What are the internal taxes paid in the Dominican Republic?

If you are thinking of living in one of the most beautiful places in the Caribbean, the first thing to do is to be well informed about taxes. What are the internal taxes to be paid in the Dominican Republic?

Whether you are a real estate investor and want to make your way in the world of Real Estate in the Dominican Republic, or you simply want to buy a property and move to live in Punta Cana to enjoy its quality of life and its beaches, in this post we will show you what you know about this matter.

What are the internal taxes in the Dominican Republic?

Internal taxes in the Dominican Republic are those taxes corresponding to the Dominican tax system. These taxes are collected by the Dirección General de Impuestos Internos (DGII).

Those who invest in this country and come from abroad must pay taxes on the real estate operations they carry out. However, thanks to the Confotur Law, you can access great tax advantages as an investor.

To invest in real estate in the Dominican Republic you don't need to live here, but it can be a good option if you would like to settle in this beautiful Caribbean country.

Here are the most important taxes you should know if you are going to live in the Dominican Republic.

Income Taxes (ISR)

Income Tax (ISR) is the tax levied on individuals. It is a progressive tax, which is levied on individuals according to their income level, in accordance with certain brackets corresponding to the current year.

Foreigners who are not residents in the country are only subject to ISR when the income has been obtained within the Dominican Republic.

On the other hand, if they are tax residents in the country and have income from the Dominican Republic itself, this income would be subject to ISR.

It should be noted that even if the income is earned outside the country, some types of income may be taxed. In the case of annuitants, however, they would be exempt from taxation on income from foreign sources.

In addition, income derived from investments in tourism projects that benefit from the Confotur Law will be exempt from the payment of this tax for a period of 15 years.

Asset Tax

Asset Tax in the Dominican Republic is paid on property, such as homes or vehicles.

This tax is only paid when the aggregate of the properties represents 1% per year. Once again, it is worth remembering that those who have invested in tourism projects subject to the Confotur Law will also be exempt from this tax for 15 years.

3. ITBIS (Tax on the Transfer of Industrialized Goods and Services)

ITBIS is a tax similar to VAT that is levied on value added. The acronym ITBIS stands for Tax on the Transfer of Industrialized Goods and Services.

The general rate is currently 18%, while certain products are exempt from this tax.

It should be noted that homes in the Dominican Republic are not subject to ITBIS, although the buyer of a property will have to pay the Real Estate Transfer Tax to register the home, which represents a 3% of the value of the property, although again if the project is subject to Confotur, it would be exempt.

4. ISC (Selective Consumption Tax)

This is a consumption tax levied on certain goods, such as alcohol, tobacco and fuel, telecommunications and insurance services, as well as the issuance of checks and electronic transfers.

The rates are as follows:

● Alcoholic beverages: 10%

● Tobacco: 20%

● Telecommunication services: 10%

● Insurance: 16%

● Issuance of checks and wire transfers: 0.0015 on the value of each check paid or wire transfer.

If you are going to reside in the Dominican Republic and buy these products or services, you will be paying taxes, although if you receive income from abroad in US dollars or any other hard currency, the cost is not at all high.

Do I have to pay taxes if I want to reside in the Dominican Republic? Some exemptions

There are different exemptions that can benefit you if you want to establish your tax residence in the Dominican Republic.

For example, if you are a rentista above a certain threshold, you are not required to pay ISR or income tax. Find out what you have to do to obtain a rentista visa in Dominican Republic.

On the other hand, pensioners or retirees can also obtain the ISR exemption if they receive a monthly pension of $1500 USD, as explained above.

Foreign investors would only have to pay taxes on Dominican source income, while income generated abroad would be exempt from income tax if you decide to establish your residence in the Dominican Republic.

Would you like to learn about real estate investment projects that benefit from the Confotur Law and buy your apartment in Dominican Republic? Write to us.