What is the annual asset tax sworn declaration? When should it be filed? What assets are taxed by this tax? In this article, we explain important aspects to consider about the annual asset tax sworn declaration in the Dominican Republic.
What is the Asset Tax in the Dominican Republic?
This declaration is used to liquidate the total assets of legal entities or individuals with sole proprietorships.
The declaration of this tax must be filed and paid together with the Income Tax Sworn Declaration.
If you are a legal entity or company and need help or advice for filing this declaration, at Contadores Dominicanos we are ready to provide the help you need.
Assets taxed by this tax
The total value of the assets listed on the balance sheet, without considering the inflation adjustment and deducting depreciation, amortization, and allowances for bad debts.
Taxable assets:
- Cash in hand and banks.
- Inventory.
- Land.
- Buildings.
- Automobiles and equipment.
- Fixed-term investments.
- Leasehold improvements.
- Accounts receivable from customers (less allowances).
- Accounts receivable from employees and officials.
- Accounts receivable from shareholders.
- Intangible assets.
- Other net fixed assets.
Excluded from the taxable base of the tax:
- Investments in shares in other companies.
- Land in rural areas.
- Real estate of agricultural and livestock operations.
- Payment of advance tax.
Tax Rate
The asset tax rate is 1% annually on the amount of taxable assets.
Assets excluded from this tax
Legal entities exempt from income tax payment, either by application of the Tax Code, special laws, or approved contracts, are exempt from this tax.
Temporary exemption from Asset Tax
The following companies may apply for a temporary exemption from this tax:
- Companies whose net fixed assets exceed 50% of total assets.
- Taxpayers with losses due to force majeure or extraordinary causes.
- Companies with investments that naturally have a cycle longer than one year, excluding certain assets from the taxable base.
When should this tax be declared?
The asset tax declaration must be filed along with the Income Tax Sworn Declaration (ISR), using Form 1R-2.
This tax is paid in two installments, the first on the income tax payment deadline and the second six months from the first installment’s due date.
When to pay the Asset Tax?
If the Income Tax is equal to or greater than the Asset Tax, only the excess Income Tax must be paid, and the Asset Tax obligation is extinguished.
If the Asset Tax exceeds the Income Tax amount, the taxpayer must pay it in two equal installments.
Credit of advances against Asset Tax payment:
If the taxpayer has a favorable balance due to excess income tax advance payments, they may request to offset this balance against the asset tax.
Tax Penalties:
If the payment of this tax is made after the deadline, a 10% late fee will be charged on the tax amount for the first month.
For subsequent months, the surcharge will be 4% progressively and indefinitely, as well as a 1.10% cumulative compensatory interest.
