Do you know what Form IT-1 entails? What is the monthly ITBIS sworn declaration? What does this tax cover? In this article, we explain important aspects of this tax in the Dominican Republic.
What is a Sworn Tax Payment Declaration?
A sworn declaration is a document, which can be printed or digital, in which taxpayers report their income or earnings from their activities, as well as the declaration of the goods and services generated by their economic activity and their assets at the end of the fiscal year.
Annual Income Tax Payment Sworn Declaration
This declaration is used to calculate the Income Tax (ISR) for legal entities for a specific fiscal period.
Annual Asset Tax Payment Sworn Declaration
This declaration is used to determine the tax on assets or properties owned by taxpayers, including legal entities and individuals with sole proprietorships.
ITBIS Tax Payment Sworn Declaration
This declaration is used to calculate and pay the tax on the transfer and importation of industrialized goods (ITBIS), as well as the provision of services, within a specific fiscal period.
What is the ITBIS – Tax on the Transfer of Industrialized Goods and Services?
The ITBIS tax is one of the most important fiscal obligations in the Dominican Republic and consists of a tax on the consumption of transferred and imported goods and services. It is a value-added type tax and is generally applied to consumption.
The monthly ITBIS sworn declaration is used to settle the tax on the transfer of industrialized goods and services within a specified fiscal period.
What does ITBIS cover?
This tax is levied on consumption and covers the conditions provided by Law No. 11-92 (Tax Code), for the following operations:
- The transfer of industrialized goods, whether new or used.
- Provision and leasing of taxable services.
- Importation of industrialized goods.
The ITBIS is one of the main taxes in the Dominican Republic. If you need help or advice for filing Form IT-1, at Contadores Dominicanos we are ready to provide the help you need.
Who is obligated to pay ITBIS?
There are two types of taxpayers obligated to declare this tax:
- Individuals or legal entities: whether national or foreign individuals who perform transfers, importations, or provision of services taxed by this tax.
- Public or private companies: that perform or do not perform taxable activities and are obligated to withhold ITBIS, including services provided by individuals, as well as payments for professional services or when renting movable goods to other profit-making or non-profit entities.
Are there products with different ITBIS rates than the general one?
The rate payable for this tax is 18% of the total service provided or goods transferred.
For products taxed at a reduced rate, it is 16%, and some of these products include:
- Yogurt.
- Butter.
- Sugars.
- Coffee.
- Cocoa and chocolate.
- Vegetable and animal fats.
Note: To consult the products derived from this classification, you can refer to Article 343 of the Tax Code, amended by Law No. 253-12.
When must this tax be declared?
This tax must be paid and declared no later than the 20th of each month, using Form IT-1.
The payment of this tax on importation is made together with customs duties or import taxes.
Where must this tax be declared?
Taxpayers must file this sworn declaration using Form IT-1 in the following modalities:
- Virtual Office of Internal Taxes.
- Local administrations.
How is ITBIS determined?
The payment to Internal Taxes is determined by deducting the ITBIS generated by transfers and services provided to customers, from the amounts of:
- ITBIS invoiced by suppliers when acquiring taxable goods or services.
- ITBIS applied by customs for the importation of taxable goods.
- Payments made in advance corresponding to ITBIS withholdings.
Note:
For this reason, it is important when acquiring any goods, purchases, or services for the company to ensure the following:
- Request our invoice with a fiscal credit receipt.
- Ensure it is authorized by the DGII.
- Ensure the invoice is correctly filled out with the supplier’s name and RNC.
- Ensure the client’s name and RNC are included.
- Ensure ITBIS is transparently shown.
Products Exempt from ITBIS
The following goods, products, and services are exempt from ITBIS payment:
- Live animals.
- Fresh, frozen, and refrigerated meats.
- Fish.
- Dairy products (except yogurt and butter).
- Milk and honey.
- Other animal products.
- Plants for planting.
- Unprocessed legumes, vegetables, and tubers.
- Unprocessed fruits for mass consumption.
- Unroasted, decaffeinated coffee, coffee husks, and shells.
- Cereals, flours, and processed grains.
- Milling products.
- Oilseeds and other seeds.
- Raw, whole, or broken cocoa beans, roasted or raw, cocoa husks and other cocoa residues.
- Infant food, pasta, bread.
- Natural and mineral water, bottled or not.
- Livestock inputs.
- Fuels.
- Medicines.
- Fertilizers and their components.
- Fungicides, herbicides, insecticides, rat poisons.
- Other agricultural inputs or capital goods.
- Books and magazines.
- Educational materials at the pre-university level.
- Wheelchairs and other vehicles for disabled people.
- Joint prostheses.
Exempt Services:
- Financial services (including insurance).
- Pension and retirement plans.
- Land transportation of people and cargo.
- Housing rentals.
- Educational and cultural services.
- Beauty salons and hairdressers.
- Funeral services.
- Health services.
Information Submission
In addition to the ITBIS declaration, General Standard No. 07-2018 requires the taxpayer to report their operations through the following reports:
- Form 606 for the purchase of goods and services.
- Form 607 for the sale of goods and services.
- Form 608 for canceled receipts.
- Form 609 for payments for services abroad.
These forms must be submitted before the ITBIS Declaration.
It is mandatory to file the ITBIS Sworn Declaration even if there are no operations.
Tax Penalties:
If the payment of this tax is made after the deadline, a 10% late fee will be charged on the value of the tax to be paid for the first month.
For subsequent months, the surcharge will be 4% progressively and indefinitely, as well as a 1.10% cumulative compensatory interest for each month or fraction thereof on the amount to be paid.
Learn about the taxes that exist in the Dominican Republic in the following article: Main Taxes in the Dominican Republic.
