Registering a subsidiary in the Dominican Republic when expanding your business into the Caribbean will provide you with a commercial presence with a significant level of independence from your operations elsewhere. Because when you register a subsidiary in the Dominican Republic, the parent company will be shielded from potential risk, as it will not be legally or economically liable in all matters related to the subsidiary.
An alternative to registering a subsidiary, beyond full company formation in the Dominican Republic, is to form a branch.
The Dominican Republic has the eighth-largest economy in Latin America, and the largest among Caribbean nations, and has registered steady economic growth over recent years. As highlighted by figures published by the World Bank, the country had a gross domestic product (GDP) of $88.94 billion in 2019 (all figures in USD) and a fast-rising gross national income (GNI), which stood at $8,090 per capita that same year — almost double that of a decade previous.
The Dominican economy is the largest in the Caribbean. Register a subsidiary in the Dominican Republic
While the Dominican Republic is known globally as a tourist destination, with the tourism and hospitality sector contributing 6.3 percent of the country's GDP, other important industries include mining and agriculture. The country's most important export commodities include nickel, sugar, gold, silver, coffee, cocoa, and tobacco.
If you are considering doing business in this Caribbean nation, read on to understand more about registering a subsidiary in the Dominican Republic. Or you could just contact us now.
Why register a subsidiary in the Dominican Republic?
A subsidiary is a separate business entity from a parent company operating in another location. The legal separation of a subsidiary can bring significant benefits to the parent company terms of tax and liability.
Being fully responsible for complying with local regulations, a subsidiary can have its own corporate bank account, and enjoy a high level of autonomy to develop its own organizational culture and make important decisions. Subsidiaries can also have their own sub-companies.
Note that although a subsidiary in the Dominican Republic is considered an independent entity from the parent company, the parent company can modify its shareholding composition to have a majority stake. This means that the parent company can move to establish more control over the subsidiary, if necessary.
Benefits of registering a subsidiary in the Dominican Republic
Registering a subsidiary in the Dominican Republic can offer your business multiple benefits, such as:
Tax benefits: Through the establishment of subsidiaries, a parent company can significantly reduce its tax liability through government-authorized deductions.
Increased efficiency: There are cases in which the parent company manages to increase the efficiency of its operations through one or more subsidiaries, as it is easier to manage several small companies than a very large organization.
Own corporate identity: a subsidiary in the Dominican Republic is free to create its own corporate management methods and adopt its own identity, allowing it to adapt to the particularities of the Dominican market and maximize the chances of success.
Risk reduction: If a subsidiary in the Dominican Republic files for bankruptcy, it can accept the sanctions of the bankruptcy proceedings without involving the parent company. In addition, the subsidiary can also be sued by a third party without involving the parent company.
How to register a subsidiary in the Dominican Republic
When registering a subsidiary in the Dominican Republic, in order to be accepted onto the National Taxpayer Registry, the following requisites must be met:
1. The certificate of the validity of the main company in its country of origin with the proof that its articles of incorporation or its statutes do not prevent it from establishing subsidiaries abroad.
2. Copy of the articles of incorporation and the statute or equivalent instruments in the country of origin.
3. Photocopies of passports and other documentation related to the administrators and representatives of the parent company.
4. Appointment of a local legal representative.
5. Agreement to establish a subsidiary in the Dominican Republic, indicating:
- The capital assigned to carry out its activities in the country
- Place of domicile of the subsidiary in the Dominican Republic
Register a subsidiary in the Dominican Republic takes five steps
Originally published 15 January, 2021 | Updated on: 04 December, 2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.