THE FREE TRADE ZONE. - ALL TAXES ON EXPORTS OR RE-EXPORTS, EXCEPT FOR EXPORTS INTO THE LOCAL MARKET. - THE BUSINESS TAX (PATENTE) ON INVENTORY OR ASSETS AND OF THE TAX ON THE TRANSFER OF INDUSTRIALIZED GOODS AND SERVICES (ITBIS). - CONSULAR CHARGES ON IMPORTATION CONSIGNED TO FZO OR ENTERPRISES. - IMPORT DUTIES ON EQUIPMENT AND UTENSILS FOR THE INSTALLATION AND OPERATION OF CAFETERIAS, HEALTH SERVICES, MEDICAL ASSISTANCE, CHILD CARE CENTERS, ENTERTAINMENT OR AMENITIES OR OTHER EQUIPMENT FOR THE WELL-BEING OF THE WORKING CLASS. - THE PAYMENT OF DUTIES ON THE IMPORTATION OF TRANSPORTATION EQUIPMENT, SUCH AS TRUCKS, GARBAGE TRUCKS, MICROBUSES, MINIBUSES FOR THE TRANSPORTATION OF EMPLOYEES TO AND FROM WORK, SUBJECT TO THE PRIOR APPROVAL, IN EACH CASE, OF THE NATIONAL FREE ZONE COUNCIL. SUCH VEHICLES SHALL BE NON-TRANSFERABLE FOR A PERIOD OF AT LEAST FIVE YEARS. FIRMS LICENSED TO OPERATE IN THE FREE TRADE ZONE MAY: - INTRODUCE, STORE, UNPACK AND RE-PACK, RECYCLE, EXHIBIT, MANUFACTURE, MOUNT, ASSEMBLE, REFINE, PROCESS AND DEAL IN ANY TYPE OF PRODUCT, GOOD OR EQUIPMENT. - PROVIDE SERVICES, SUCH AS DESIGN, LAYOUT, MARKETING, TELECOMMUNICATIONS, PRINTING, DATA PROCESSING, TRANSLATION, SOFTWARE DEVELOPMENT AND ANY OTHER SIMILAR OR RELATED SERVICE. - INTRODUCE INTO THE FREE TRADE ZONE ANY AND ALL MACHINERY, EQUIPMENT, PARTS, AND TOOLS WHICH MAY BE NEEDED IN THEIR OPERATIONS. - TRANSFER MATERIALS, EQUIPMENT, MACHINERY, ETC. AS WELL AS LABOR AND SERVICES FROM ONE FREE TRADE ZONE ENTERPRISE TO ANOTHER OR BETWEEN ENTERPRISES OF DIFFERENT FREE TRADE ZONES, PROVIDED THE TRANSIT REGULATIONS FROM ONE FREE ZONE TO ANOTHER ARE COMPLIED WITH. SPECIAL IMPORT PROVISIONS: NONE. MEMBERSHIP IN FREE TRADE ARRANGEMENTS: THE DOMINICAN REPUBLIC RECEIVES THE BENEFITS OF THE CARIBBEAN BASIN INITIATIVE FROM THE U.S., AS WELL AS GATT, GSP, ICO, ISO, LOME IV, AND ACP. IT DOES NOT BELONG TO ANY FREE TRADE ASSOCIATION AND GRANTS NO RECIPROCAL TRADE BENEFITS TO THE COUNTRIES FROM WHICH IT RECEIVES BENEFITS. IT IS EXPLORING MEMBERSHIP IN CARICOM (WHERE IT HAS OBSERVER STATUS), THE CENTRAL AMERICAN COMMON MARKET AND IS A FOUNDING MEMBER OF THE NEWLY FORMED ASSOCIATION OF CARIBBEAN STATES.