Income Tax
Income Tax Regulations/law Dominican Republic
Introduction
Taxation in the Dominican Republic is governed by Law No. 11-92 of May 31, 1992, commonly known as the Tax Code (“Código Tributario”), its amendments and regulations (“Reglamentos”). This overview is a brief summary of the Tax Code’s most relevant provisions. All references in parentheses refer to articles in the Tax Code unless otherwise specified.
Taxes are collected by the Bureau of Internal Revenue (“Dirección General de Impuestos Internos”or DGII), an autonomous government entity which may also issue its own regulations (“Normas”).
Dominican income tax law is primarily territorial. All income derived from work or business activities in the Dominican Republic is taxable, no matter if the person is a Dominican, a resident foreigner or a nonresident foreigner (Articles 269 and 270).
Income derived from work done outside of the Dominican Republic, by Dominicans or resident foreigners, is not taxable in the Dominican Republic. The exception to the principle of territoriality is income from financial sources abroad (Articles 269 and 271). A Dominican or a resident foreigner receiving income from financial investments (stocks and bonds, certificates of deposits, etc.) must pay taxes in the Dominican Republic on their income from those investments (Art. 269). Pensions and Social Security benefits are exempt (Art. 2 of Reglamento #139-98). For the resident foreigner, this obligation only starts three years after obtaining residency (Art. 271).
For tax purposes, any person residing in the Dominican Republic for more than 182 days in a year is considered a resident (Art. 12).
The Tax Code includes a general anti-avoidance provision whereby the tax authorities may ignore the existence of legal entities or certain transactions when used to secure a tax advantage (Art. 2).
Law #53 of 1970 makes it mandatory for all taxpayers to register with the tax authorities and obtain a tax or RNC (“Registro Nacional de Contribuyentes”) number.
A summary of the most important taxes in the Dominican Republic is found below.
Income Tax regulations Dominican Republic
For Individuals
Individuals obtaining income from a Dominican source or from financial investments abroad shall pay taxes as per the following scale (Art. 296), in Dominican pesos (RD$):
| Income up to RD$290,243.00 | annually exempt |
| RD$290,243.01-RD$ 435,364.00 | 15% |
| RD$435,364.01-RD$604,672.00 | RD$21,769 plus 20% of income above RD$435,364.0 |
| Income above RD$604,672.01 | RD$55,630 plus 25% of income above RD$604,672.01 |
This scale is adjusted for inflation every January based on the rate of inflation calculated by the Central Bank of the Dominican Republic. There are very few deductions.
Employers must retain and pay to the DGII, within the first ten days of each month, any income tax due on the salaries paid to their employees the previous month (Art. 307). Individuals who receive incomes from non-wage sources must file a tax declaration every year, on or before March 31 (Art. 110 of Regulation #139-98).
For Corporations and Other Entities
Corporations and any other for-profit organizations pay a flat 25% income tax on net taxable income (Art. 297). Unlike in the United States and other countries, in the Dominican Republic the tax treatment for corporations, partnerships and limited liability companies is exactly the same.
Net taxable income is determined after deducting from gross income those deductions, credits and advance payments admitted by law (Articles 284 to 287).
All corporation and for-profit entities must file a tax declaration every year, on or before April 30, if their business year coincides with the calendar year. Otherwise, the filing must be done within 120 days after the end of the business year (Art. 112 of Regulation #139-98).
(Article “Income Tax Regulations Law in the Dominican Republic” by Fabio J. Guzman Ariza from Attorneys at Law at www.drlawyer.com).
Note: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.