An Overview of Taxation in the Dominican Republic


Taxation in the Dominican Republic is governed by Law No. 11-92 of May 31, 1992, commonly known as the Tax Code (“Código Tributario”), its amendments and regulations (“Reglamentos”).
This overview is a brief summary of the Tax Code’s most relevant provisions. All references in parentheses refer to articles in the Tax Code unless otherwise specified.

Taxes are collected by the Bureau of Internal Revenue (Dirección General de Impuestos Internos or DGII), an autonomous government entity which may also issue its own regulations (“Normas”).

Dominican income tax law is primarily territorial. All income derived from work or business activities in the Dominican Republic is taxable, no matter if the person is a Dominican, a resident foreigner or a nonresident foreigner (Articles 269 and 270).

Income derived from work done outside of the Dominican Republic, by Dominicans or resident foreigners, is not taxable in the Dominican Republic.

The exception to the principle of territoriality is income from financial sources abroad (Articles 269 and 271). A Dominican or a resident foreigner receiving income from financial investments (stocks and bonds, certificates of deposits, etc.) must pay taxes in the Dominican Republic on their income from those investments (Art. 269). Pensions and social security benefits are exempt (Art. 2 of Reglamento #139-98). For the resident foreigner, this obligation only starts three years after obtaining residency (Art. 271); however, those who have obtained their residence as retirees are exempt from paying taxes on the income they have declared for resident purposes. (Art. 10 of Law 171-07).

For tax purposes, any person residing in the Dominican Republic for more than 182 days in a year is considered a resident (Art. 12).

The Tax Code includes a general anti-avoidance provision whereby the tax authorities may ignore the existence of legal entities or certain transactions when used to secure a tax advantage (Art. 2).

Law #53 of 1970 makes it mandatory for all taxpayers to register with the tax authorities and obtain a tax or RNC (“Registro Nacional de Contribuyentes”) number.

The most important taxes in the Dominican Republic are the following:

Income Tax

For Individuals

Individuals obtaining income from a Dominican source or from financial investments abroad shall pay taxes according to the following scale (Art. 296), in Dominican pesos (RD$):

Income up to RD$399,923.00 annually    –     exempt
RD$399,923.01 to RD$599,884.00        –     15%
RD$599,884.01 to RD$$833,171.00        –    RD$29,994.00 plus 20% of income above     RD$599,884.01.
Income above $833,171.01            –    RD$76,652.00 plus 25% of income above     RD$833,171.01

This scale is adjusted for inflation every January based on the rate of inflation calculated by the Central Bank of the Dominican Republic. This adjustment has been recently suspended for the period 2013 to 2015 (Art. 3 of Law 253-12).

Employers must retain and pay to the DGII, within the first ten days of each month, any income tax due on the salaries paid to their employees the previous month (Art. 307). Individuals who receive incomes from non-wage sources must file a tax declaration every year, on or before March 31 (Art. 110 of Regulation #139-98).

For Corporations and Other Entities

Corporations and any other for-profit organizations pay a flat 29% income tax on net taxable income (Art. 297). The rate will be reduced to 28% for fiscal year 2004 and to 27% thereafter. Unlike in the United States and other countries, in the Dominican Republic the tax treatment for corporations, partnerships and limited liability companies is exactly the same.

Net taxable income is determined after deducting from gross income those deductions, credits and advance payments admitted by law (Articles 284 to 287).

All corporation and for-profit entities must file a tax declaration every year, on or before April 30, if their business year coincides with the calendar year. Otherwise, the filing must be done within 120 days after the end of the business year (Art. 112 of Regulation #139-98)

Capital Gains Tax

Capital gains are defined as the difference between the sale price of an asset and the acquisition or production price adjusted for inflation (Art. 289). Capital gains are taxed as regular income.

An example: if an individual with an annual income higher than RD$833,171.01 purchases a house for RD$4 million pesos and sells it two years later for $6 million pesos, while inflation during the two-year period is a cumulative 15%, the tax due on capital gains is calculated as follows:

RD$6 million pesos – $4.6 million pesos ($4 million pesos + 15%) x 25% tax = $350,000 pesos.

