we need small space in free trade zone

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Mike Weinberg

New member
Apr 16, 2007
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We are evaluating reallocating our 1200 sq foot small resin
producing operation from WEST Florida to Puerta Plata D.R.
>
> We had been planning to move in May to Panama, but we understand that
Puerta Plata D.R. may be better for us, our factory requirements are
small.
>
> Can we hire RELIABLE people to cast our resins (unskilled work) and
skilled Artists to to carve our plastics beads and bracelets? This is
similar to Amber. Excellent wood carvers can do this work. What are Labor
prices?
>
> Can someone help us understand all the facts, costs, warehouse space
availability, of moving and setting up in Puerta Plata, so we can decide IF
D.R. is better for us then Panama? We could come to visit in about 3
weeks?
>
> I > As a option, for quicker set-up (?), we also could send our own 30
foot by 40 foot $18,000 knock-down building ( A Canadian made Quonset
hut type metal one) to D.R. This would be a option IF if we can rent
the land, pour concrete flooring, electric plumbing in the processing
zone to set up our factory?
>
> Someone told explained the cost of about $5000 (?)to set up In D.R. but
did not tell us if we could rent a smaller space 120 SQ meters ( 1200
sq feet). She also said electric is a problem and this is critical to us
as we cook our products in ovens and need reliable 120 V and 220 V. Do
we need a generator?
>
> Thank You,
>
> For your help,
>
> Mike Weinberg 727-741-4597 AmericanCatalin.com
 
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HOWMAR

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Jan 28, 2004
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If you are interested in space in a zona franca (tax free zone) you have only one option in Puerto Plata. There is plenty of unused and underutilized space in the Puerto Plata Zona Franca but I hear rental rates are very high and are net/net. You will have to pay for all improvements including a generator as power outages in the free zone are common.
Labor costs for unskilled labor in the free zones is quite good. In adition as a free zone company you will not be subject to the 16% ITBIS you would normally have to pay for funds sent to the DR to pay expenses.
I have been told that shipping time from the Puerto Plata Zona Franca to Miami is 3 days by container.
 
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Mike Weinberg

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Apr 16, 2007
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Thanks much can you reccomend another location? better and less setup costs , better electric and place to live? You have any contacts for rentals?
 
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Chris

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Oct 21, 2002
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Santiago offers better free zone options. Puerto Plata (and I'm talking some years ago, but have no confidence that anything has changed) ... seems to run on the inevitable propina.

Small space in a free zone is also problematic. Unless you can sub-lease from a bigger company, Puerto Plata Zona Franca does not have smaller spaces. The Pisana free zone in Santiago have smaller spaces - around 2,500 sq feet. There used to be a waiting list for these. And it also depends on what kind of loading dock you need. Not all loading docks are created equal ;)

Set-up costs ... setup costs for a DR company (usually the ones in the know recommend a Panamanian company structure as well) - depends on the capitalization. Including Lawers, Registation of Zona Franca company, all permissions .. I would budget on at least US$5,000 if you do some of this work yourself. Then add to that somebody has to become a resident ... and this also has a cost to it. There is also the annual maintenance of the companies, so capitilization is important.

In a zona, you have to do the inside fitting out, install protection for theft, lighting, generator and installation, invertors, batteries and installation, and there is a host of little things that need to be given attention to, i.e., buying forms for exportation documents, keeping the local aduana in a fair lifestyle and stuff like that.

Transportation from Puerto Plata port or Santo Domingo port to Santiago is easy and the channels are set up. There is a cost here.

You have to make a visit here and go and speak to some zona francas. I would suggest you make an appointment at Pisano just outside of Santiago for smaller space. Some zona franca's are government run and others privately owned.

So at the end of the day, you have to work out whether it is a better option to simply register as an exporter and rent a facility at much cheaper rates than a zona franca, and figure on the tax free issues and not paying itbis, or go the zona franca way, pay more for infrastructure but have the tax free options and itbis options. The size of your business and the revenue vs cost structure will determine the best option. Sometimes it is better to pay the taxes but have cheap infrastructure, sometimes it is better to pay more for ready-made infrastructure and not pay taxes.
 
