In Santo Domingo, the Dominican Association of Free Zones (ADOZONA) conveyed its deep concern to the President of the Chamber of Deputies, Alfredo Pacheco Osoria. ADOZONA’s concern focuses on the articles in the Fiscal Modernization Bill. They believe these changes could impede the free zone sector, a crucial element of the Dominican economy, from growing and thriving.
ADOZONA asserts in their communication that free zones are vital for job creation and investment attraction. Yet, they warn the proposed alterations may instigate uncertainty about legal protection currently ensuring smooth operation of these businesses. They fear changing the tax system could discourage foreign investment, potentially damaging job creation and the nation’s economic growth.
The letter emphasizes that the suggested reforms could lead to an unsettling environment, potentially discouraging foreign investors and threatening the sector’s stability. ADOZONA indicates that the Dominican Republic’s free zone model aligns with DR-CAFTA signatory countries like Nicaragua, Costa Rica, and El Salvador, along with Mexico. Along with fiscal measures, these countries implement other incentives to foster growth. Introducing new taxes could disadvantage the Dominican Republic in competition with countries offering more attractive conditions for investments.
Free zones create an excess of 449,000 official jobs, with more than 198,000 being direct. Any reform limiting investments could lead to significant job losses, severely impacting communities relying on this sector. ADOZONA notes that the perceived threat of the Fiscal Modernization Law has halted about eight new park construction projects and several already-approved expansion plans. The association stresses the necessity to continue creating free zone parks to attract value-added investments. They argue that without proper infrastructure, it will be challenging to leverage current opportunities, particularly regarding global value chain relocations.
ADOZONA asserts that adhering to the guidelines, conditions, and prerequisites of the integrated industrial export processing zone model under Law 8-90, titled “Promotes the Establishment of New Free Zones and the Growth of Existing Ones,” has permitted parks to be present in 28 of the 32 provinces. This has led to nearly 450,000 formal jobs, an unprecedented figure.
As a result, ADOZONA urges the honorable Chamber of Deputies to fully erase Article 31 and reconsider Article 36 during their review of the Fiscal Modernization Bill.
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