Dominican car imports now duty free!

According to the DR-CAFTA agreement, as of January 2010 you can now import American made cars duty free. The DR-CAFTA agreement is an international treaty between the U.S. and various Central American countries which the Dominican Republic joined in 2004. The idea of the treaty was to create a more favorable trading environment between the countries with the aim of phasing out import taxes for certain goods between the nations involved.

Under the terms of the agreement, the Dominican Republic agreed to phase out car import duties for American made vehicles (or whose parts are at least 35% originally from the US) in 5% stages starting in 2005.

This year signals the completion of those phases, meaning no import duty is to be charged on imported American cars.The agreement also covers for auto parts, batteries and tires, as long as they are originally from the U.S.

Other goods that under the agreement that should be zero rated when imported from member nations include poultry, fish, shellfish, vegetables, fruits, processed foods (such as jellies and baby food), soaps and items of personal hygiene (such as toothbrushes, hair brushes, detergents and preparations).
Also included are packing materials, special purpose shoes and boots, such as security boots and shoes, chemical products,medicines, ambulances, funeral cars and trucks, paper, disposable diapers, chairs, beds and public (outdoor) lighting fixtures, sporting goods, electronic apparatus such as cameras and projectors, among other products.

As a simple exercise we did a simple calculation based in information contained on the Dominican Customs (DGA) website. Using a basic 2006 Ford Explorer as an example, we used the DGA’s own calculator to calculate the taxes involved in importing the vehicle.

According to U.S based autotrader.com website, you can pick up a 2006 Ford Explorer in the States for around US$9000, although prices as low as US$6500 were noted on the website.

Unfortunately, the Dominican customs are unlikely to accept your purchase invoice as proof of value and will use their own figures, the lowest of which at the moment appears to be US$13,481.50 for this model and year. They use this figure to calculate the taxes which amount in total to a whopping RD$291,243.60 (US$8078).

The total tax amount includes VAT (ITBIS) it 16% and other taxes including registering the plate so the car can be legally driven on Dominican roads.

Ironically, the reduction in import duty under DR-CAFTA doesn’t have appeared to have lowered the real cost of importing the vehicle since before the DR joined the agreement in 2004.

In conclusion, if you were to purchase a 2006 Ford Explorer in the U.S. and ship it here, your basic expenses would be:

Car purchase – US$9000
Shipping to DR & misc expenses – US$1000
DR taxes - $8078
Total: US$18,078

Your end price would be roughly double what the car cost in the U.S. Obviously, the end price will vary depending the the year and model of the vehicle and your original purchase price in the U.S.

All figures taken from autotrader.com and the Dominican Customs website at www.dga.gov.do on Jan 8, 2010.

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