TAX IMPLICATIONS AND FISCAL OBLIGATIONS

March 2023

Which are the most relevant taxes applicable to companies in the Dominican Republic?

  • Income tax (impuesto sobre la renta, “ISR”)
  • Excise tax (impuesto selectivo al consumo, “ISC”)
  • Value added tax (impuesto a la transferencia de bienes industrializados y servicios, “ITBIS”)
  • Asset tax (impuesto sobre activos “ISA”)

Income Tax

It is the tax levied on all income, profit, or benefit obtained in a given fiscal period from a Dominican source by individuals and legal entities, regardless of their nationality, residence or domicile, as well as undivided successions of deceased with domicile in the country. In addition, every person, natural or legal, resident or domiciled (from the third year of residence) in the Dominican Republic, must pay taxes on their foreign source income from investments and financial gains.

How is the tax levied?
Rate: 27% (for corporations)

Excise Tax

It taxes the transfer of some nationally produced goods at the level of their manufacture, their importation and the provision of telecommunications services, insurance and payments made with checks by financial intermediation entities and those made through electronic transfers.

How is the tax levied?
Rate: Depends on the good or service it is applied on.

Value Added Tax
Taxes the importation and transfer of industrialized goods, as well as the provision and location of services.

How is the tax levied?
Rate: 18%, and a reduced rate of 16% for some products (i.e., yogurt, butter, sugars, among other basic consumer products)

Asset Tax

Taxes the holding of assets within a particular tax period.

How is the tax levied?
Rate: 1%

It does NOT apply to: (i) shares in other companies; (ii) land in rural areas, or real estate dedicated exclusively to agricultural operations; (iii) advanced taxes or advances; and, (iv) to legal entities, which are exempt from the payment of ISR.