Dominican Republic

The Dominican Republic imposes various taxes, starting with the value-added tax (VAT), also known as ITBIS (Impuesto a la Transferencia de Bienes Industrializados y Servicios). VAT is applied to industrial goods and services at a rate of 18 percent. Certain essential goods and services, such as basic food items like eggs, milk, grains, vegetables, educational materials, books, and medical products like prosthetics, are exempt from this tax. Additionally, services such as education, health, insurance, electricity, and water are also exempt from VAT. A zero percent rate applies to exports, including sales to Free Trade Zones (FTZs).

The Dominican Republic applies a territorial tax system, taxing companies only on Dominican-source income at a CIT rate of 27%. An alternative minimum tax of 1% on total assets applies when the standard CIT liability is lower. The CIT return must be filed within 120 days after the end of the fiscal year (which may end on 31 December, 31 March, 30 June, or 30 September), with the final payment also due at that time. Businesses must also make estimated monthly advance payments on the 15th of each month. There are no local or provincial income taxes.

Personal income tax (PIT) in the Dominican Republic is charged at a headline rate of 25 percent. Individuals are required to file their PIT returns and make the final payment by March 31 each year. Employees are generally taxed monthly on employment income.

Selective consumption taxes (Impuesto Selectivo al Consumo or ISCs) are applied to certain goods and services, with rates varying by product. Alcoholic beverages are taxed at 10 percent, while tobacco products face taxes between 25 and 50 percent depending on the quantity. Telecommunications services are taxed at 10 percent, insurance services at 16 percent, and financial transactions involving checks or wire transfers at 0.0015 percent.

In the Dominican Republic, withholding tax (WHT) is applied to certain income types such as dividends, interest, and royalties. For residents, a WHT rate of 10 percent is applied to dividends, while interest and royalties are not subject to withholding tax. For non-residents, the WHT rate is 10 percent for dividends and interest, while royalties are taxed at a higher rate of 27 percent. These rates reflect the country’s approach to taxation on income earned within its jurisdiction by both residents and non-residents, particularly on passive income streams such as investments and intellectual property rights.