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Mike Weinberg

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Apr 16, 2007
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seems problematic

Wow, so I must be on a wait list? And only 2500 no smaller . costs plus costs when is the ceiling? I may be better in Panama?

mike
 
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Chris

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Oct 21, 2002
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I don't know about Panama ... no idea what the costs are there.

You need to do an investigation in the DR and talk to the zona francas. There may be zonas with smaller space available, I don't know. You may strike a lucky and find a sub-lease. For these things, you need to investigate on the spot. And no, moving your business to another country is not easy.

Anyone with a link to the latest list of zona francas?

Btw, Mike, it is not necessary to run two threads on the same subject.
 
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Mike Weinberg

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Apr 16, 2007
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Maybe Outside Zone?

O.K. so if I set up in a small place (rent from someone?) outside zone, that may also work BUT we must ship all kinds of our manufacturing equiptment to D.R. and thousand of pounds of our resins, what will be the the import takes?? That is more a issue than corporate taxes. MIKE
 
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HOWMAR

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Jan 28, 2004
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Mike Weinberg said:
O.K. so if I set up in a small place (rent from someone?) outside zone, that may also work BUT we must ship all kinds of our manufacturing equiptment to D.R. and thousand of pounds of our resins, what will be the the import takes?? That is more a issue than corporate taxes. MIKE
Click to expand...

Under CAFTA this MAY not be an issue, you'll have to check if CAFTA applies.
The big advantage of being in a zona franca other than import duties (which may not continue to be an advantage under CAFTA as everyone will be exempt) is the exemption from the ITBIS.
 
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Chris

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Oct 21, 2002
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To add to what Howmar says, Cafta has just been implemented and some people are having good experiences and others bad in terms of aduana.

So, with Cafta, you don't pay import taxes (for materials that have a US certificate of origin). It is however not so easy, as one will have to go through the Cafta agreements and figure out if your specific raw materials are included currently as tax free imports.
This applies to all imports, not just imports into a free zone.

So, inside the free zone, you do not pay itbis, similar to VAT or Sales Tax.

So, outside the free zone, you pay itbis and you pay whatever the rules are under Cafta for your specific products. Your raw materials may be tax free.

So .. if your raw materials are tax free, and you are outside the free zone, you only have to pay itbis. So, if your raw materials are cheap, itbis will be small and you may be better outside a free zone than inside a free zone.

(I?m confusing myself here ... help! I need a spreadsheet and some real numbers to work this out)
 
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HOWMAR

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Jan 28, 2004
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Chris said:
So .. if your raw materials are tax free, and you are outside the free zone, you only have to pay itbis. So, if your raw materials are cheap, itbis will be small and you may be better outside a free zone than inside a free zone.
Click to expand...
May not be so small a difference as a non-free zone company will have to pay ITBIS on all the money the US parent company sends to cover expenses in the DR such as rent, payroll, etc. This money sent to a free zone company is exempt.
 
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Mike Weinberg

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Apr 16, 2007
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Thanks

O.K. I must do now my homework maybe someone will see my post and offer me a WAREHOUSE share or rental?? MIKE
 
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Mike Weinberg

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Apr 16, 2007
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Yes BUt our raw materials Plastic Raw RESINs cost many tens of thousands of dollars to buy in U.S.A., seems like too many headaches, if we are NOT in Free Zone!!!! Howe much less could rent be for a small building be anyway outside the Zone??. As long as SOMEONE has a rental not more than 2000 SF in Zone we should be O.K.?
 
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CFA123

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May 29, 2004
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Mike,
If you want a contact in Santiago I can get you one who might have some space to rent inside a free zone. Send a private msg if you want a contact. Many apparel factories have closed, so there have to be buildings available.

Be prepared to be more specific with any potential landlord regarding electrical & water requirements, dock height loading needs, noise, odors, waste disposal, etc.
 
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