Ley no. 108-10 is the law containing the film industry provisions.
Transferable tax credit, VAT exemption incentive
Law no. 108-10 provides a transferable tax credit equal to 25% of all expenses incurred in the Dominican Republic and related to the pre-production, production, and post-production of films, provided certain conditions are satisfied:
- The transferable tax credit is only available for Dominican taxpayers. Thus, to qualify for this tax credit, foreign producers must either engage a domestic production agency that is registered with the film commission in the Dominican Republic, or incorporate a legal entity in the Dominican Republic and then obtain a commercial certificate and a national tax identification number for that entity.
- A “shooting permit” is required (currently provided by the film commission).
- Foreign film projects must comply with minimum Dominican personnel requirements—i.e., employment requirements ranging from 10%, 20% or 25%.
A second tax incentive under Law no. 108-10 is that the transfer of goods and services directly related to the production of films in the Dominican Republic is exempt from value added tax (VAT).
Summary of other tax incentives, tax exemptions
In general, additional tax incentives for film production activities in the Dominican Republic provide for the following:
- An income tax deduction (100%) of the amount invested with respect to the film for the tax period in which the investment is made (applicable only for “local investments”)
- An income tax exemption (100%) for producers and distributors of Dominican films
- An income tax exemption (50%) related to the construction of cinema houses located either in Santo Domingo or Santiago, and a 100% exemption for the construction of cinema houses in other provinces and municipalities
- Exemption from building permit taxes and property sales recordation taxes for certain cinema construction projects (as decribed above)
- VAT exemption (100%) with respect to the production of foreign movies in the Dominican Republic
- Income tax exemption for technical services related to the film industry in the Dominican Republic
To claim these tax exemptions provided under law 108-10, in addition to claiming the transferable tax credit and VAT exemption incentive, film producers must provide the Dominican tax authorities with a detailed budget of the film project in advance of filming or production.
Film commission’s report
The Dominican Republic film commission in February 2014 issued a report—known in English as the “Dominican Republic film incentives, 25% tax credit”—that describes incentives available for those making films and movies in the Dominican Republic.
The film commission’s report not only describes the Dominican Republic as an attractive locale for foreign producers of films (for example, it includes descriptions of waterfalls, rainforests, and beaches) but also notes the presence of high quality production services that, combined with tax incentives, may afford opportunities to those in film productions.
The report also provides a summary of the Dominican Republic’s film industry law.
For more information, contact a KPMG tax professional in the Dominican Republic:
José Manuel Romero
+ 809-566-9161 Ext.1303