Taxes are levied based on the capital gains calculated in Dominican pesos.

Tax on the Transfer of Industrialized Goods and Services (ITBIS)

The ITBIS is a value-added  tax applicable to the transfer and importation of most goods , and to most services (Art. 335). The rate of the ITBIS is 18% (Art. 341). For imports, the ITBIS is charged on the CIF value of the goods plus applicable duty (Art. 339).There are many exemptions to the ITBIS tax (Arts. 342 and 343), among them, the following:

•    exported goods
•    some basic foodstuffs
•    medicines
•    fuels
•    fertilizers
•    books and magazines
•    educational materials
•    financial services
•    transportation services
•    home rentals
•    utilities
•    educational and cultural services

The 18% IBIS must be added to every bill for goods and services that are not exempt. The individual or entity receiving the ITBIS must disburse it to the GII within the first 20 days of the following month (Art. 353). Noncompliance is subject to a 10% surcharge for the first month and 4% for each month thereafter, in addition to 2.58% interest for each month or fraction of a month (Art. 252).  From the total ITBIS received, the individual or entity is allowed to deduct any ITBIS paid to suppliers, customs, etc. (Art. 346).

Selective Consumption Tax (ISC)

The Selective Consumption Tax is applied to the acquisition or import of certain goods and services, such as the following (Articles 361,  381 to 383):

•    motor vehicles
•    guns
•    tobacco products
•    alcohol products
•    jewelry
•    Electronic products
•    long distance phone calls
•    insurance

The ISC rate varies according to the good or service taxed.

Tax on Assets

Businesses and corporations must pay a 1% annual tax on assets (Arts. 401 and 404) in two instalments due on April 30 and October 30 (Art. 405). For the purposes of this tax, all assets are taken into account, minus depreciation and amortization, except: a) stock holdings in other corporations, b) real estate in rural areas, c) real estate used for agriculture or animal  husbandry, d) tax advances and e) provisions for bad debts (Art. 402).

The tax on assets operates as a kind of minimum income tax.  If the income tax paid by the business or corporation is equal or higher than the amount of the tax on assets, then the business will have no obligation to pay the tax on assets (Art. 407). If the income tax paid is less than the amount of tax on assets due, the business must pay the difference.

New capital-intensive businesses may obtain a temporary exemption from this tax if certain conditions are met.

The tax on assets will be eliminated in 2015. Also, the tax rate for 2014 will be reduced to 0.5%. After 2015, real estate properties held by corporations will pay the same property tax as individuals.

Real Estate Tax

A 1% annual tax is assessed on any real property owned by individuals, based on the cumulative value of the properties owned by the same individual, as appraised by the government authorities.  (Articles 1  to 3 of Law #18-88). Properties are valued without taking into account any furniture or equipment to be found in them.  For built lots, the 1% is calculated only for values exceeding RD$6.5 million pesos. For unbuilt lots, the 1% tax is calculated on the actual appraised value without the RD$6.5 million pesos exemption. Individuals must pay this tax every year on or before March 11, or in two equal instalments: 50% on or before March 11, and the remaining 50%, on or before September 11.

The RD$6.5 million pesos threshold  is adjusted annually for inflation.

The following properties are exempt from this tax:

(1) Built properties valued at RD$6,500,000 or below.
(2) Farm properties.
(3) Properties whose owners are 65 years old or older, who have owned it for more than 15 years and have no other property in their name.
(4) Properties subject to the Tax on Assets.

Real Property Transfer Tax

A 3% tax is assessed on any transfer of ownership of real estate  (Art. 20 of Law #288-04). The transfer tax is paid based on the market value of the property as determined by the appraisal done by the DGII, not on the price of purchase stated in the deed of sale. The deed of sale cannot be filed at the Title Registry Office without paying this tax. The transfer tax must be paid within six months of the date of the deed of sale (Art. 7 of Law #173-07). Noncompliance is subject to fines.

