When it comes to setting up a business, you must consider all local regulations, including tax requirements in the Dominican Republic. In this way, you will ensure a smooth market entry and avoid compliance issues. As the country increasingly modernizes and professionalizes, this is becoming ever more important.
To support your company incorporation and ongoing operations in the country, you must be aware of and comply with the following accounting and tax requirements in the Dominican Republic. This applies equally to established companies and newer ventures that may be considering international expansion.
At Biz Latin Hub we can help you with tax requirements in the Dominican Republic as part of our market-leading array of back office services. We can make sure you keep compliant in both accounting and legal terms, whether you have been in the market for a long time or if you are want to incorporate a company in the Dominican Republic.
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Accounting and tax requirements
The Directorate General of Internal Taxes (DGII) is the main tax authority in the Dominican Republic. Tax obligations and rights are established by law and are allocated based on the taxpayer’s turn on activities. These are provided from registration to the National Taxpayer Registry (RNC) and must be presented on the established dates.
In the Dominican Republic, there are several tax requirements that companies doing business in the country must take into account, such as:
- IR2- Annual Affidavit of Corporate Income Tax (ISR): Companies that receive income during the financial year must pay 27% on taxable income from legal entities domiciled in the country, this excludes rebates.
- IR1- Annual Affidavit of Personal Income Tax: Self-employed people who received an income through personal work or commercial activities must file for the deadline of March 31st each year.
- ACT-Taxable Assets: Applicable property assets are taxed by 1% on the total value of the property held by the taxpayer. The tax payable must be paid in two equal installments.
- ITBIS-Tax on the Transfer of Industrialised Goods and Services (VAT): 18% tax on the transfer of goods and services.
- IR3- Statement of Employee Withholdings: Tax is to be paid by withholding agents, who are individuals or public and private entities obligated to carry out the corresponding withholding when paying salaries and/or any other cash remuneration to their employees. The withholding rates are progressive, ranging from 15%, 20%, and 25%. Declarations must be made within the first 10 days of each month.
- IR-17 Withholding and additional Remuneration: Payment of other withholdings that companies make each month.
- SC2-Consumer Selective, IST-Selective Telecommunication Tax, and DSS-Selective Insurance: These three declarations must be submitted no later than 20 days of each month. This addresses the industries that sell tobacco, alcohol or telecommunications-related companies.
Other tax requirements in the Dominican Republic also include:
- 10% income tax (ISR) on prizes on winnings made on slot machines.
- 10% income tax (ISR) on winnings made on the lottery and sports bets.
- ISF: Declaration Affidavit Non-Profit Institutions.
- CD-Corruptions Output.
Accounting requirements for the purchase of goods and services
Executives who intend to purchase goods and services in the Dominican Republic must also be aware of the corresponding accounting and tax requirements. Note that there are different formats used to certify that these activities were carried out in full compliance with local regulations, such as:
- Format 606: Used to report the purchase of goods and services that include the tax receipt number. This must be submitted within the first 15 days of each month.
- Format 607: This format is submitted to declare sales of taxpayers goods and services that include the tax proof number.
- Format 608: Used to send canceled invoices.
- Format 609: This is a format presented for taxpayers who make a payment from abroad.
Likewise, note that International Accounting Standards (IAS) and their interpretations in Spanish will apply as mandatory standards in the Dominican Republic. These accounting requirements must be taken into account for the following cases:
- IAS 1: Presentation of Financial Statements.
- IAS 2: Stocks or Inventories.
- IAS 7: Statement of Cash Flows.
- IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors.
- IAS 12: Income Tax.
- IAS 16: Property and Plant equipment.
- IAS 17: Leases.
- IAS 19: Remuneration to Employees.
FAQs when understanding accounting and taxation in the Dominican Republic
Based on our extensive experience these are the common questions and doubts from our clients when looking to understand accounting and taxation in the Dominican Republic.
The corporate tax rate in the Dominican Republic is 27%.
Businesses in the Dominican Republic are taxed according to the IFRS, which works on the basis of paying tax on the difference between revenue minus deductible expenses.
The IRS in the Dominican Republic is called the Dirección General de Impuestos Internos (DGII) and it is responsible for implementing the fiscal and customs legislation in Dominican Republic.
Dominican accounting standards require companies to prepare their financial statements in Spanish and according to International Financial Reporting Standards. Accounting registries and books of account must be recorded in Spanish.
The equivalent of a CPA in the Dominican Republic is a certified public accountant (Contador Publico Autorizado—CPA).
Yes it does. Dominican accounting standards require companies to prepare their financial statements in Spanish and according to International Financial Reporting Standards.
Receive assistance from a qualified account and tax specialist
Executives doing business in the Dominican Republic must be aware of accounting and tax requirements to fully comply with local regulations and ensure the good standing of their company. For this reason, it is vital that you have the support of a qualified account and tax specialist from the start.
At Biz Latin Hub, our team of bilingual experts with extensive experience can guide you through the steps and documentation required to meet all the accounting and tax requirements in the Dominican Republic. Our personnel trained in all areas related to the implementation of new businesses in Latin America can assist you with company formation, hiring, and back-office services.
Contact us now to receive personalized assistance and learn more about our team and expert authors.
