On October 6th, President Luis Abinader passed Law No. 57-23 which creates a series of tax incentives for national and international commercial civil aviation.
This law aims to create a scheme of tax incentives for commercial civil aviation in the Dominican Republic aimed at fostering and increasing the competitiveness of civil aviation in the country, encouraging the increase of visitors to the country by air, establishing new domestic and international routes to and from strategic markets of the Dominican Republic as well as strengthening the position of the Dominican Republic as a connection point for transport, passenger and cargo logistics, trade and international investment.
These regulations provide the following tax incentives for companies operating national and international commercial air transport once they comply with certain requirements set forth in said law:
(1) Total exemption from withholding tax on foreign income payments for leasing aircraft or aircraft engines, and aircraft maintenance and repair services; engine parts and other aircraft parts;
2) Once-off five percent (5%) withholding on payments abroad by non-residents for training and education of crew personnel; use and maintenance of computer programs and software related to the operation of the aircraft and for the insurance of the aircraft;
3) Exemption from Tax on the Transfer of Industrialized Goods and Services (ITBIS/VAT) on the sale of complete flights by Dominican operating companies to companies abroad (charter), as long as they are flights originating abroad to the Dominican Republic;
4. Exemption Duty and ITBIS (VAT) on the importation of aircraft and aeroplanes of subheadings 8802.30.00 corresponding to aeroplanes and other aircraft with an unladen weight exceeding 2,000 kg but not exceeding 15,000 kg and subheading 8802.40.00 corresponding to aeroplanes and other aircraft of an unladen weight exceeding 15,000 kg;
5) Exemption from Asset Tax on Assets that have been declared in the General Directorate of Internal Taxes (DGII/IRS);
The Act confers the function of receiving and assessing applications filed by companies interested in availing ofthese tax incentives on the Civil Aviation Board, as well as recommending to the Executive Branch the approval of the granting of these benefits, subject to clearance from the Ministry of Finance.
These regulations, which will enter into force upon their publication in the Official Gazette, will foster the development of international civil aviation, in the context of the guidelines issued by the International Civil Aviation Organization (ICAO), which contain international standards, recommended practices and procedures for the benefit of the sector.
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