Tax In Dominican Republic

A Contractor’s Guide to Taxes :

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:

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 Calculator:

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 :

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:

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!

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/
Currency:
Dominican Republic Peso (DOP)
Tax-free Threshold in:
DRP416,220
Grossed Income:
0 – 416,220
Tax Rate:
0%
Grossed Income:
>416,220 – 624, 329
Tax Rate:
15%
Grossed Income:
>624,329 – 867,123
Tax Rate:
20%
Grossed Income:
>867,123
Tax Rate:
25%
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)
How to File Taxes in:

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.

Notes:

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.

Does the 183 day rule apply in:

Yes

When do you become a tax resident in:

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.

Am I taxed on my global income in:

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.

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