The Income Tax reporting (withholdings for salaried employees) applies to salaried workers who work in public or private companies. Employers must deduct the tax from their income if it exceeds the exempt amount established in Art. 296 of the Dominican Republic Labor Code.
This tax must be applied to the net salary earned during the fiscal year (12 months).
Salaried workers are those who earn income or wages in a dependent relationship with an employer.
A job is considered in a dependent relationship if the worker meets one of the following conditions:
- Fixed or variable schedule.
- Receives direct orders from the employer.
- Compensation in case of dismissal.
- Paid vacations.
How to Calculate ISR in the Dominican Republic? Learn how to calculate the Income Tax of an employee in this article.
How is Income Tax Calculated in the Dominican Republic?
The workers’ ISR should be calculated from the net salary obtained during the fiscal year, excluding the amount deducted for Social Security (TSS, AFP, SFS, etc.).
Income Tax Calculator – Dominican Republic
How to calculate an employee’s ISR in the Dominican Republic? To know the ISR withholding that must be made to the employee, the amounts corresponding to Social Security must be calculated and deducted, compare the net salary with the salary scale, and apply the progressive rates according to the annual scale.
But if you need help or advice to calculate the Income Tax or submit the Income Tax Withholdings of Salaried Workers, at Contadores Dominicanos, we are willing to provide the help you need so that you don’t have to worry about paperwork and can focus on your business.
Income Tax Table for Salaries and Wages 2023 – Dominican Republic
At what salary does Income Tax apply? From what amount is Income Tax paid?
Deductions made to workers in the Dominican Republic apply in Tax rates from 15% to 25%, as shown in the following table:
Salary Scale:
| Annual Scale | Rate |
| Income up to RD$ 416,220.00 | Exempt |
| Income from RD$ 416,220.01 to RD$ 624,329.00 | 15% of the excess over RD$ 416,220.01 |
| Income from RD$ 624,329.01 to RD$ 867,123.00 | RD$ 31,216.00 plus 20% of the excess over RD$ 624,329.01 |
| Income from RD$ 867,123.01 and above | RD$ 79,776.00 plus 25% of the excess over RD$ 867,123.01 |
ISR Withholdings for Salaried Workers
Salaried workers will pay ISR monthly on the excess of their salary that exceeds one-twelfth of the annual exempt amount which, since 2017, is RD$ 416,220.00.
In addition to the salary, the following items are also taxed:
- Commissions.
- Overtime.
- Bonuses.
- Vacations.
- Proportion of the Christmas Bonus, one-twelfth of the annual salaries.
Note: Employees who receive salaries from more than one company must choose a Single Withholding Agent.
Settlement of ISR Withholdings
The steps an employer must take to settle this tax are:
- Prepare the monthly payroll using the IR-4 help format (Calculation of Monthly Employee Withholdings).
- Access the Social Security Treasury (TSS) website, select the “Novedades” option, and upload the payroll.
- Access the Virtual Office of Internal Taxes and through the “Declaración-IR-3” option, verify the data.
- Consult the IR-3 Form.
- Accept the proposed declaration and generate the payment authorization.
Exemption from ISR Withholdings for Salaried Workers
- Salary and other cash compensation not exceeding the monthly contributory remuneration RD$ 34,685.00.
- The Christmas Bonus, up to the amount of one-twelfth of the total salaries received during the year.
- Compensation for work accidents.
- Compensation for pre-notice and severance aid.
- Relocation and travel allowances.
- Goods, services, or benefits provided by an employer to an individual for their work in a dependent relationship that does not constitute monetary remuneration, as long as they are taxed with the Complementary Compensation Tax.
When and Where is This Tax Paid?
This tax must be paid no later than the tenth (10th) day of the month following the declared period.
Payment can be made through the following options:
- Online payments via the internet.
- At the counter.
- Local administrations.
Income Tax Forms
What is IR-3?
It is the form to submit and send the Monthly Declaration of Employee Withholdings (IR-3). This declaration is used to report the Income Tax for workers. In the case of individuals, they must submit the monthly declaration if they have workers.
Employee withholdings must be submitted and paid monthly by the employer within the first 10 days of the month following the declared period.
What is IR-4?
Form detailing the withholdings made to each worker (IR-3). IR-4 indicates the amount to be deducted for Income Tax (ISR) from each worker.
What is IR-13?
Form IR-13 is the Annual Declaration of Withholding Agents for Salaried Workers. This declaration contains the Income Tax withholdings that have been made by an employer to their employees during the year. This declaration is a summary of what was reported on the IR-3 form.
To report the withholdings for salaried workers, you must enter the web portal of the General Directorate of Internal Taxes (DGII) in the segment of sworn declarations.
Learn more about Income Tax in the following article: All About Income Tax.
