Duty on Imports Lowered

Beginning January 2001, duty on goods imported into the Dominican Republic will range from 0% to a maximum of 20%, a considerable change from the former scale which had a maximum of 35%. Law #146-00, amending Law #14-93, was signed by President Mejía on December 27, 2000 and paves the way for ratification of free trade agreements reached between the Dominican Republic and countries of Central America and the Caribbean trade grouping Caricom. In addition to customs duty, imports are subject to a 12% tax, the so-called "ITBIS" (Industrialized Goods and Services Transfer Tax).

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No Duty on Computers and the Household Goods of Immigrants

Article 13 of Law #146-00 expressly exempted from any duty, among other items, the following:

• The importation of the personal effects and household goods of foreigners immigrating into the Dominican Republic and of Dominicans coming back home to live permanently after residing abroad for more than two consecutive years.

• The importation of personal computers, its components, software and other accessories.
  

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Legal Services Taxed 12%

Also beginning January 2001, all legal services will be subject to a 12% service tax, payable monthly. The "ITBIS" tax, previously 8% and applicable mostly to the sale of goods, was raised to 12% and extended to most services. Education, health and transportation are among the few services exempted. Law #147-00, amending many provisions of the Dominican Tax Code, was signed by President Mejía on December 27, 2000 with the stated objective of raising revenue to compensate for the revenue lost by the lowering of tariffs.

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New Personal Income Tax Rates

Personal income tax rates were changed by Law #147-00 as follows:

• Up to RD$120,000 - exempt
  
• RD$120,001-RD$200,000 - 15%
  
• RD$200,001 to RD$300,000 - 20%
  
• Above RD$300,001 - 25%

The scale is to be adjusted for inflation every January.
Corporations pay a flat 25% income tax.
Figures are in Dominican Pesos (RD$).

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Withholding on Interest Payments Abroad Lowered to 5%

A major criticism of the 1992 Tax Code was that all interest payments to financial institutions outside the Dominican Republic were subject to 15% withholding (Article 306 of the Tax Code). It was considered that this levy hindered the flow of much needed capital into the country. Law #147-00 lowered the withholding to only 5%. Interest payments to creditors abroad who are not financial institutions are still subject to 25% withholding (Article 305 of the Tax Code).

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Link of the Month: Internal Revenue (www.dgii.gov.do)

The website of the Dominican Bureau of Internal Revenue ("Dirección General de Impuestos Internos" or DGII) is full of interesting information ranging from a very comprehensive FAQ section on taxes to inflation tables. You may be surprised to find out that you can pay your taxes online! The site is in Spanish only.

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