Income tax is one of the main taxes in the Dominican Republic, and in this article, we will explain some important aspects to keep in mind.
According to the Directorate General of Internal Revenue (DGII), income tax can be defined as:
“The tax that levies all income, profit, or benefit earned by individuals, companies, and undivided estates during a specific fiscal period.”
It is not only a taxation mechanism for legal entities and companies, but also for all individuals. Whether they are nationals or foreigners domiciled in the country, they will pay taxes on their Dominican-sourced income and on non-Dominican sources derived from investments and financial gains.
What is income tax in the Dominican Republic, what does income tax cover, how much is the income tax in the Dominican Republic, and who must pay it? We will cover these in this article.
What does the Income Tax (ISR) cover in the Dominican Republic?
For individuals: Income or earnings from employment (public and private employees), as well as income from business activities of sole proprietorships and investments or financial gains abroad.
For legal entities: All income, profit, or benefit obtained within a specific period.
Which profits are subject to tax?
All Dominican-sourced income is subject to taxation, whether the person or entity is a national or foreigner.
According to the Directorate General of Internal Revenue, public entities, businesses, and others mandated by law must withhold the corresponding tax amount from the payment due and submit it to the tax administration within the established deadline.
If you have questions about paying income tax in the Dominican Republic or need assistance with filing your tax return, at Contadores Dominicanos we have a team of highly qualified advisors ready to help you.
If I am a foreigner, do I need to pay income tax in the Dominican Republic?
Foreigners are required to file and pay income tax (ISR) if they:
- Work abroad from the Dominican Republic.
- Are foreigners residing or domiciled in Dominican territory.
- Have financial income abroad.
In these cases, every foreigner must pay income tax (ISR).
There are specific cases of exemptions for foreigners, which we will detail later.
Anyone domiciled in the Dominican Republic receiving investments abroad must pay this tax, whether they are nationals or foreigners.
For tax purposes, anyone who stays more than 182 days continuously or non-continuously in the Dominican Republic is considered a resident.
Income Tax Exemptions in the Dominican Republic for Foreigners:
- Social security benefits and pensions received from abroad that are exempt from tax.
- Individuals who have resided in the Dominican Republic for less than three years are exempt from paying taxes on foreign-sourced financial income.
- All individuals who obtain residency as retirees, annuitants, or pensioners.
When must income tax be paid in the Dominican Republic?
The deadline for paying and filing this tax is within ten (10) business days after the end of the declared period.
Tax filing and payment deadlines for individuals:
The income tax return for individuals (IR 1) is due by March 31st each year. If that date falls on a weekend or holiday, payment can be made on the next business day.
Tax filing and payment deadlines for companies:
The income tax return for companies (IR 2) must be submitted no later than 120 days after the company’s fiscal year-end.
Important note: The tax due must be paid on the same date.
Tax rates:
In the Dominican Republic, the corporate income tax rate is 27%.
Income Tax Rates for Individuals:
Individuals are subject to three progressive rates: 15%, 20%, and 25%, which are applied to the net taxable income for the fiscal year according to the following 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 |
