Establishing a corporation in the Dominican Republic is much more beneficial for those who wish to purchase real estate in this Caribbean country. An offshore entity, by comparison, would encounter greater difficulty in wading through the steps and procedures of buying property in the Dominican Republic, be this be a Caribbean villa, condo, or single family home.

Indeed, it is true that this country has enacted legislation which makes purchases of real estate and other kinds of investments attractive to foreign investors. Nonetheless, the bureaucracy in the Dominican Republic has a still a long way to go at streamlining the processing of business transactions of a foreign corporation. Opening a bank account alone for foreign companies or investors can be a hassle. Often, bank employees would still ask for a tax ID even if such isn’t a requirement for a foreign corporation or even a tourist for that matter.

The issue on real estate taxation would be the best benefit that can be derived from forming a Dominican Republic corporation. The trick here is to place the ownership of such real estate properties as a Caribbean condo or villa under the name of that corporation, in addition to the property owner’s bank accounts. For this advantage to work, it is necessary to employ the services of an accountant who will then declare that all income of the property owner is only derived from interest on deposits in the bank account which is tax-free in the Dominican Republic.

This is, of course, assuming that no income is derived from rentals of the property which has been placed under the name of the corporation along with the bank accounts. With no income, therefore, the corporation has no tax liability. The only expenditure that would be involved in this regard will include the accountant’s professional fee and the annual company registration tax that should total at just around $300 per year.

And there is yet another benefit which comes when selling that Caribbean house, villa, or condo owned by a local corporation at the Dominican Republic instead of a foreign nationa. Avoidance of any hefty capital gains tax  be facilitated by transferring the control or the stocks of the corporation, and therefore its assets, in an undisclosed and private transaction. The title transfer to the new owners will not have to undergo registration, a step ich enables the Dominican Republic to collect capital gains tax. The title transfer registration is no longer necessary because the property owner—the local corporation—never changed; what just changed were the shareholders.