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Income Tax

Dominican Republic - Income Tax


Income tax is governed by the Direccion General de Impuestos Internos, or the DGII, and is established by Law 11-92. All work carried out within the Dominican Republic is taxable, but any work sourced from outside the country is not. However, once you have held residency for over 3 years then income from overseas, both financial and investment, is liable to taxation. In practice this is never collected. If you work for a company they will automatically deduct the tax, and those who are self employed should register with the DGII. Tax is then paid monthly usually, but often the DGII will demand more money at the end of the tax year – especially from foreigners.

Tax is based on a sliding scale, which increases each year in line with inflation. Roughly the first US$9500 a year is tax free, the second US$5000 is taxed at 15%, the next US$ 5000 at 20% and above that at 25%. In reality only 8% roughly of the country pays tax, as everyone else earns below the minimum level. Those who work on a freelance basis should be aware that it is standard practice for the client to deduct 10% of the agreed fee for taxation, even if one is earning below the minimum level. There is no double taxation agreement with the UK or with the USA, but there is one with Canada.


Useful Resources

A great book with excellent information on taxation, accompanied by a website which keeps the key information updated.

Expat FAQs: Moving to and Living in the Dominican Republic. By Ginnie Bedggood and Ilana Benady
www.expatfaqsdr.wordpress.com

Direccion General de Impuestos Internos
http://www.dgii.gov.do

This guide was compiled with the help of Lindsay de Feliz, a British expat blogger living in the Dominican Republic. Visit her blog at yoursaucepans.blogspot.com.


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