Properties worth less than RD$1 million pesos acquired through a bank loan are exempt from the transfer tax   (Art. 20 of Law #288-04). The RD$1 million pesos exemption is adjusted annually for inflation.

Tax on Mortgages

A 2% tax is levied on all mortgages recorded in the Dominican Republic (Art. 8 of Law #173-07).

Tax on Transfers of Motor Vehicles

A 2% tax is levied on any change of ownership of motor vehicles (Art. 9 of Law #173-07).  The transfer tax must be paid within three months of the date of the acquisition. Noncompliance is subject to fines.

Inheritance and Gift Taxes

The estate of any person, Dominican or foreign,  whose last domicile was in the Dominican Republic is subject to Dominican inheritance taxes. The inheritance of property located in the Dominican Republic is subject to Dominican inheritance taxes, irrespective of the nationality or domicile of the deceased (Art. 1 of Law #2569 of 1950).

Law #288-04 lowered inheritance taxes to 3% of the value of the estate, after deductions, as determined by the tax authorities. Medical and funeral expenses, as well as outstanding debts and mortgages, are some of the allowed deductions.

Beneficiaries must file a declaration with the tax authorities within 90 days of the death of the decedent. An extension for an additional three and half months is possible in complex cases (Art. 26 of Law #2569). Delays in filing are subject to a 2% per month penalty, up to a maximum of 50% of the tax owed (Art. 9 of Law #2569).

Gifts are taxed at a 25% rate (Art. 6 of Law #2569) except the following, which are exempt;

•    Gifts for less than RD$500
•    Gifts to government institutions or recognized nonprofit organizations
•    Gifts to the family homestead (“bien de familia”).

Withholding or Retentions at the Source

The Tax Code establishes the following withholdings:

•    Payments abroad to persons or entities not domiciled or resident in the Dominican Republic are subject to a 29% withholding on the amount paid (Art. 305). This withholding is considered as final and definitive payment of the taxes owed for the operation. No deductions are allowed. The only exceptions to this provision are interest payments to financial institutions abroad which are subject to a 10% withholding instead (Art. 306).

•    Also, payments abroad by a branch office domiciled in the Dominican Republic to its headquarters abroad are subject to a 10% withholding (Art. 308).

•    Payments to workers. Employers must retain income taxes as per the table published by the DGII (Art. 307)

•    Dividends. Corporations must retain 10% of the dividends paid to shareholders (Art. 308).

•    Rentals. Payments to individuals (not corporations) are subject to a 10% withholding (Art. 309).

•    Fees for services and commissions. Payments to individuals (not corporations) are subject to a 10% withholding (Art. 309).

•    Prizes. All payments are subject to a 10%  to 25% withholding, depending on the amount of the prize.

•    Government payments to suppliers are subject to a 5% withholding.

[Updated: December 31, 2012].

Business Entities in the Dominican Republic

Business and Companies


Foreign companies may conduct business in the Dominican Republic by setting up a branch office,  incorporating a local subsidiary or acquiring the shares of an existing Dominican company.


Any company duly organized and existing in accordance with the laws of its country of origin can set up a branch in the Dominican Republic by registering at the Business Registry and obtaining a tax number from the Internal Revenue Agency. Additional approvals may be required in certain regulated industries.

Registration requires that (a) all incorporation documents of the foreign company be translated into Spanish and authenticated, (b) corporate minutes establishing a registered office in the Dominican Republic and naming a local representative, and (c) particulars of the local representative and the company’s shareholders.

Registration is not necessary if the activity of the foreign company is limited to acquiring equity in a local business entity or to occasional transactions in the Dominican Republic.

Local branches of foreign companies receive the same tax treatment as Dominican companies and are subject to the same local laws and regulations in labor and other matters. For tax purposes, they must keep separate accounts from their head office so as to facilitate the determination of their income.


The most common structures available for investors to establish a local subsidiary as an independent local business entity in the Dominican Republic are the Limited Liability Company, the Corporation and the Simplified Corporation.

