Do You Pay Taxes in the Dominican Republic?

The Dominican Republic’s tropical environment and favorable economic conditions make it an appealing destination for retirement, investment, and business ventures. As a growing hub in the Caribbean, individuals and companies considering a move must understand the local tax obligations. A clear grasp of these financial responsibilities is part of the financial planning process and ensures long-term compliance.

Determining Your Tax Residency Status

An individual’s tax obligations in the Dominican Republic are directly tied to their residency status, which is determined by physical presence. According to the Dominican Tax Code, a person is considered a tax resident if they spend more than 182 days in the country during a fiscal year. These days do not need to be consecutive, as the total is cumulative.

Beyond the 182-day rule, a person may also be considered a resident if their “center of vital interests” is located in the Dominican Republic. This alternative test considers factors such as the primary location of an individual’s economic activities, professional base, or family connections. It is designed to apply to individuals who may not meet the physical presence test but have clear and substantial ties to the country.

The distinction between resident and non-resident status is significant for tax liability. Tax residents are subject to taxes on their worldwide income, though this often applies after the third year of residency. In contrast, non-residents are only taxed on income that is generated from sources within the Dominican Republic.

Taxes on Personal Income and Assets

Personal Income Tax (ISR)

The primary tax on individual earnings is the Personal Income Tax, known as Impuesto Sobre la Renta (ISR). This tax applies to various forms of income, including salaries, wages, and fees from independent professional services. For 2024, there was an annual exemption for income up to DOP 416,220.

Earnings between DOP 416,220.01 and DOP 624,329 were taxed at a rate of 15%. For income falling between DOP 624,329.01 and DOP 867,123, the rate increased to 20%. Any income surpassing DOP 867,123.01 was taxed at the highest rate of 25%. Employers are responsible for withholding this tax directly from the salaries of their employees on a monthly basis.

Capital Gains Tax

Profits realized from the sale or transfer of capital assets are subject to a capital gains tax. This tax applies to assets such as real estate, stocks, and other securities. The gain is calculated as the difference between the selling price and the asset’s original cost basis, adjusted for inflation.

The tax rate on capital gains is a flat 25% of the net gain. This single rate simplifies the calculation compared to the progressive structure of the personal income tax.

Real Estate Property Tax (IPI)

An annual tax is levied on real estate property, known as the Impuesto a la Propiedad Inmobiliaria (IPI). This tax applies to the value of developed urban and rural properties as well as vacant lots.

The tax rate is 1% on the value of real estate assets that exceeds an annually adjusted exemption. For 2025, the exemption for individuals is DOP 10,190,833, so only the value above this amount is subject to the tax.

Taxes on Business and Consumption

Corporate Income Tax

Businesses operating in the Dominican Republic are subject to a corporate income tax on their net profits. This tax is levied at a flat rate of 27% on the taxable income of the company. The taxable income is determined by subtracting allowable deductions and expenses from the company’s gross revenue.

Value-Added Tax (ITBIS)

A broad-based consumption tax, known as the Tax on the Transfer of Industrialized Goods and Services (ITBIS), is applied to most goods and services. This tax functions similarly to a Value-Added Tax (VAT) in other countries, with a standard rate of 18% included in the final price of most consumer purchases.

Certain goods and services are exempt from ITBIS. These include:

• Basic food staples
• Educational materials
• Healthcare services
• Utilities

The tax is collected by businesses at the point of sale and then remitted to the government.

The Tax Filing and Payment Process

To engage with the Dominican tax system, individuals and businesses must first obtain a taxpayer identification number, the Registro Nacional de Contribuyentes (RNC). This number is issued by the national tax authority, the Dirección General de Impuestos Internos (DGII). The RNC is required for all tax filings and official financial transactions.

The primary method for submitting tax returns is through the DGII’s online portal. Taxpayers can complete and submit their annual income tax declaration, the Declaración Jurada de Impuesto Sobre la Renta para Personas Físicas (IR-1), directly through this platform. While online filing is the standard, in-person assistance and filing options are available at DGII service centers.

The deadline for filing the annual income tax return for individuals is March 31 of each year, covering the income from the previous calendar year. Tax payments can be made through several channels. The most common methods include online payments via internet banking platforms linked to the DGII system or direct payments at authorized local banks.