According to the Tax Code, Income Tax (ISR) is the tax levied on all income, earnings, profits, or benefits obtained by individuals, estates, or undivided successions within a given fiscal period.
In this article, we explain who are the withholding agents for income tax, who is exempt from Income Tax in the Dominican Republic, what Income Tax is, and what income is exempt from ISR.
Income is understood as any revenue that constitutes profit or benefit generated by an asset or activity, as well as all benefits, profits, and increases in wealth realized by the taxpayer, regardless of their origin or nature.
What Are Income Tax Withholdings?
It is a percentage of the income, known as deductions, that is applied to the payment of salaries, wages, and other incomes as determined by law, regulations, or norms issued by the Tax Administration.
At Contadores Dominicanos, we understand how important it is to be aware of everything related to Income Tax in the Dominican Republic, so we are here to assist you with whatever you need.
Who Are the Income Tax Withholding Agents?
According to Article 269 of the Tax Code:
- All individuals or legal entities, residents, or domiciled in the Dominican Republic, and undivided successions of deceased persons domiciled in the country, will pay taxes on their income from Dominican sources and sources outside the Dominican Republic.
According to Article 270 of the Tax Code:
- Individuals, legal entities, or entities not resident or domiciled in the Dominican Republic when they receive payments for income from Dominican sources.
- Individuals, legal entities, or entities not resident in the Dominican territory who obtain income through a permanent establishment.
According to Article 309 of the Tax Code:
- Public entities when they pay or credit accounts to Individuals, Undivided Successions, and Legally Constituted Legal Entities.
- Legally Constituted Legal Entities and Sole Proprietorships when they pay or credit accounts to Natural Persons and Undivided Successions.
- Civil Societies and Associations, with or without legal personality, as well as Cooperative Societies and other public or private law activities.
Who Is Exempt from Paying Income Tax?
Who is exempt from ISR and not subject to income withholding?
Entities Exempt from Paying ISR:
Get to know the Entities and Institutions exempt from paying this tax:
- The State
- National District
- Municipalities
- Municipal Districts
- Chambers of Commerce and Production
- Civil Assistance and Charity Entities
- Religious Institutions
- Beneficence and Social Centers
- Literary, Artistic, and Political Centers
- Guild Centers
- Scientific Centers
- Non-Profit Sports Associations
What Income Is Exempt from Income Tax?
- Compensation for work-related accidents.
- Severance and notice compensations as established by the Labor Code and relevant laws.
- Sums received by a beneficiary under life insurance contracts due to the death of the insured.
- Salaries and other cash compensations paid to employees that do not exceed the monthly tax exemption of RD 34,685.00.
- Goods, services, or benefits provided by an employer to an individual due to their employment that does not constitute cash remuneration and are subject to the Complementary Compensation Tax.
- Income exempt from rent tax
- Salaries received by diplomatic or consular representatives, as well as other officials or employees of foreign governments, for performing their duties in the Dominican Republic.
People Exempt from Paying Income Taxes
Salaries received by diplomatic or consular representatives, as well as other officials or employees of foreign governments, for performing their duties in the Dominican Republic.
We hope this article’s information is useful to you and helps you comply with this obligation.
