INDIVIDUAL TAXES
GENERAL NOTE
The information in this entry is current as of January 1998. For subsequent developments consult the contact listed above.
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 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) 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 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$7,560 per month (RD$90,720 annually). Christmas bonuses are tax exempt.
OTHER TAXES
Social security taxes/Employers contribute 7% of salaries and withhold 2.5% from employees. Because employees with compensation exceeding RD$744 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 are payable on income.
TAX ADMINISTRATION
Returns/Spouses are required to file separate income tax returns covering their respective income. 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$60,000 yearly is allowed for withholding purposes.
Tax rates
Basic tax/Individuals pay tax on the excess of RD$90,000 received. Personal income is taxed at the following rates:
TAXABLE INCOME TAX ON PERCENTAGE
OVER NOT OVER COLUMN 1 ON EXCESS
0 RD$90,720…………………-………………0
RD$90,720 151,200……………………-………………15
151,200 226,800…………………RD$9,072……… 20
226,800……………………………… 24,192 25
INDIVIDUAL TAX CALCULATION
Calendar year 1997
Assumptions
Resident alien, living in the Dominican Republic; husband and wife, two children; only one spouse is allowed to earn all the income.
Tax computation
Salary…………………………………………………………RD$900,000
Interest (other than nontaxable interest) ……………… 90,000
Christmas bonus…………………………………………… 75,000
Total gross income………………………………………… 1,065,000
Less:
Personal standard deduction……………………90,720
Christmas bonus(maximum) …………………75,000 165,720
Taxable income……………………………………… RD$ 899,280
Income tax (Note 1) ……………………………… RD$ 192,312
Notes:
1. Determined as follows:
AMOUNT
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