What Is ITBIS in the Dominican Republic?

The Impuesto sobre la Transferencia de Bienes Industrializados y Servicios, or ITBIS, is the Dominican Republic’s primary consumption tax. It functions as a value-added tax (VAT), meaning it is applied to the value added at each stage of the production and distribution chain. It is collected by businesses and remitted to the government, ultimately being paid by the final consumer.

Scope of ITBIS

The application of ITBIS is broad, covering most industrialized goods and a wide array of services. The standard tax rate is 18%, which applies to the transfer of goods and the provision of services unless a specific exemption is provided by law. This rate covers items like electronics, clothing, professional services, and telecommunications.

A reduced rate of 16% applies to a select list of food products, including items such as yogurt, butter, coffee, sugar, and chocolate. This lower rate is intended to lessen the tax impact on certain common household goods.

Conversely, many goods and services are exempt from ITBIS to ease the financial burden on essential areas. Exempt items and services include:

• Basic food items such as fresh meat, milk, eggs, bread, and vegetables
• Medicines, fuels, books, and agricultural inputs like seeds and fertilizers
• Healthcare and all levels of education
• Financial services, including loans and insurance
• Residential rent and public utilities

ITBIS Taxpayer Obligations

Individuals and legal entities who engage in the transfer of taxable goods or services are considered ITBIS taxpayers. Their primary obligation is to act as collection agents for the state, which begins with registration with the tax authority, the Dirección General de Impuestos Internos (DGII).

Before registering for ITBIS, a business must first be inscribed in the National Taxpayer Registry (RNC). The RNC number is a unique identifier required for all tax-related matters. Once the RNC is secured, the taxpayer can proceed with ITBIS registration.

The registration process is completed through the DGII’s online portal, the Oficina Virtual. This formalizes the entity’s status as an ITBIS taxpayer. The business is then legally required to charge ITBIS on its sales, issue official fiscal receipts, and remit the collected tax.

Calculating and Crediting ITBIS

The amount of ITBIS a business remits to the DGII is calculated by netting the ITBIS collected on sales against the ITBIS paid on business-related purchases. The ITBIS collected from customers on sales is known as “Débito Fiscal” (Fiscal Debit). This represents the tax liability from the company’s revenue-producing activities.

The ITBIS that the business pays to its suppliers for goods and services necessary for its operations is called “Crédito Fiscal” (Fiscal Credit). This includes tax paid on inventory, raw materials, office supplies, and professional services. The system allows businesses to credit the taxes they have paid against the taxes they have collected.

The final amount payable is determined by subtracting Fiscal Credits from Fiscal Debits. For example, if a business collects $1,000 in Fiscal Debits and has paid $600 in Fiscal Credits, its ITBIS liability is $400. To claim a Fiscal Credit, the expense must be supported by a valid “Comprobante Fiscal” (fiscal receipt).

Filing and Payment Procedures

After calculating the net ITBIS liability, taxpayers must report and pay the amount due to the DGII. The declaration is made using the “Formulario IT-1,” the standard monthly return for this tax. This form details all fiscal debits and credits for the reporting period.

The deadline for filing the IT-1 return is no later than the 20th day of the month following the period being declared. For instance, the ITBIS declaration for January must be filed by February 20th.

Submission of the IT-1 form is done electronically through the DGII’s Virtual Office portal. Payment can then be made through authorized financial institutions’ online portals or directly at bank branches.