Law 158-01, known as the Tourism Development Promotion Law, or simply CONFOTUR, was passed by the Congress of the Dominican Republic on October 9, 2001. Its main goal is to attract capital to tourism projects, whether in underdeveloped areas or new locations with high potential, through a series of tax incentives.
The Tourism Promotion Council, also called CONFOTUR, operates under the Ministry of Tourism and is responsible for enforcing this regulation. The entity reviews, classifies and gives the green light to plans that meet the requirements to access the benefits.
Types of Projects
The law opens the door to a varied list of initiatives within the tourism sector:
- Hotel facilities, resorts and tourist complexes.
- Venues for fairs, conventions, international shows and cruises.
- Theme, ecological, sports or recreational parks.
- Tourism infrastructure, including restaurants, golf courses and sports facilities.
- Auxiliary businesses, such as tourist transport, sanitation, waste collection and basic services.
Medical and health tourism is also admitted, on the condition of having a CONFOTUR resolution and the respective prior environmental licenses.
Key Tax and Financial Benefits
The tax incentives extend for a period of up to 15 years, following the extension decreed in 2013 (originally they were 10 years).
These incentives include the total exemption from Income Tax for individuals and companies that finance the project, zero withholding on national and international funds used in the development, and the deduction of the investment in project assets against taxable income.
In addition, other benefits include the 100% exemption from tariffs and import taxes on machinery, equipment and materials included in the work, and the exemption from the real estate transfer tax and the Real Estate Property Tax for 15 years.
And, for property buyers, anyone who acquires a unit in a CONFOTUR development also doesn’t pay the transfer tax or the IPI during the established period. They must pay other regular applicable taxes afterward. This greatly facilitates the closing process and obtaining mortgage loans, since many of these projects are managed through a real estate trust for greater security.
Priority Geographic Areas
The regulation distinguishes between "poles of scarce development" and "new poles of great potential," and although the measure was initially limited to non-traditional areas, since 2013 it can cover the entire national territory of the Dominican Republic.
The areas with the most CONFOTUR projects are the east of the country, the north and other emerging zones such as Miches, Pedernales, areas of the Cibao and the Colonial Zone of Santo Domingo.
From October 2020 to August 2024, CONFOTUR has approved 216 initiatives worth approximately US$9.07 billion, of which 91% are new projects and most are located in the east.
Profile of Those Who Benefit
- Developers: tourism or real estate developers who enjoy exemptions on import taxes, income tax, IPI, transfers and financing.
- Foreign or local investors: natural or legal persons domiciled in the Dominican Republic who channel resources to initiatives registered and authorized by CONFOTUR.
- Property buyers: those who acquire units in registered projects; however, the incentives are tied to the development, not the owner, and the property remains exempt for as long as the benefits last.
Application Process
The first step is registering the project with the Central Unit for Tourism Procedures (UCTT). This is followed by the technical evaluation carried out by the CONFOTUR Technical Directorate and the provisional or definitive classification within a maximum of 60 days.
After that, the implementation of the project and oversight during the term of the incentive will begin.
Keep in mind that any transfer or sale of units requires prior authorization from the Council. For environmental supervision, a license is mandatory before granting the benefits.
Risks, Limits and Current Context
In the short term (2024-2025), proposals have circulated seeking to repeal or reduce CONFOTUR, eliminating fundamental articles. Concerns have been raised about its effect on tax collection and the possible over-incentivization of already developed poles.
Despite those concerns, Minister David Collado has reaffirmed that the legislation will remain in force in order to strengthen hotel capacity, which is needed to cover an estimated deficit of 30,000 rooms.
Conclusion
The CONFOTUR Law remains a key pillar of tourism and real estate growth in the Dominican Republic and still offers attractive tax benefits for those planning to develop or acquire properties in strategic tourist poles.
Despite the proposals circulating to limit or suppress these incentives, the State, through Minister Collado, has reiterated its support for the regime and the controlled expansion of the sector.
Parties interested in the tourism incentive law should stay up to date with the official registration of the project, comply with the environmental and legal requirements, identify the deadlines of the benefits and keep informed about any reforms.
With conscious planning, the law can be a strategic tax tool for the development of or investment in hotel and real estate projects with high return potential in the Dominican Republic.
This law offers the most powerful tax advantage for investing in the Dominican Republic. However, not all projects qualify and navigating the process requires expert knowledge.
Our team specializes in identifying properties that carry active Confotur benefits, ensuring you maximize the return on your investment and save thousands of dollars in taxes. Let us guide you toward a smart purchase. Get advice on properties with Confotur