Difficult to have the right figures ?

bruno said:

hello,

I am consulting this forum for a few weeks and i find it very interesting. thanks to you all for sharing you experiences.

I live down south in the caribbean and I am studying the possibility to start an agro transformation company in a DR free zone.

I shall be in DR in a few weeks but i would like to come with the clearest view...and i am far from it.

Also i found a lot of informations on free zones, things seem to be very different from one to another...so if anyone could answer a few question, it would be great help.

What is the minimum capital requested to create a CxA ?

Does anyone know which free zone around la haina would be good to start such a company. space needs are not to important (500m?). I am thinking of the closest to the port as road trucking containers seems to be expensive...

I saw today that minimum wage has changed (25%). What is the actual average wage in free zone for a non specialised worker today ? for a team manager ?

I read a lot of threads on export taxes (5%), change taxes (3RD$) etc...what are actually the taxes (especially hidden ones) in free zones today ?

What is the regulation for transaction : is every foreign currency coming in the country has to be changed into DOP and change again before going out ?



thanks for your help

bruno

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red

Hi bruno.

You can form a Dominican corporation with as little capital as RD$10,000, for about RD$15,000 (roughly $475) , and annual costs of about RD$10,000 thereafter to file the necesssary reports with the government, etc. Formation costs for a Dominican corporation with capital of RD$1,000,000 was quoted to me to cost about RD$42,000 (roughly US$1300).

Costs to form go up, as the amount of authorized capital goes up, as there are government taxes calculated on this amount when you form it. A lawyer can tell you the reasons to choose larger capital amounts - I can't. Lawyers advice in the DR is a relatively cheap investment compared to other jurisdictions.

If you have an existing company there now, you could also open a "branch office" here, and avoid having to start a DR company. Ask the lawyer about this.

As far as trucking costs, no matter where you are, you will still pay Fenatrano (the truckers' union) their cut, so I think this will not differ much wherever you are trucking from. Probably costs US$150 if you are outside the port gates, or US$200 if you are some distance from the port.

As far as the port of Haina, there are 2 ports, one on each side of the river, but also consider that by year-end the new port by the Santo Domingo airport (Caucedo) will also be opening up, and it will be bigger than Haina someday. There is also the port at Boca Chica nearby, so they have competition.

There is a wide range of Free Zones available, from really rundown zones to some really nice places, and the costs to lease will run from about US$2.50 a square foot/year to probably US$7 a square foot/year. Depends on what you need and can pay for, and security issues. Best information source is the Consejo Nacional de Zonas Francas de Exportacion. (www.cnzfe.gov.do) Telephone (809) 686-8077.

Free Zone minimum wage is now roughly RD$2800, and average wages paid now are probably in the range of $900 to $1100 a week. Group leaders average is at about the $8000+ a month range. Bi-lingual supervisors are probably at an average of $10000 -12000 / month, and up. Add on another 40% to these numbers to get your ballpark cost of labor, in the form of the add-ons to wages in form of mandatory pay for vacation, mandated Christmas bonus, health, social security,etc. They will probably give this minimum level a raise very soon in the region of 20%, but it is still cheap labor.

Taxes you talked about aren't being applied to Free Zone companies, as the Free Zone laws excuse them from these forms of taxes. No income taxes to the company, but they do apply to all employees.

No currency requirements in place to Free Zone companies, and you don't need to go through the Central Bank as many other countries require. Freedom of exchange with cambios and banks. No registrations of foreign monies, and you can move money freely anywhere else.