Editor Note: This summary
reflects the tax
laws as of July 31, 1996.
INCOME TAXES ON CORPORATIONS
1. Rates
The rate of corporation tax is a flat 25%.
For tax purposes, the term corporation?broadly covers stock
companies, limited partnerships, general partnerships, joint stock companies, and joint enterprises. All of these taxpayers are subject to the above income tax rates.
2. Local Income Taxes
There are no municipal or provincial income taxes for corporations in the Dominican Republic.
3. Capital Gains Taxes
Capital gains are subject to income tax at the same rate as corporation tax (see item 1). Ordinary losses can offset capital gains, but capital losses can offset only capital gains.
4. Branch Profits Taxes
Profits of branches of foreign corporations are subject to the
corporate income tax (see item 1).
5. Foreign Tax Reliefs
Financial and investment income from foreign sources obtained by enterprises domiciled in the Dominican Republic is considered taxable income. Foreign enterprises not domiciled in the Dominican Republic pay taxes on income from Dominican sources.
Individuals who become residents of the country will pay taxes on their income from foreign sources as of the third year after becoming residents.
6. Classification of Corporations
There are no differences in the tax treatment of corporations. Both domestic and foreign corporations are subject to the income taxes indicated above.
7. Payment of Taxes
Corporations are required to make three prepayments towards their annual tax liabilities, totaling 100% of the prior year tax liability, and to pay any balance upon filing their income tax returns.
The prepayments fall due on the sixth, ninth, and twelfth months following the closing date, and are equivalent to 50%, 30% and 20% of the previous year income tax liability. The balance should be paid within a period of 120 days after the closing date.
INCOME TAXES ON INDIVIDUALS
9. Rates
The rates of individual income tax are as follows:
Taxable Income
Tax on Percentage
Over Not Over Lower Amount on Excess
RD $ 60,000 RD $100,000 RD $ 0 15%
100,000 150,000 6,000 20
150,000 10,000 25
10. Local Income Taxes
There are no municipal or provincial income taxes for individuals in the Dominican Republic.
11. Capital Gains Taxes
Capital gains are subject to income tax at the same rates and
conditions as for corporations (see item 3).
12. Foreign Tax Reliefs
Taxes paid abroad on income from foreign sources taxable by law are credited in the country in an amount not exceeding the tax payable in the country corresponding to that same income.
13. Tax Period
Individuals are taxed on a calendar-year basis. Tax returns must be filed no later than March 31 of the following year. Tax payment schedules are the same as those for corporations.
INCOME TAXES ON NONRESIDENTS
15. Liability to Tax
Nonresidents of the Dominican Republic are subject to tax on income derived from property situated or utilized in the Dominican Republic;or derived from any trade, industrial, agricultural, cattle, mining or similar activity carried on in the Dominican Republic. Income from services performed in the Dominican Republic as well as Dominican-source interest income and leasing payments are also subject to tax.
16. Rates
Corporations. Corporations doing business in the Dominican Republic having no permanent establishment in the country must pay tax at the 26% rate, gradually reduced as indicated in item 1.
Individuals. Nonresidents?income from professions and other
personal services and income of employees in the Dominican Republic are subject to the same income taxes as resident individuals. A nonresident is defined as a person that has not resided more than 182 consecutive or nonconsecutive days in the Dominican Republic during a calendar year.
18. Special Withholding Provisions
Taxes must be withheld at source by the payor if the payee does not have a representative or agent or someone acting for the payee with power of attorney in the country. In such cases, there is no obligat
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