The spokesperson for the Association of Dominican Free Zones Industrial Parks (Adozona), Luis Jose Bonilla told Diario Libre reporters last week that free zone tax incentives granted under Free Zone Law 8-90, are essential for the export companies to continue operating here. The 2022 budget for the Dominican government shows RD$28 billion in tax exemptions to these companies, which is about 13.5% of the total exemptions granted by the government.
A few weeks ago, President Luis Abinader talked about the coming tax reform and noted that the free zones were some of the most benefitted recipients of the tax breaks.
Bonilla notes that the core business of the free zones has changed somewhat over the years. Twenty years ago, the free zones were well known for textiles and electronics. However, now they are producing medical devices and tobacco products like never before. Electronics have certainly not disappeared and call centers and jewelry manufacturing are on the upswing.
Most of these companies are foreign-owned and operate here attracted by the tax incentives. With well over 150,000 direct employees, the free zones sector is a solid participant in the Gross Domestic Product.
Some people might recall Operation Bootstrap, inaugurated 70 years ago by Luis Muñoz Marin, the governor of Puerto Rico. It provided 20-year tax exemptions for many companies and the Puerto Rican economy took off. But at the 20-year term was over, these companies pulled out, taking their business to other countries, and the economy of Puerto Rico tanked.
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Diario Libre
30 May 2021