Taxes in the Dominican Republic

Main taxes existing in the country:

There is a tax called ITBIS - Impuesto sobre la Transferencia de Bienes Industrializados y Servicios, with a current rate of 16%, applicable both to national or imported products and services. Only a set of basic products are exempt.

The Revenue Tax (Impuesto sobre la Renta - ISR) is applicable to every person, following this table (year 2006):

Revenues up to RD$276,422.00: Exempt

Revenues from RD$276,422.01 up to RD$414,632.00: 15%

Revenues from RD$414,632.01 up to RD$575,878.00: RD$20,732.00 plus 20% of the surplus beyond RD$414,632.01

Revenues from RD$575,878.01 up to 900,000.00: RD$52,981.00 plus 25% of the surplus beyond RD$575,878.01

Revenues from RD$900,000.01 onwards: RD$134,012.00 plus 30% of the surplus beyond RD$900,000.01

The 30% tax will be gradually reduced every year to become 25% from 2009(29% on tax year 2007; 27% on tax year 2008).

Company Tax (Impuesto sobre Sociedades) is set at a rate of 30%.

Tax year for physical persons runs from January 1st to December 31st. Tax year for companies can be chosen to finish on March 31st, June 30th, or September 31st.

Deadline for presentation and payment of the Sworn Declaration of the Income Tax (ISR) is March 31st every year, corresponding to income generated the previous tax year.

Deadline for presentation and payment of the Sworn Declaration of the Company Tax (Form IR-2) is 120 days after the closing of the company's tax year.

Other taxes:

Selective tax on consumption - Impuesto Selectivo al Consumo (ISC): This is a tax on alcohol, tobacco, telecommunications services and payments through checks and electronic money transfers.

Succession and Gift Tax - Impuesto sobre Sucesiones y Donaciones: For successions, the tax rate is 3% of the total amount of the estate, after applicable deductions. In the case of gifts (donations) the tax is 25% of the amount.
Tax on luxury homes and unused urban plots - Impuesto sobre las Viviendas Suntuarias y los Solares Urbanos no Edificados (IVSS)Applicable to houses and flats whose market value is higher than 5 million pesos, and to urban plots which have not been built, or where a construction occupies less then 30% of the available space. Te rate is 1% of the official value, as calculated by the cadastre (Dirección General de Catastro).


Tax advantages of becoming a legal resident

Only legal residents can work or set up companies in Dominican Republic.

Becoming a legal resident makes you exempt from paying the tourist card every time you enter the country, and the penalty for overstaying every time you leave the country after having stayed in for more than 15 days.

You can bring personal items (furniture, appliances) tax-free from your country of origin without paying import duties. There is also a partial exemption for vehicles.

In case you initiate a legal action and you are a non-resident, you must deposit a caution for legal expenses, that can be quite high. A legal resident is not subject to this requirement.

Due to the relatively low tax rates in the country, it might become interesting to apply for residency to avoid being taxed at your country of origin for all income generate outside it. (Important for American citizens).

In case of being a heir of a property in RD, a non-resident must pay 50% more taxes than residents and nationals.