New Application Regulations of Law No. 158-01

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This past October 9th of the year 2014, the Presidential Decree No. 372-14 was pronounced regarding the content of the new application regulations of law No. 158-01 law and its modifications. This new set of rules has the primordial objective to modify the requirements and administrative processes in a way that ambiguities and wrongful interpretations are not an option.

The regulations precise the Planning Lineups of the Tourist Encouragement Board, CONFOTUR by its initials in Spanish, as well as establish that the same will have the faculty to determine, by a properly issued Resolution, the classification of the tourist projects or activities that will be benefited by the incentives contemplated by the said law.

The new regulations establish that the provisional classification will lead to the exemption of not only constitution taxes and of real-estate transfer rights (as it was since the last modification made to the law), but as well will exempt municipal taxes that must be prorate, including the ones of ground use, providing, in theory, a way to solve one of the most common problems in touristic projects, the unawareness of the regulation by the local authorities.

Relative to fiscal exemptions, for example, the new touristic projects will obtain exempts for a period of time of fifteen (15) years but the Decree clarify that the ones that are already definitively qualified until the month of December of 2013, which exemptions will be in use, will also benefit by this period of exemption, to say, for a total period of fifteen (15) years.

Regarding the exemptions for existing hotels, in the case that they have more than fifteen (15) years of construction, they will obtain all the exemptions of the law, only if they demonstrate that their reconstruction or remodeling is superior to 50% of the original investment. With this said, the regulations determine that said requirement is met by considering the parametric “meter squared of construction” or by “the number of rooms.”

An important aspect is that it will be necessary to have the Construction License emitted by the Ministry of Public Works and Communications, before submitting approval to the lists of goods to be imported for the first equipment of the qualified project, the list shall be presented in a period of time of three (3) years after the project is initiated.

Another important point is the obligation of notifying the beginning of the project and of the construction of the qualified project, as a previous requirement to requiring anything else to the said organization (CONFOTUR) and the Technical Direction of the CONFOTUR is created to be in charge of creating the approval recommendations of every project.

Also, it was included a regime with more restrictive control for the compliance of the developers, constructers and operators of the approved tourist projects that have been benefited by the exemptions. This regime will include frequent inspections, penal processes if needed, suspension or partial/total loss of the given exemptions and fines.

In conclusion, the Decree clarifies the important aspects contemplated in the 158-01 law and its modifications and it constitutes an important improvement to the process of tourist investments in the country.

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