Taxation Service of the Dominican Republic (DGII)
First of all, let's talk about the tax service of the Dominican Republic. Although the collection of taxes in the Dominican Republic dates back to colonial times, the tax service in its current form exists just over 80 years. For the first time the tax service arose in 1935, under the guidance of the Ministry of Finance. Until 1949 in the Dominican Republic there was no income tax, and the tax service was engaged in patent fees, the distribution of excise taxes on cigarettes and alcohol. A year later, Law No. 5911 on tax benefits was introduced.
Who has tax benefits in the Dominican Republic?
Benefits apply to the following categories of citizens: foreign investors, pensioners, low-income families, farmers, production in the franc zones, as well as investors who develop tourism in non-popular regions of the country.
What taxes should I pay in the Dominican Republic?
Taxes in the Dominican Republic are regulated by the tax code (Law No. 11-92). Below, we will give a brief summary about taxes and some important aspects in the Dominican Republic.
It is necessary to pay tax on real estate. When buying a property to reissue property is 3 - 3.5% tax on the purchase of real estate, if you are making a property for a local company, 3.5% is not provided for by law.
Annual tax of 1% based on the value of property valued by public authorities. (Articles 1-3 of Law No. 18-88). A tax of 1% is calculated if it exceeds the value of the property over 6 million pesos. Individuals must pay this tax every year until the end of April.
The tax system in the Dominican Republic has a territorial principle, i. all sources of income are taxed, regardless of who receives income - a Dominican citizen, a foreigner, or a legal entity. However, the income received abroad is not taxed, except for the financial benefits of individuals residing in the Dominican Republic. Foreign citizens who become Dominican residents fall under the tax on foreign income only after three years, after obtaining residence permit.
Residents of the country are all individuals who are in the country more than 182 days a year.
Any natural or legal person with a duty to pay taxes in the Dominican Republic must be registered in the national taxpayer register (Act No. 53 of 1970).
Below are the most important taxes, established by the tax laws of the Dominican Republic.
For individuals:
Persons born or permanently residing in the territory of the Dominican Republic pay income tax as follows:
- Revenue to RD $ 290,243.00 per year - no tax
- income from RD $ 290,243.01 to $ RD 435,364.00 - 15%
- income from RD $ 435,364.01 to $ RD 604,672.00 RD-RD - $ RD 21,769 plus 20% of income in excess of RD $ 435,364.0
- Revenues from RD $ 604,672.01 - RD $ 55,630 plus 25% of income RD $ 604,672.01
This scale will be adjusted annually for cumulative inflation for the previous year, according to data published by the Central Bank of the Dominican Republic.
For companies:
Legal entities pay twenty-five percent (25%) of net taxable income for the financial year (Article 297). Unlike some countries, taxation is the same for all legal entities, without distinction between corporations, limited liability companies or private entrepreneurs.
Value Added Tax (ITBIS)
The rate of value added tax is 16%. In case of importing goods from abroad, it is calculated on the basis of full cost, including shipping, insurance, etc. There is a whole range of goods that are exempt from VAT:
- goods for export
- basic food products
- medicines
- fuel
- fertilizers
- Books and magazines
- Financial services
- medical services
- pension services
- ground transportation of people and goods
- electricity, water and garbage disposal
- rent
- Housing and communal services
- personal medical services
VAT must be added to all goods and services that are not included in this list.
The official website of the tax service is www.dgii.gov.do. Here you can find information about taxes, addresses and phone numbers of the nearest tax office.