Countries › Dominican Republic › Guide › 3. Investing › The border zone regime in the Dominican Republic: 100% income tax relief in seven provinces under Ley 12-21

The border zone regime in the Dominican Republic: 100% income tax relief in seven provinces under Ley 12-21

Last verified: 2026-10-30 · Status: Stable

Ley 12-21 gives companies operating in Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez and Bahoruco a 100% income tax exemption and other reliefs, for 30 years from the law. A coordination council classifies projects after Hacienda reviews a feasibility study. Most jobs must stay in the zone, and each company is reviewed within ten years of its licence.

USD figures use the Banco Central de la República Dominicana reference selling rate of RD$60.9007 per US dollar for 29 October 2026, the latest row in its published rate file on the verification date, rounded to the cent.

Key facts

Term from the entry into force of the law	30 yearsLey 12-21 art. 5, as of 2026-10-30 · in force
Income tax relief	100 %Ley 12-21 art. 4, as of 2026-10-30 · in force
Provinces covered	7 provincesLey 12-21 art. 1, as of 2026-10-30 · in force
Time from licence to begin operations	2 yearsLey 12-21 art. 5 paragraph I, as of 2026-10-30 · in force
Review within	10 years of the operating licenceLey 12-21 art. 5 paragraph II, as of 2026-10-30 · in force

The rule

1. The Special Border Development Zone covers seven provinces: Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez and Bahoruco. Goods and services made by covered companies can be sold in the country and abroad.Ley 12-21, arts. 1 to 3, 2021-02-22 official text · verified 2026-10-30 · changed: Ley 12-21 of 22 February 2021 replaced the expired incentive of Ley 28-01.

2. Companies of any type formed under Dominican law get relief on operations carried out only in those provinces: 100% of income tax; 100% of selective tax on telecoms and insurance for the project; 100% of tariffs and ITBIS on machinery and equipment for installation; 100% of ITBIS on inputs for ITBIS exempt goods and 50% for others; 100% of tariffs on inputs not made in the country; 100% of real estate transfer taxes on the project land; no withholding on foreign technology innovation services during construction and start up; and 100% of taxes on capital increases and share transfers.Ley 12-21, art. 4, 2021-02-22 official text · verified 2026-10-30

3. Exemptions do not extend to a classified company's facilities outside the zone.Ley 12-21, art. 4 paragraph, 2021-02-22 official text · verified 2026-10-30

4. The incentives last 30 years from the entry into force of the law, whenever the company joins. The term for each company runs from the date it joins until the 30 years end.Ley 12-21, art. 5 and paragraph III, 2021-02-22 official text · verified 2026-10-30

5. A company has two years from the installation licence to begin operations or the licence lapses. Classified companies are reviewed within ten years of the operating licence, and its validity depends on the social cost benefit review.Ley 12-21, art. 5 paragraphs I to III, 2021-02-22 official text · verified 2026-10-30

6. The applicant files a feasibility study with Hacienda, which issues a no objection or comments before the council classifies.Ley 12-21 with Ley 253-12 art. 45, art. 6, 2021-02-22 official text · verified 2026-10-30

7. The application form is filed with a contribution set by council resolution. The numbered classification form cannot pass to another project and is valid for three months.
Cost to do it: Contribution set by council resolution; the amount was not found.Ley 12-21, art. 13 and paragraphs I and II, 2021-02-22 official text · verified 2026-10-30

8. The company must keep most of its jobs in the zone provinces, at a minimum share set by regulation; keep records of exempt goods and organized accounts; file its tax return, payroll, output and export data; and report to the secretariat every six months.Ley 12-21, art. 15, 2021-02-22 official text · verified 2026-10-30

9. Selling, diverting or misusing exempt machinery is a serious fault, with a fine of 100% of the unpaid taxes plus interest and surcharges, and the tax stays due.Ley 12-21, art. 17 and paragraph I, 2021-02-22 official text · verified 2026-10-30

10. Very serious faults, including deceit to get the incentives, not starting on time and breach of social security or tax rules, lead to revocation. A company revoked for misuse cannot enter any other incentive regime, and neither can companies with a similar shareholding.Ley 12-21, art. 18 and paragraph, 2021-02-22 official text · verified 2026-10-30

11. Council decisions can be challenged within 30 days by reconsideration, decided in 30 days, and before the Tribunal Superior Administrativo within 30 days of notice.Ley 12-21, arts. 19 and 20, 2021-02-22 official text · verified 2026-10-30

12. Companies classified under Ley 28-01 must apply under the new regime, and those with permits over two years old and no proof of operating at promulgation were cancelled.Ley 12-21, art. 5 paragraph IV; art. 21 and paragraph, 2021-02-22 official text · verified 2026-10-30

13. The Constitution calls for special treatment for investment in border provinces and declares border development of supreme national interest.Constitución de 2024, arts. 10 and 221, 2024-10-27 official text · verified 2026-10-30

Point	Ley 12-21	Ley 8-90 border zone
Where	Anywhere in the seven provinces	Within 3 to 25 km of the line
Market	Local and export	Export, with limited local sales
Term	30 years from the law	20 years from the first full year
Authority	Coordination Council	CNZFE

Border zone route versus a border free zone

Worked example

A dairy firm invests RD$60,900,700 (US$1,000,000.00) in Dajabón. Equipment comes in free of tariffs and ITBIS. Profit of RD$18,270,210 (US$300,000.00) earned only there pays no income tax, saving RD$4,932,956.70 (US$81,000.00) at the 27% general rate. If it opens a Santo Domingo depot, that site is outside the exemption, and related party dealings must follow transfer pricing rules under art. 5 paragraph V.

Step by step

Confirm that the site and all exempt operations are inside the seven provinces.
Prepare the feasibility study and file it for the Hacienda review.
File the form and contribution, then complete the classification form within three months.
After the licence, start operating within two years.
Keep job, exemption and output records, and report every six months.

Common traps

The 30 year clock began with the law, so a company that joins late gets a shorter period.
The minimum job share is left to the regulation. This guide did not find a regulation under Ley 12-21, so confirm the figure and the procedure with the council.
The relief stops at the province line. Sales staff or sites elsewhere need separate treatment, and mixed books invite challenge.
A revocation also blocks related shareholder groups from other regimes.
Land rules in the border zone are a separate point; see investing/restricted-activities-and-ownership-limits.

Sources

← Tourism incentives in the Dominican Republic: CONFOTUR classification and 15 years of tax reliefRenewable energy incentives in the Dominican Republic: what Ley 57-07 still gives after the 2012 cuts →

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