SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments in the past year.
TERRITORIALITY AND RESIDENCE
The Dominican Republic follows a territorial concept for the determination of taxable income. Dominican-source income is subject to tax, but foreign income is not.
Residents and nonresidents are not taxed in the same manner.
Persons are resident in the Dominican Republic if they live in the country for more than 182 days during a calendar year.
GROSS INCOME
Employee gross income/ Broadly, the entire remuneration for personal services rendered in the Dominican Republic is subject to income tax.
However, with regard to compensation-in-kind, the employer is liable for paying tax (on a monthly basis) as set forth by the Tax code. This additional compensation includes housing, living allowances, and automobiles.
Capital gains and investment income/ Capital gains are taxed at a rate of 25%. Interest from time deposits, savings accounts, and other sources that is received from financial institutions in the Dominican Republic is tax exempt. Cash dividends to resident and nonresident individuals are subject to a withholding tax of 25%; the withholding represents a credit to be offset against future tax payable. Foreign investment and financial income of Dominican residents is subject to tax (according to the Tax Code).
DEDUCTIONS
Business deductions/ In general, all expenses incurred in the production of assessable income are deductible.
Nonbusiness expenses/ Nonbusiness expenses are not deductible.
Personal allowances/ Residents have a standard deduction of RD$8,150 per month (RD$97,800 annually). Christmas bonuses are tax exempt.
OTHER TAXES
Social security taxes/ Employers contribute 7% of salaries and withhold 2.5% form employees. Because employees with compensation exceeding RD$1,001 per week are excluded, foreigners are seldom required to be covered.
Technical education tax/ A payroll-based contribution is imposed on employees and employers toward the financing of a program for the technical instruction and training of workers. The contribution of employers is 1% of total monthly payroll; for employees, it is 0.5% of bonuses received.
Other taxes on income/ No other taxes payable in income.
TAX ADMINISTRATION
Returns/ Spouses are required to file separate income tax returns covering their respective incomes. Income from property held in common is included in the return of the husband. Individuals are required to file a personal
tax only when income from sources different from the salaries, wages, and bonuses (where the employer withholds tax) is received.
Payment of tax/ Employers are required to withhold income tax on salaries, wages, and bonuses. Only a personal standard allowance of RD$97,800 yearly is allowed for withholding purposes.
TAX RATES.
Basic tax/ Individuals pay tax on the excess of RD$97,800 received. Personal income is taxed at the following rates.
Taxable income tax on Percentage
Over Not over Column 1 on excess
0 RD$ 97,800 - 0
RD$ 97,800 162,996 - 15
162,996 244,488 RD$ 9,779 20
244,488
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