The free trade zone regime is one of the most robust tools offered by the Dominican Republic to attract industrial and service investments. For a company considering setting up operations or expanding in the country, understanding how a free trade zone operates in the Dominican Republic is the first step toward assessing its profitability. In this article, we explain what the regime is, how it is structured under Law 8-90, what tax benefits it offers, and why being located within a park with an active free trade zone makes all the difference. At PID, we have been supporting industrial operators in this decision for more than 40 years.
What Is a Free Trade Zone and How Does It Work?
A free trade zone is a defined geographical area within a country’s territory that receives special treatment for customs and tax purposes. Goods that enter, are processed, and leave the zone are considered to be outside the ordinary customs territory while they remain under the regime.
In practice, this means that a company can import raw materials, machinery, and supplies without paying the tariffs and taxes that would apply to a standard import, provided that those goods are intended for the authorized activity and, as a general rule, for export.
Customs control under the regime
Preferential treatment requires rigorous oversight. Each free trade zone operates under customs supervision: the entry and exit of goods are recorded, inventory of raw materials and finished products is maintained, and the destination of each batch is documented. This oversight is the counterpart to the tax benefit and ensures that exemptions apply only to qualifying operations.
Law 8-90 and the Role of the CNZFE
The legal framework governing the regime is Law 8-90 on the Promotion of Free Zones. This law defines the categories of free zones, the requirements for operating under the regime, the obligations of companies, and the scope of the incentives.
Administration and oversight are the responsibility of the National Council of Export Free Zones (CNZFE), the agency that approves applications for establishment, grants operating permits, and ensures compliance with the regime’s conditions. Any company seeking to operate as a free zone must obtain approval from this council.
The tax benefits of the program
The main appeal of Law 8-90 is a set of substantial tax exemptions. The following are the main ones, described in general terms; the specific percentages, time frames, and conditions should be confirmed with specialized legal and tax advisors, as they depend on the company’s category and current regulations.
- Exemption from income tax on income generated by activities that qualify under the regime.
- Exemption from customs duties and ITBIS on imports of raw materials, equipment, machinery, and other supplies intended for use in operations.
- Exemption from municipal taxes applicable to the company’s business activities.
- Tax exemption on construction, as well as on loan agreements and real estate transfer agreements related to the facility.
The combined effect of these exemptions significantly reduces the tax burden on an industrial operation, thereby improving its competitiveness compared to equivalent schemes in other markets in the region. For an accurate financial projection, we recommend that each company consult with its advisors to assess its specific situation.
What types of businesses is it suitable for?
The regime is not limited to a single sector. Its structure favors export-oriented operations and those with import flows of inputs. Among the types of businesses that benefit most from a free trade zone are:
- Manufacturing: the production of goods from imported raw materials, ranging from textiles and medical devices to electrical and consumer products.
- Assembly: integration of components into a finished product for export.
- Logistics and distribution: warehousing, consolidation, and transshipment centers that benefit from customs processing of inventory.
- Services: skilled service operations, including those targeting foreign markets.
If your company imports raw materials, processes them, or adds value, and exports a significant portion of its production, this regime warrants a detailed analysis. At the PID Free Zone Park, we have welcomed companies with various profiles since we launched our free trade zone in 2021.
The General Grading Process
Qualifying as a free trade zone company is a regulated process. Although each case has its own particularities, the general process involves the following steps:
- Project definition: activity, free trade zone category, investment and employment projections.
- Submission of the application to the CNZFE, along with the required corporate and technical documentation.
- Review and approval by the board.
- Registration of the facility within an authorized free trade zone.
- Commencement of operations under customs supervision and ongoing compliance with the regulations.
Locating within a park that already has the infrastructure and active free-trade zone permits in place significantly simplifies this process, because the company joins an already established operation rather than building the framework from scratch.
Obligations and Oversight
Tax benefits come with responsibilities. Companies under this regime must maintain accurate accounting and customs records, report periodically to the CNZFE, fulfill their declared employment and investment commitments, and use imported inputs exclusively for the authorized activity. Failure to comply with these conditions may result in penalties or the loss of benefits. Therefore, we recommend always seeking legal and tax advice to provide ongoing guidance throughout the operation.
Why Set Up Operations in an Industrial Park with an Active Free Trade Zone, Such as PID
There is a significant difference between applying for a regime on its own and operating within an established industrial park. At PID, located at Km 22 of the Duarte Highway in Santo Domingo, your company gains access to the Santo Domingo Free Trade Zone, which has a supporting industrial infrastructure that has been developed over more than four decades.
In-house infrastructure that supports operations
We operate with our own electrical substation and our own industrial water supply—two factors that are critical to the continuity of any production process. In addition, we provide 24/7 security throughout the entire facility. In 2025, our performance was recognized with the CFI.co award, a testament to the project’s strength.
Warehouses, Lots, and Custom Construction
We tailor the space to the scale of each operation. We offer industrial warehouses ranging from 500 to 5,000 m², industrial lots ranging from 1,000 to 100,000 m², and built-to-suit developments constructed according to your process specifications. This flexibility ensures that both medium-sized logistics operations and large-scale manufacturing plants can find a tailored solution within the PID Free Zone Park.
Frequently Asked Questions
What is the difference between a free trade zone and a regular import?
In a standard import transaction, goods enter the customs territory and are subject to the applicable duties and taxes. Under the free trade zone regime, goods intended for qualifying activities remain outside the ordinary customs territory and are exempt from these charges while they are used in the authorized operation, generally for export.
What law governs free trade zones in the Dominican Republic?
The regime is governed by Law 8-90 on the Promotion of Free Trade Zones, which is administered and supervised by the National Council of Export Free Trade Zones (CNZFE). The law defines the categories, requirements, and scope of the tax incentives.
Which companies are eligible for the program?
Manufacturing, assembly, logistics, and service companies, among others, may qualify if their operations fall within the categories specified by law and are approved by the CNZFE. The ideal profile combines the importation of inputs, value addition, and an export-oriented focus. We recommend confirming your eligibility with a specialist advisor.
Is it easier to set up a business in an industrial park with an active free trade zone?
Yes. Joining a park that already has the infrastructure and active free trade zone permits in place reduces the time and complexity involved, because the company is joining an established operation rather than developing the entire framework on its own. This is the case with the PID Free Zone Park.
Are you considering setting up your business under the free trade zone regime? At PID, we’re with you every step of the way, from selecting a space to getting up and running. Learn about the options available at the PID Free Zone Park or contact our team at (809) 559-9011.