Law No. 11-92 dated May 31, 1992 , which establishes the Tax Code of the Dominican Republic , as amended , lays down general provisions applicable to all internal taxable contributions and the emerging legal relations of them. This law is divided into 5 sections: ( i ) General Principles , Procedures and tax penalties ; ( ii ) income tax ; ( iii ) Tax on the Transfer of Industrialized Goods and Services (ITBIS ) ; ( iv ) Selective Consumption Tax (ISC ) ; and ( v ) Tax Assets ( ISA ) .
The Dominican Tax Administration specifically named as Dirección General de Impuestos Internos (DGII) is the institution responsible for the collection and administration of the main taxes and fees in the Dominican Republic. Ahead we indicate those most relevant taxes, as well as their scope and respective payment.
Income Tax (ISR)
It is the tax levied on all income, profit or benefit gained in a fiscal period from Dominican sources, natural persons and legal entities, regardless of nationality, residence or domicile, as well as undivided sucessions cause residing in the country. In addition, any natural or legal person residing or domiciled (after the third year of residency) in the Dominican Republic must pay taxes on their foreign income from investments and financial gains.
Individuals that benefit from an exemption on their annual income up to RD $ 409,281,000.00 (effective January 1, 2016 ). An amount that exceeds this sum will experience a progressive rate, as follows:
The deadline for submission and payment of (the affidavit) the sworn ISR declaration of natural persons and undivided estates is March 31st of each year and shall correspond to the income of the previous year (January 1 to December 31).
Legal persons domiciled in the country pay 27 % of the net income annually (applicable from 2015 and 2016 rate). The taxable amount is determined after deducting the overall gross income those deductions allowed by law, such as interest payments, taxes , insurance premiums , extraordinary damages , depreciation, bad debts , among others.
The deadline for submission and payment of the affidavit of legal entities or companies date is 120 days after the closing date of the company. The closing dates set out in the Tax Code companies are: from March 31, June 30, September 30 and December 31.
Withholding Income Tax
Withholding agents are designated by the legislation and regulations (public institutions, commercial companies and other) as direct responsible that must withhold the corresponding tax, and return it to the tax authorities within the prescribed period.
The main income subject to withholding are: (i) monthly salary that exceeds the monthly tax exemption (excluding employee contributions to the Social Security Treasury); (ii) payments abroad in general; (iii) interest on loans to foreign credit institutions; (iv) Dividends paid in cash; (v) rents paid to individuals; (vi) fees for services and commissions paid to individuals; (vii) prizes or lottery winnings or promotional campaigns and (viii) payments made by the State for the acquisition of goods and services not performed as an employee.
The deadline for submission and payment of this tax is within 10 days after the end of the declared period.
Under Article 305 of the Dominican Tax Code, unless a different treatment is available for a particular category of income, any payment or credit on account of taxable income from Dominican sources to individuals, corporations...