How can an Umbrella Company Help with Contracting in Dominican Republic?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in the Dominican Republic. Even better, most are experts in the Dominican Republic and expat tax law, meaning they’ll also help you optimise your earnings in the Dominican Republic.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for the Dominican Republic.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in the Dominican Republic, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in the Dominican Republic and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Dominican Republic
One of the most consistently challenging aspects of contracting in the Dominican Republic is complying with the country’s tax system. As well as paying tax in the Dominican Republic, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Dominican Republic
If you’re working in the Dominican Republic under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in the Dominican Republic for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in the Dominican Republic, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in the Dominican Republic through PAYE is left with the prospect doing everything themselves.
Do you know much about Dominican Republic Tax Law? Does the Dominican Republic have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in the Dominican Republic can range from 15 to 25 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Dominican Republic
|When Do You Need to Lodge Your Tax Return?||31 March (of the year following the income tax year)|
|Tax Filing Deadline||31 March (of the year following the income tax year)|
|Can you file it online?||Yes, https://www.dgii.gov.do/ofv/|
How to File Taxes in Dominican Republic as a Contractor
It is recommended that you consult a translator and/or tax specialist as the Dominican Republic tax authority (Direccion General de Impuestos Internos) website and all forms are in Spanish.
Step 1: Register
Register for the Registro Nacional de Contribuyentes (National Registry of Taxpayers). You can do this online here(link is external). Under Inscripción (Registration), select Personas Físicas (Individuals) and fill in the required data.
Alternatively, you can register in person at a tax office with the following documents:
- Form RC-01(link is external)
- Identity card or passport (if you are a foreigner)
- Cédula de Identidad (if applicable)
- Certificado Registro Mercantil (if applicable)
Step 2: Obtain a Número de Comprobante Fiscal (NCF)
An NCF is the alphanumeric sequence (1 letter and 10 numbers) on a Comprobante Fiscal or receipt which certifies the transfer of goods or provision of services. There are 9 different types of receipts and taxpayers must obtain a NCF for every provision of a good or service.
You can access comprehensive instructions on the different types of receipts and how to obtain NCFs for each type here(link is external).
Keep a record of all transactions carried out.
Step 3: Complete Forms
Income is declared by filling out Form 606, 607, 608 or 609. These can be accessed here.& Form 607 (Formato de ventas Bienes/Servicios) is the relevant form for employees.
You are also required to fill out an affidavit. All affidavits can be found here(link is external). For an employee whose tax is withheld by an employer, the relevant form is IR-18, found under Impuesto sobre la Renta (Income Tax) and Asalariado (Salaried). Individuals with other sources of income (apart of employment income) may also be required to complete Form IR-1, found under Impuesto sobre la Renta (Income Tax) and Persona Física (Physical Persons).
Step 4: Submit Forms
Forms can be submitted online via the Oficina Virtual de Impuestos Internos here(link is external), or in person at the tax office.
Tax Figures in Dominican Republic
|Currency||Dominican Republic Peso (DOP)|
|Tax-free Threshold in Dominican Republic||DRP416,220|
|Income Tax Rates|
Deductions: Individuals may deduct up to 10% of their taxable income for educational expenses incurred for the benefit of themselves or their direct dependents. Residents are entitled to a standard deduction of DOP399,923 on gross taxable income annually.
Tax Residency in Dominican Republic
When do you become a tax resident in Dominican Republic
You become a tax resident in Dominican Republic when:
You become a tax resident in the Dominican Republic when you are present in the country for 183 days or more in a fiscal year, whether continuously or not.
Does the 183 day rule apply in Dominican Republic
Am I taxed on my global income in Dominican Republic
Individuals are generally taxed on their Dominican-source income only. Residents are taxed on certain sources of foreign investment income.
Foreign individuals who become residents are subject to tax on their global income from the third taxable year in which they become resident.
Non-residents are taxed on their Dominican-source income only.
Can you set up your own Limited Company in Dominican Republic?
|How long does it take to set up||7 days|
|How much does it cost||DOP13,255 + 1% of capital|
|Is it easy?||Starting a Business Rank: 116/190 (Source: World Bank)|
Tax Calculator in Dominican Republic
If you are a contractor and want a calculation on your tax and net retention in the Dominican Republic, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Dominican Republic
Contractors in the Dominican Republic are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Dominican Republic umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in the Dominican Republic taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Dominican Republic tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Dominican Republic
We work with numerous umbrella companies in the Dominican Republic, many of whom are experts in tax and immigration laws. If you have any questions about tax in the Dominican Republic, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Dominican work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in the Dominican Republic but without the overhead of directly dealing with the Dominican tax authorities. Get in touch with us today for some reliable advice on tax in the Dominican Republic!
A Contractor’s Guide to Work Permits in Dominican Republic
Immigration is one of the primary concerns for any contractor hoping to start working in the Dominican Republic. Permanent employees will find it easy to get their Dominican work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Dominican work permit, known more commonly as the Visa de Negocios con Fines Laborales, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in the Dominican Republic is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in the Dominican Republic (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in the Dominican Republic. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout the Dominican Republic and match contractors with the right company for them. If you’ve already secured a contract in the Dominican Republic, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).