Do I have to pay taxes in Dominica?
09/06/23
Do I have to pay taxes in Dominica?
Taxes in the Dominican Republic are regulated by the Tax Code (Law No. 11-92). Below we will give a short summary regarding taxes and some important aspects in the Dominican Republic.
The tax system in the Dominican Republic is based on a territorial principle, i.e. all sources of income are taxed, regardless of who receives the income - a Dominican citizen, a foreigner, or a legal entity. However, income earned abroad is not taxed, with the exception of the financial benefits of persons residing in the Dominican Republic. Foreign citizens who become Dominican residents are subject to foreign income tax only three years after obtaining a residence permit.
Residents of the country are all individuals who are in the country for more than 182 days a year.
Any natural or legal person with a vocation to pay taxes in the Dominican Republic must be registered in the national register of taxpayers (Law No. 53 of 1970).
Below are the most important taxes established by Dominican tax law.
For individuals:
Persons born or permanently residing in the territory of the Dominican Republic pay income tax as follows:
- Income up to RD $290,243.00 per annum is exempt from taxes
- income from RD $290,243.01 to $RD 435,364.00 - 15%
- income from RD $435,364.01 to $RD 604,672.00 RD-RD - $RD 21,769 plus 20% on income in excess of RD $435,364.0
- Income from RD $604,672.01 - RD $55,630 plus 25% of income RD $604,672.01
This scale will be adjusted annually for the previous year's cumulative inflation, according to data published by the Central Bank of the Dominican Republic.
For legal entities: Legal entities pay twenty-five percent (25%) of their net taxable income for the financial year (art. 297). Unlike some countries, taxation is the same for all legal entities, with no distinction between corporations, limited liability companies or private entrepreneurs.
Value Added Tax (ITBIS)
The value added tax rate is 16%. In the case of importing goods from abroad, it is calculated based on the total cost, including delivery, insurance, etc. There are a number of goods that are exempt from VAT:
- goods for export
- basic food
- medicines
- fuel
- fertilizers
- Books and magazines
- Financial services
- medical services
- pension service
- land transport of people and goods
- electricity, water and waste disposal
- rent
- housing and communal services
- personal medical services
VAT must be added to all goods and services that are not included in this list.
Where can I learn more about taxes?
If you are going to do business in the Dominican Republic, we recommend that you definitely use the services of an accountant who knows the local tax code.
In addition, you can ask any questions about taxes by phone, through the website, or in person at the tax office of the Dominican Republic.
The official website of the tax office is www.dgii.gov.do. Here you can find information about taxes, addresses and phone numbers of the tax service offices closest to you.