Can MSME business owners turn COVID-19 into a life-changing opportunity?
The support function and process of development agencies
Micro, Small and Medium Enterprises (MSMEs) represent the largest number of businesses in the world. They are also the most vulnerable to business disruption caused by COVID-19. The United Nations for Industrial Development Organization (UNIDO) classifies the COVID-19 pandemic as a disaster and issued guidance for MSME business recovery. The United Nations Office for Disaster Risk Reduction (UNDRR) defines a disaster as “a serious disruption of the functioning of a community or society involving widespread human, material, economic or environmental losses and impacts, which exceeds the ability of the affected community or society to cope with using its own resources”. The ability of MSMEs to survive depends on a variety of factors, include entrepreneurship and vision of the owners, financial capacity, nature of the product, the magnitude of the impact, aid from government and development agencies, among others. Irrespective of the different factors, it is believed that with the right support, MSMEs cannot only survive but turn COVID-19 into an opportunity for a brighter future. In this white paper, we will explore the different stages of business recovery for MSMEs based on disaster risk management cycle theory, adopted by key development agencies, and case study examples from Egypt.
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3 Reasons why you should invest in the Dominican Republic
Luis Quezada, HLB Santo Domingo
At only a two-hour flight south of Miami, we often think of the Dominican Republic as a Caribbean paradise for luxurious beach vacations. However, the country has so much more to offer. Especially for foreign investors looking to find new business opportunities in the Caribbean region. Here are 3 reasons why you should invest in the Dominican Republic:
1. Political and economic social stability
The Dominican Republic has seen substantial GDP growth and significant reduction of poverty over the past two decades. The country’s solid legal framework and various incentives for business, as well as other forms of support from Government entities, provide a political and economically stable business environment. The Dominican Republic has trade agreements with almost 50 countries. Since the 1990s, the Government of the Dominican Republic has been carrying out important reforms in trade policy with the task of increasing the competitiveness of the economy and achieving greater participation in international markets. The main functions of the agreements are trade liberalisation, and the elimination of a wide variety of tariff and para‐tariff restrictions that contribute to expanding and strengthening the country’s export capacity. While the domestic language is Spanish, English and French are commonly spoken business languages. The country’s geographical location and strong infrastructure to North and Latin America and the rest of the Caribbean, make for a strategic location to establish foreign branches.
2. Real estate investment opportunities
Across many industries, various advantages are put in place to level the playing field for foreign businesses, such as fair treatment for local and foreign investors, repatriation of 100 percent of profits, free conversion of funds, free access to international currency in local commercial banks and the Central Bank and a fast and easy registration process. The real estate industry is not an exception and foreign investors are treated the same as local investors. They can buy real estate throughout the Dominican territory, including in touristic and maritime locations. The only exception is for the border region. To purchase property in the Dominican Republic, do not residency nor need a local partner. Property purchases can be carried out through a natural person or a local or offshore company. Once the purchase is complete, the alien citizen has the full and absolute ownership of the property, with all the same use and disposition rights as to which Dominican citizens are entitled.
Furthermore, according with Law 171-07 on incentives to retired people and foreign source renters, the real estate investors can obtain a resident permission in 45 days.
The real estate industry has been promoted significantly by several government measures to stimulate tourism and give significant tax incentives to the investors on Tourist Development Promotion. The goal is to develop the tourism industry in a reasonable and sustained manner, by offering investors several tax incentives. It is worth to highlight the tax exemption for 10 years of 100% on the taxes for income, capital gain, company incorporation and capital increase, real estate transfer and real estate property. Such law exonerates 100% of custom taxes or goods importation taxes, movables estates, equipment and those material needed for building and setting up the real estate facilities purchased.
3. Attractive tax incentives
Over the past 2 decades, the Dominican Republic has opened its borders to international business as part of its strategy for economic growth. For example, tax incentives exist where the Dominican State recognises that a foreign investment and technology transfer contributes to domestic economic growth and social development. This has been reflected in the current legal framework as well as in the international agreements that have recently been signed. Some of these tax incentives include: Law No. 16-95: On Foreign Investment, where the Dominican State recognises that foreign investment and technology transfer contribute to the economic growth and social development of the country; Law No. 84-99: On Reactivation and Promotion of Exports whose interest of the State is to establish new mechanisms and modernise existing ones in order to promote a reactivation and sustained expansion of exports of goods and services; Law No. 8-90: Promotion of the Free Trade Zones of Exportation. This law exonerates all the taxes of exportation, import, re-export, of all the goods and services necessary to perform different types of activities. Law No. 56-07: Declares the sectors belonging to the textile, clothing and accessory chain as a national priority; skins, manufacture of footwear and leather and creates a national regulatory regime for these industries which includes the exempt from payment of the Tax on the Transfer of Industrialized Goods and Services (ITBIS) and other taxes; Law No. 480-08: On International Financial Zones. The purpose of this Law is to create the legal framework for the establishment of International Financial Zones in certain geographical areas. In 2010, the DR Government promulgated the Law for the promotion of cinematographic activity (Law 108-10), which provides various tax incentives for the development of this economic activity.
In short, the Dominican Republic offers numerous opportunities for foreign investors and international businesses looking for new opportunities. We believe the domestic business environment in dynamic and ever evolving for the better. For a more in-depth discussion about investment opportunities and doing business in the Dominican Republic, contact one of our local offices. Our professionals are trained to offer a wide range of integrated Audit, Tax, Advisory and Business services to both local and international clients, focused on the variety of industries operating in the Dominican Republic and Haiti.