Updated 5 months ago

As with every country in the world, there are a whole range of taxes in the Dominican Republic. This article will explain the different taxes and their rates.

Taxation in the Dominican Republic is governed by Law No. 11-92 of May 31, 1992, commonly known as the Tax Code. Taxes are collected by the Taxation Office known as the Dirección General de Impuestos Internos, or DGII.

Income Tax

All income which comes from work or business activities within the Dominican Republic is taxable, but not work from overseas. Everyone has to pay tax if they earn sufficiently within the country, no matter if the person is a Dominican, a resident foreigner, or a non-resident foreigner. You are said to be resident if you have been in the country for more than 182 consecutive days.

Income derived from work done outside of the Dominican Republic, by Dominicans or resident foreigners, is not taxable in the Dominican Republic. However, Dominicans and resident expats must pay taxes in the Dominican Republic on any income from overseas investments, once the expat has been a legal resident for three years. Note that any pensions or social security are not taxable.

However, you do not have to pay tax unless you earn RD$416,220 a year or a monthly salary of RD$34,685. In US dollars that is US$8,671 annually or US$722 a month. This means, given the wages in the Dominican Republic, that not many people pay income tax. Those who earn over that amount up to RD$624,329 (US$13,006) a year pay 15% on the amount over RD$416,220, and the next rate is up to 20% for those earning over RD$624,329 a year.

The levels are adjusted every year in January.

Corporation tax

Corporations and any other for-profit organizations pay a flat 27% income tax rate on net taxable income, and they must file a tax declaration before April 30.

Capital Gains tax

Capital gains are defined as the difference between the sale price of an asset and the acquisition or production price adjusted for inflation, and they are taxed as regular income.

Tax on the Transfer of Industrialized Goods and Services (ITBIS) or Sales tax

The ITBIS is a value-added or sales tax applicable to the transfer and importation of most goods and most services, and currently, the rate of ITBIS is 18%. However, there are many exemptions including exported goods, some basic foodstuffs, medication, fuel, fertilizers, books, educational materials, transport, home rentals, and utilities.

Property Tax

A 1% annual tax is payable on any property owned by individuals, based on the value of the property as appraised by the government authorities. However, the 1% is calculated only for values exceeding RD$6.5 million pesos which is US$135,000. For lots with no buildings on them, the 1% tax is calculated on the actual appraised value without the RD$6.5 million pesos exemption. You must pay this tax every year on or before March 11, or in two equal instalments: 50% on or before March 11, and the remaining 50%, on or before September 11.

The RD$6.5 million pesos threshold is adjusted annually for inflation and there are some exemptions to the tax as well as those properties below that value. These include farms and properties whose owners are 65 or above, and it is their sole property and they have owned it for more than 15 years.

Property Transfer Tax

A 3% tax is assessed on any transfer of ownership of real estate. The transfer tax is paid based on the market value of the property as determined by the appraisal done by the DGII, not on the price of purchase stated in the deed of sale. The deed of sale cannot be filed at the Title Registry Office without paying this tax and it must be paid within six months of the date of the deed of sale.

Tax on Transfers of Motor Vehicles

There is a 2% tax on any change of ownership of motor vehicles. The transfer tax must be paid within three months of the date of acquisition of the said vehicle.

Inheritance Tax

The estate of any person, Dominican or foreign, who lived in the Dominican Republic prior to death is subject to Dominican inheritance taxes irrespective of nationality.

Inheritance tax is 3% of the value of the estate, after deductions. Deductions can include medical and funeral expenses, as well as outstanding debts and mortgages.

Beneficiaries to the estate must file a declaration with the tax authorities within 90 days of the death, but if the case is complex an additional three and a half month extension can be granted.

 Important:

If you are working for a Dominican company, it is standard for them to retain 10% of your salary to pay tax.

If you are self-employed you have to also pay tax on a monthly basis based on estimated earnings.

Some countries have a double taxation agreement with the Dominican Republic, such as Canada, but the United States and the United Kingdom do not. For those who are from the United States, the Dominican banks now report their assets to the United States taxation authorities.

 Useful link:

Dirección General de Impuestos Internos – DGII 

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