The CONFOTUR Law, ITBIS, Property Taxes, and Exemptions: A Unique Fiscal Framework in the Caribbean

The Dominican Republic attracts a growing number of international real estate investors every year. Beyond its pristine beaches and impressive tourism growth, the country owes much of its success to a key factor: an exceptionally advantageous tax environment.

With extensive exemptions, tax credits, and reduced property-related taxes, the Dominican Republic offers one of the most competitive fiscal frameworks in the entire Caribbean region. Here is a clear and strategic overview of the main benefits available to investors.

 

1. The CONFOTUR Law: The Most Powerful Tax Incentive

Law 158-01, known as CONFOTUR, is arguably the strongest advantage for real estate investors. Its purpose is to stimulate tourism development by offering major tax exemptions.

What does CONFOTUR offer?

For any approved real estate project (typically in tourist zones such as Punta Cana, Cap Cana, Bávaro, Las Terrenas, Puerto Plata, etc.):

1. Exemption from Transfer Tax (3% of the purchase price)

Normally, buyers must pay a 3% property transfer tax.
With CONFOTUR: 0%

2. Exemption from Property Tax (IPI) for 15 years

IPI, similar to a property tax, is normally 1% of the annual assessed value.
With CONFOTUR: full exemption for 15 years

3. Exemptions for Developers

Developers also benefit from exemptions on:
– income tax
– import duties
– construction-related taxes
– ITBIS (local VAT) on raw materials

  The result: more accessible projects, better pricing, and stronger market value.

 

2. ITBIS (Dominican VAT): When Are You Exempt?

ITBIS is the Dominican Republic’s version of VAT: 18% on goods and services.

The good news for investors:

• New construction purchases within CONFOTUR projects are automatically exempt from ITBIS.

• Developers benefit from major reductions on materials and equipment.

This means:

✔ lower construction costs
✔ more competitive unit prices
✔ higher rental profitability

 

3. IPI: A Very Low Property Tax Outside CONFOTUR

Even though CONFOTUR removes IPI for 15 years, it’s important to understand the standard tax structure.

Without CONFOTUR:

IPI is 1% annually, but only on property value exceeding 9.2 million pesos (approximately 160,000 USD).

In practice:

• More modest units often pay no property tax at all.

• Higher-end properties are taxed at a rate far lower than in North America or Europe.

With CONFOTUR:

➡️ 0% for 15 years, resulting in substantial savings.

 

4. Additional Tax Advantages for Foreign Investors

1. No wealth tax

The Dominican Republic does not tax investors on their global assets.

2. Potential exemptions on rental income

Depending on the project structure, certain rental earnings may benefit from favorable tax treatment.

3. Deductible operational expenses

For investors declaring income locally, expenses related to operations (management, maintenance, marketing, services) can be deductible.

4. No restrictions for foreigners

Non-residents can:

• buy

• own

• sell

• pass on property

with no special fiscal limitations.

 

5. Why the Dominican Tax System Is a Magnet for Investors

When you combine:

• exemption from transfer tax

• 15 years of zero property tax

• removal of VAT (ITBIS) on CONFOTUR projects

• light taxation on rental income

• strong tourism growth

 

5. Why the Dominican Tax System Is a Magnet for Investors

When you combine:

• exemption from transfer tax

• 15 years of zero property tax

• removal of VAT (ITBIS) on CONFOTUR projects

• light taxation on rental income

• strong tourism growth

   the Dominican Republic becomes one of the most tax-efficient real estate markets in the region.

This allows investors to:
✔ enjoy high rental returns (8% to 12% on average)
✔ significantly reduce recurring costs
✔ maximize resale value
✔ secure assets in a stable, fast-growing country