Since 2008, the Dominican Republic has an adequate legal framework which regulates the life of commercial companies and sole proprietorships with limited liability; however, in 2012, the Chamber of Commerce and Production of Santo Domingo, meeting its commitments before the Inter-American Development Bank – IDB, led a field study in order to verify the status of business informality in Santo Domingo, which provided alarming information and results, reflecting a reality that required the State’s immediate intervention.
For that reason, the Deputy Minister for Development of small and medium enterprises (SMEs), Mr. Ignacio Méndez said in 2013: “(…) there is a clear link between informal employment and poverty, the major challenge is to improve production and management of informal enterprises and improve the performance of the activities of people and technicians who are in the informal sector, promoting the programs that we currently have which are addressed to them, ensuring that the benefits of being formalized are greater or more attractive than those that keep them on informality.”1
Informality is due to a number of reasons, among which is the distrust of merchants, high taxes of the Tax Administration, confusion and onerous formalization processing.
The Dominican government with the help and support of various institutions including the Chamber of Commerce and Production, the Ministry of Industry and Commerce, the National Office of Industrial Property and the General Directorate of Internal Revenue has established a policy incentive for the formalization of micro, small and medium enterprises (MSMEs) in the country with the intention of formalizing businesses operating outside the system.
That is why the ONE-STOP EXECUTION service through the website www.formalizate.gob.do was born, as a mechanism to expedite the creation of business partnerships within 7 business days, lowered from approximately 21 days which the regular process of incorporation required. This is achieved by reducing transfers, forms and payments requested by the various institutions. After 7 business days, the employer will receive the Certificate of Business Name, receipt of payment of 1% of tax constitution, the Commercial Register, the National Taxpayer Registration and will be enrolled in the Treasury of the Social Security through the One-Stop Execution.
Clearly, the government of the Dominican Republic is committed to the sustainable development of small and medium enterprises, of which the country has 791,2362, representing a significant percentage of the economic sector of the country, ensuring competitiveness and sustainability in both the local and foreign market. This decision only builds trust, promote greater investment, contribute to legal certainty and, ultimately, increase the overall trade turnover.