These three types of companies enjoy limited liability for its shareholders, meaning that if the company fails, they will be liable only for the amount of capital invested, and that shareholders, individually or collectively, are not liable for the debt obligations of the company. This limited liability protection afforded to shareholders of these entities is strictly observed under the law, except in case of fraud or misrepresentation.

Other business structures exist (Individual Limited Liability Companies, Partnerships, Limited Partnerships and Limited Partnerships with Shares) but they are rarely used by investors because, in the case of Individual Limited Liability Companies, the sole shareholder must be an individual, and in other cases, the partners do not have limited liability.

All business entities are taxed in the same manner, in contrast to the practice in other countries such as the United States. Please refer to the chapter on taxation for details.


Shareholders, partners, members, officers and directors of a Dominican company do not need to be Dominican citizens or residents, except in very special circumstances.


Corporations are best suited for large businesses with many shareholders  where protecting minority interests is important. They are the only entities that can raise capital through public stock offerings.

Simplified Corporations are best for medium to large-sized businesses that require special shareholder provisions for corporate governance purposes. Simple Corporations cannot raise capital through public stock offerings, but are able to issue debt instruments to the public.

Limited Liability Companies are ideal for small to medium-sized businesses, the most common in the Dominican Republic, reason why LLC’s are very popular for local investors. LLC’s cannot raise capital through public offerings.


LLC’s must have no less than two shareholders and no more than fifty. To form an LLC, a minimum capital of 100,000 DOP is required (about $2,200 at the exchange rate current in December 2015), which must be paid in full, and divided into shares with a par value of at least 100 DOP each.

Shares in an LLC are nonnegotiable. Share transfers to third parties who are not current shareholders must be approved by 75% of the votes of the company, except in certain cases, such as when the beneficiary is a child or parent of the person doing the transfer.  Nonetheless, if the transfer is rejected, the shares in question must be purchased or redeemed by the other shareholders or the company.

Management of an LLC is in the hands of one or several managers or a board of managers. Managers must be natural persons, not other companies.

Unless otherwise stipulated in the bylaws, no inspection officer (comisario de cuentas) is required to oversee management.


Simplified corporations must have a minimum of two shareholders but, unlike in the LLC’s, there is no maximum. The minimum capital required to form a Simplified Corporation, called the company’s authorized capital, is three million DOP (about $66,000 at the exchange rate current in December 2015), of which at least 10% (300,000 DOP or $6,600) must be paid-in upon incorporation. Shares in a Simplified Corporation are negotiable, although restrictions may be established in its bylaws.

Management of a Simplified Corporation is freely determined by its shareholders in the company bylaws. It could consist of a board or of one or several individual managers. Members of the board and individual managers do not need to be natural persons.

Unless otherwise stipulated in the bylaws, no inspection officer (comisario de cuentas) is required to oversee management.

Simplified corporations can issue debentures and bonds privately, although not publicly.


Corporations must have a minimum of two shareholders. There is no limit on the maximum. The minimum capital required to form a corporation (minimum authorized capital) is 30 million DOP (about $666,000 at the exchange rate current in December 2015), of which at least 10% (3,000,000 DOP or $66,600) must be paid-in upon incorporation. Shares in a corporation are negotiable, although certain restrictions may be established in its bylaws.

Corporations can be private or public. Only public corporations can offer the sale of stock and bonds to the general public.

The management of corporations must consist of a board of directors of at least three members, which do not have to be natural persons.

An inspection officer (comisario de cuentas) is required to oversee management and to render an annual report to the shareholders meeting about the company’s financial statements and the performance of the board of directors.


The value of company shares as well as its capital can be stated in foreign currency.


All companies can issue common shares and preferred shares. Preferred shares may grant the shareholder the right to a fixed dividend or a fixed percentage of profits, or both at the same time, as well as priority rights over the company capital in case of liquidation.


Company formation is best managed by a local attorney, and carefully monitored by you. If your attorney does not guide you in selecting the best company structure for your needs by explaining the advantages and disadvantages of the various options, change your attorney. Make your selection only after you are well-informed.

