ITBIS-Tax
ITBIS-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.
Tax on the Transfer of Industrialized Goods and Services (ITBIS) Dominican Republic
The ITBIS is a value-added tax applicable to the transfer and importation of most goods, and to most services (Art. 335). The rate of the ITBIS is 16% (Art. 341). For imports, the ITBIS is charged on the CIF value of the goods plus applicable duty (Art. 339).There are many exemptions to the ITBIS tax (Arts. 342 and 343), among them, the following:
* exported goods
* basic foodstuffs
* medicines
* fuels
* fertilizers
* books and magazines
* educational materials
* financial services
* transportation services
* home rentals
* utilities
* educational and cultural services
The 16% ITBIS must be added to every bill for goods and services that are not exempt. The individual or entity receiving the ITBIS must disburse it to the DGII within the first 20 days of the following month (Art. 353). Noncompliance is subject to a 10% surcharge for the first month and 4% for each month thereafter, in addition to 2.58% interest for each month or fraction of a month (Art. 252). From the total ITBIS received, the individual or entity is allowed to deduct any ITBIS paid to suppliers, customs, etc. (Art. 346).
(Article “ITBIS-Tax 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.