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Dominican Republic

Taxes

If you want to do business in Dominican Republic, this article explains the tax laws for a LLC which is the most common legal entity in Dominican Republic.

Dominican Republic taxes corporate income on a territorial basis. This means that usually offshore income, from our research, and your results may vary, is not subject to taxation. However, foreign-source income from investments and financial gains may be taxable, but a foreign tax credit up to the amount of the tax payable in the country is usually available. Standard rate of taxation on a LLC entity is 27%. This ranks Dominican Republic as 132nd when compared to CIT globally.

The value added tax (VAT) rate is 18%, which ranks Dominican Republic as 120th when compared to VAT taxation rate internationally. In terms of other taxation, an employer will contribute 7.10% to the equivalent of a social security fund and an employee will contribute 2.87%.

Thin capitalisation standards are in effect. Thin capitalisation refers to any sort of laws on a business and the debt-to-asset ratios. Dividends paid by a resident entity are subject to a final withholding tax of 10%. Dividends are a distribution of a portion of a company earnings, voted by the board of directors, to a particular class of shareholders. Dividends can be either cash payments, shares of stock, or other property. Capital Gains are usually subject to Corporate Income Tax. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.

The interest withholding tax rate is estimated at 10%. This means that the relevant tax authorities expects relevant legal entities to automatically withhold 10% of interest payments to non-residents. The dividends withholding tax rate is 10%. Which means that the tax authorities expects legal entities to withhold 10% of payments abroad on dividends. The royalties withholding tax rate is 27%. Which means that the taxman expects companies to withhold 27% of payments on royalties to non-residents.
There is a capital duty. There is a tax on individual's net wealth in Dominican Republic. There are real property and transfer taxes. There are inheritance taxes. We are aware of widely used R&D initiatives that provide tax relief and several free trade areas for manufacturing export companies, which benefit of a full tax and duty exemption.

The above is not tax or legal advice for your company's circumstances. We are able to help you to find a lawyer in Dominican Republic who can properly advise you. Want to work together? Click incorporate now if you are in a hurry, or press the free consultation button above.

Country details

Dominican Republic
DOP
Santo Domingo
North America
Spanish (Dominican Republic)
9,823,821

Tax treaties

Country Type Date Signed
Spain DTC  2011-11-16
Canada DTC  1976-08-06
United States TIEA 1989-08-07

Tax treaties Map

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