Wondering if you have to pay tax in the Dominican Republic? Find an overview of the country's tax system in this article.
You may be willing to move to the Dominican Republic for various reasons: work, invest, retire, etc. In this case, it is best to inquire beforehand on tax regulations so as to avoid surprises. There are different types of taxes in the country, applying to different categories of taxpayers. Foreigners also have to pay tax according to their amount of income.
Good to know:
You will be considered as a Dominican resident if you have spent more than 182 consecutive days in the country. In this case, you are required to declare your income.
Income tax is deducted at source on a yearly basis in the Dominican Republic. Therefore, you are required to declare all your income received in the country during the current tax year if you are a resident.
According to the Dirección General de Impuestos Internos (DGII), foreigners who have not stayed in the country for 3 years but who have received income also have to pay income tax. Beyond these three years, any resident who is receiving income in the Dominican Republic as well as from his own country has to declare both sources of income.
Self-employed have to report to the DGII and pay the annual due amount in monthly installments as indicated in the article "Setting up a business in the Dominican Republic". Do not be surprised if you have to pay arrears.
Moreover, Dominican customers are very likely to deduct 10% of the agreed price for a particular work so as to avoid paying tax.
In general, tax rates in the Dominican Republic vary according to the inflation rate. In 2014, it ranged as follows:
- 0% for a maximum income of 399,923 pesos per year,
- 15% for income between 399,923.01 pesos and 599,844 pesos a year
- 20% for income between 599,884.01 and 833,171 pesos a year
- 25% for income as from 833,171.01 pesos a year.
You are advised to inquire whether your home country has signed a double-taxation agreement with the Dominican Republic. Note that Canada has signed an agreement in this regard with the country, unlike the United States and the United Kingdom.
In case you have purchased a property in the Dominican Republic, you are not required to pay capital gains tax, property tax or housing tax. However, you will have to pay an annual real estate tax in case the property value exceeds 5 million pesos. In fact, the amount will be calculated according to 1% of the declared property value.
Expat.com – Tax in Dominican Republic Forum
Dirección General de Impuestos Internos – DGII www.dgii.gov.do
Análisis del sistema impositivo de la Republica Dominicana idbdocs.iadb.org