DOMINICAN REPUBLIC TAX SYSTEM

TAX REGIME

DOMINICAN REPUBLIC TAX SYSTEM

Foreign investments in Dominican Republic are fundamental pillars for the economy, and at the same time provide jobs; therefore, the State provides a number of benefits that ensure the success of investments in the territory.

Foreign investments in Dominican Republic are fundamental pillars for the economy, and at the same time provide jobs; therefore, the State provides a number of benefits that ensure the success of investments in the territory. Incentives and tax exemptions apply to production sectors with high potential, including: Export promotion, Free Zones, Textile Industry, Tourism Development, Renewable Energy, Motion pictures, Competitiveness and industrial innovation, and more. The Tax Code is the legal instrument that establishes taxes, tax regulations and penalties. The Directorate General of Internal Revenue (DGII) is the agency responsible for the collection and administration of taxes nationwide.

 

Tax obligations of legal entities

The allocation of the National Registry of Taxpayers (RNC) to any legal person leads to the generation of tax obligations. These, are linked to the economic activities that each taxpayer makes. Therefore, from such registration the taxpayer has the duty to file and pay taxes when it applies, according to their economic activity.

ECONOMIC ACTIVITIES THAT GENERATE TAX OBLIGATIONS

TAXES IN F ORCE IN THE COUNTRY

Income Tax: It taxes all income, salary, revenue or profit earned by individuals, societies and undivided successions, in a given fiscal period. Employers will pay and settled monthly, the tax on fringe benefits at the rate of twenty-seven percent (27%) applicable on the benefits of that nature granted each month, in the way prescribed by the Regulations.

Fossil Fuels Tax: Places 13% on the importation and local production of fuels. The Dominican law (law 112- 00, 557-45 and 495-06) also provides specific taxes for each type of fuel.

Inheritance and donation tax: On any transfer of movable or immovable property upon death or donation. In the case of inheritances, the pay rate is 3% on the succession mass (inheritance) made after the corresponding deductions.

Tax on Motor Vehicles: Imposes a tax of up to RD$ 2,200.00 in the emissions of license plates and 2% in the transfer of registration.

Real Estate Property Tax (IPI): Annual tax charged on the total amount of taxable property assets that individuals and trusts have registered. Individuals: a rate of 1% on the surplus value of RD$ 6,858,885.00 of the asset is applied. In trusts, it is 1% of the value of the property.

Tax on Real Estate Transactions: Places 3% real estate sales and its improvements and 2% on mortgage registration.

Tax on the Transfer of Industrialized Goods and Services (ITBIS): Taxes at a rate of 18% on the consumption of goods and services.

Tax on Capital of Companies: Imposes a 1% of the capital of commercial companies at the time of formation or capital increase.

Excise Tax: This tax will be paid with varying rates depending on the good or service to which it is applied, among which we quote:

• Alcohol products: specific amounts depending on the number of liters of absolute alcohol.

• Tobacco products: specific amounts depending on cigarette packs.

• Telecommunications services: 10%

• Checks and electronic transfers: 1.5 per thousand (0.0015)

• Insurance services in general: 16%

• Other goods established by the Law: specific amounts depending on good.

Tax on Capital Gains: It is generated when the sale of capital assets occurs and its rate is 29% on the value of the gain.

Tax on business assets: Imposes assets of companies, including banking institutions with 1% annually.