Formation should be customized to fit the needs of company members. Note that a member need not be a Dominican citizen or resident to form a Dominican company, except in very special circumstances. As a member, you will be required to provide certain particulars such as your full name, nationality, occupation, marital status, and address, and where applicable, a copy of your passport, “cédula” (Dominican identification), and/or driver’s license. The process involves five basic steps.

1. Register the company name

Clearing a company name can be time consuming as most commonly selected names are already in use by others. Therefore, if time is important and the company name is not immediately critical, you have some options. Many law firms retain shelf companies that are ready to go and available for purchase at a premium price. However, if cost is a factor, you can still expedite the registration process by selecting a “numbered” company (e.g., 12345 S.R.L.), and opting to change the name later. This two-step process will incur extra costs, but will expedite the registration process with the advantage that you will establish a legally recognized company more quickly.

2. Prepare and sign company documents

The documents required will depend on the particular structure selected, but will include at a minimum the articles of incorporation and by-laws (“estatutos”).

3. Pay the organization tax

Be forewarned that Dominican company organization taxes are higher than those imposed on American companies. This particular tax amounts to 1% of the authorized capital for corporations and simplified corporations, and paid-in capital for S.R.L. and E.I.R.L. structures.

4. Register the company documents at the Business Registry (Registro Mercantil)

The incorporation documents must be filed at the Business Registry for the area where the company’s registered office is located. Registration fees for corporations and simplified corporations are calculated on the basis of the company’s authorized capital; fees for LLC’s are calculated on the basis of its paid-in capital.

A company is deemed to legally exist from the time its documents are recorded at the Business Registry.

After incorporation, any documentation related to important corporate activities must be also registered at the Business Registry.

Company registration at the Business Registry must be renewed every two years.

5. Register the company at the Internal Revenue Agency

To begin operation, newly-formed companies must obtain a tax number at the Dominican Internal Revenue Agency. Also, shareholders of the company, foreign or local, who do not already have an individual tax number must obtain it at this time. Without a tax number, a company cannot open bank accounts, buy real estate, nor, in general, operate within the country.


All Dominican companies must hold an annual shareholders’ meeting to review the company’s operation during the previous year.  Minutes of this meeting must be recorded at the Business Registry.


Joint ventures in the Dominican Republic generally consist of a contractual arrangement between two or more existing business entities for the purpose of carrying out a particular project or task. The joint venture itself is not a legal person nor enjoys limited liability unless a new business entity is formed according to Dominican company law.


Knowledge is the cornerstone of Guzmán Ariza’s service in company law. We actively produce and disseminate information that shapes this practice area in the country.

Fabio J. Guzman-Ariza, name partner and prolific writer on Dominican law, co-authored the only current book on company forms, Modelos para la práctica societaria. Partner Alfredo Guzman contributed further to Fabio Guzman’s seminal work with El funcionamiento de las sociedades de responsabilidad limitada, a book explaining how limited liability companies work in the Dominican Republic. Together, the two have contributed to preparing regulations to assist existing companies in the transition to current Company Law 479-08, and have co-authored additional articles on the SRL (LLC) company structure in the only Dominican law review, Gaceta Judicial.

Our knowledge of company law is widely available, respected, and regularly referenced, and covers company formation, corporate governance, mergers and acquisitions, and dissolution; and related business areas such as contracts, employment, labor, company finance, company tax, litigation, dispute resolution, and intellectual property.

Modelos para la práctica societaria (Company Forms)

FormSocPortadaModelos para la práctica societaria (Company Forms):
Gaceta Judicial, Santo Domingo, 2009

By Guzmán Ariza name partner Fabio J. Guzmán-Ariza.

The Functioning of Limited Liability Companies

El funcionamiento de las sociedades de responsabilidad limitadaEl funcionamiento de las sociedades de responsabilidad limitada (The Functioning of Limited Liability Companies: Santo Domingo, Pontificia Universidad Madre y Maestra, 2009.

By Guzmán Ariza partner Alfredo A. Guzmán-Saladín.