Income Tax (ISR) in the Dominican Republic: advantages for the investor

One of the issues that may be of concern to the investor in Dominican Republic Will I have to pay taxes? Pay Income Tax (ISR) Is there any kind of advantage for those who invest in the country?

As we know you are interested in this topic, we will explain to you what is ISR and what are the advantages you can obtain as a foreign investor if you are thinking of buying apartments in this paradisiacal Caribbean country.

What is Income Tax (ISR)?

The Income Tax is the tax levied on income earned by individuals in the Dominican Republic, as is the case in many other countries.

All the information about taxes in Dominican Republic you will find it in Law 11-92, of December 31, 1992.

May 1992, which is also commonly known as the Tax Code. Taxes must be paid to the Dirección General de Impuestos Internos (DGII), which is the agency in charge of taxes in the Dominican Republic.

The ISR is a tax intended to support government expenditures and is paid progressivelyThe taxable income is calculated according to income brackets. To give you an idea, these were the brackets for the year 2024:

Rentals up to RD$416,220.00	Tax exempt
Rents from RD$416,220.01 to RD$624,329.00	15% from surplus of RD$416,220.01
Rents from RD$624,329.01 up to RD$867,123.00	RD$31,216.00 plus 20% of the excess of RD$624,329.01
Rents from RD$867,123.01 and upward	RD$79,776.00 plus 25% of the excess of RD$867,123.01

It is important to be clear that in the Dominican Republic there are two types of ISRThe tax rate is 27%, which is paid by individuals and 27%, which is paid by legal entities or companies, although in the latter case the net income (after expenses) is taxed.

Do foreign investors have to pay Income Tax (ISR)?

One of the issues that you may have doubts about is whether you will need to Pay Income Tax (ISR)even if you are a foreign investor.

In order to do so, it must first be taken into account that ISR is only levied on income generated in the Dominican Republic. and persons who are tax residents in the Dominican Republic.

This means that if you are a foreign investor and you apply for residency or even acquire the naturalization in Dominican RepublicIf you have income from abroad, it will not be taxed for income tax purposes.

Remember that to be considered tax resident in the Dominican Republic you need to spend 183 days a year in the country. In case you spend less than that time in the Dominican Republic, you will not be considered a tax resident.

In case you are not tax resident in the Dominican RepublicA fixed withholding is made, depending on the type of income in question. In the case of dividend income, it is taxed at 10%, while income from professional services fees is taxed at 27%,

You should keep in mind that the financial incomeWhether you are a Dominican national or only a resident, even if they are of foreign origin, they must pay ISR. That is to say, if you transfer your tax residence to the Dominican Republic and receive income from stocks, bonds, certificates of deposit, etc., they will be taxed, even if they come from a foreign source.

On the other hand, you should keep in mind that pensions received from abroad are not subject to income tax.It may be a good option for you to retire in the Dominican Republic.

How to save ISR if you are a real estate investor in the Dominican Republic?

Many real estate investors have decided to to set its sights on the Dominican Republicwhere they have one or more apartments from which they receive regular income from tourist rentals. Remember that foreigners can buy property in Punta Cana and the Dominican Republic without any problem.

These are incomes that are received and must pay ISR, although the brackets are applied on the net profits (yields).

However, there are many investors who can saving on Income Tax (ISR) in the Dominican Republic by investing in projects that benefit from the Confotur Lawwhich allows you to be exempt from ISR for a period of 15 years. A period long enough to capitalize and consolidate your business in the Dominican Republic in the long term, so if you are thinking of investing, it is worth looking into this type of investment.

Would you like to learn about real estate opportunities that can benefit from the Confotur Law in order to establish your residence in the DR and save on income tax?Talk to us!