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Dominican Republic - Banking
The official currency in the Dominican Republic is the Dominican peso (RD$). One peso is divided into 100 centavos. Pesos come in $20, $50, $100, $200, $500, $1000 and $2000 notes, while centavos come in $1, $5, $10 and $25 coins. Even though the peso is the official currency in this country, US dollars and Euros are accepted everywhere, because tourism is one of the country's biggest industries. The use of other currencies is sanctioned by the government and the Dominican peso is currently quite stable after a huge value drop in 2004, but inflation is a common issue in this country.
The opening hours in this country vary by bank, but in general, banks are open from 9 am to 4 pm and until noon on Saturdays. Some banks open at 8 am, while some close at 5 pm. Very long queues can expected on work days, especially near the beginning and the end of the month. The best time to visit a bank would be around lunchtime, when most people are at home eating. There are several banks inside supermarkets that have the same opening hours as the supermarkets themselves. A good thing about these is that they are mostly open until 8 pm, when the shopping complex also closes. Many banks in supermarkets are open even on Sundays.
Opening a bank account
Opening a new bank account in the Dominican Republic is quite a straightforward process, although it varies from bank to bank, and sometimes even by branch. As is the case with most businesses in the country, a good personal relationship is always important. It's not common for bank managers to speak English except in expat areas. When opening an account, it's necessary to provide a copy of your passport, a letter of recommendation from the home bank and details of existing bank account with sources of income.
In the Dominican Republic, there are several types of bank accounts. Accounts can be opened in pesos or dollars. A Dominican peso account brings customers the advantage of having a credit or debit card and a cheque book, while a dollar account can only get you a transaction booklet. Credit cards are not common in this country as the interest rates are around 10%, which is quite expensive.
Mortgages and loans
Mortgages and loans are available in the Dominican Republic, but expats must be aware that interest rates are very high. When it comes to mortgages, the penalties for late payment are very high. Due to the high level of interest rates for loans, there are also high levels for savings. The Central Bank offers Certificates of Deposits for different periods of time, with interest paid monthly into the retail bank account. The levels of interest depend on the amount that was invested and the duration. Many expats actually live off this income.
ATMs and credit cards
ATMs can be found all over the country, inside and outside banks, at gas stations, in supermarkets and shopping malls. Expats must be aware of the transaction limits as well. The maximum is usually 10,000 pesos, which is around $210 USD. Because of the presence of ATM fraud, it is best to withdraw money at the bank, where it's always possible to talk to the staff when some problems occur. ATMs usually accept all sorts of cards, not just Dominican, but also foreign ones. However, charges for using the cards of some overseas banks are around 100 pesos.
Visa and Mastercard are widely accepted in this country, but American Express is not an option in some of the country's major outlets. Even though there's a large number of ATMs in the country, expats rarely use credit cards, but rather deal with cash, considering it much safer. Transferring money from abroad can take up to 10 days, and any sum over $10,000 USD is often held by the bank until the recipient proves the source of the funds.
Income tax is established by the law 11-92 and governed by the Direccion General de Impuestos Internos, or DGII. All work which is carried out in the Dominican Republic is taxable, while any type of work from outside the country is not taxable. However, once expats have had residency status for more than three years, their income from overseas - both financial and investing - is the subject of taxation. When expats work for a company, their taxes are automatically deducted, while in the case of self-employed people, it's necessary to register with the DGII. Tax is paid monthly, but the DGII usually demands more money at the end of the year, especially from foreigners.
The tax is based on a sliding scale, which rises each year along with inflation. In reality, only 8% of people pay tax in this country, as all the others earn below the minimum level. Those who work on a freelance basis must know that it's a common practice for the client to deduct 10% of the agreed fee for taxation. There is no double taxation agreement with the United Kingdom and the United States, but there is one with Canada.
More information can be found via the Direccion General de Impuestos Internos.
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