Taxes and taxation in Dominican Republic

The Tax Reform, approved by President Fernandez on September 27, 2004 represents the most important tax legislation since the promulgation of the Code of Taxes in 1992. The most important provisions of the law are as follows :

- The tax ITBIS (VAT) rate passes from 12 to 16%.
- Increase in the taxation of alcohol and tobacco.
- Tax of 25% taken on non-alcoholic drinks using of corn syrup like sweetening substance. This provision was strongly criticized by certain sectors like a violation of the Treaty of Free trade negotiated with the United States. President Fernandez exposed his intention to submit a new bill to the Congress for his revocation.
- Tax of 1,5 per thousand (0,15%), for each check bank or credit transfer. Only the withdrawals in liquid and the payments with the Social security or the Dominican Government will be exempted of this tax.
- The personal incomes will be taxable starting from an annual income fixed at 240.000 DOP (Pesos Dominicains), in rise compared to the former amount which was of 197.472 DOP.

Formerly applicable only for residential properties is now extended to commercial, industrial and professional properties.

The rate remains unchanged, 1% of the estimated value, but it applies only to amounts higher than 5.000.000 DOP

Formerly included between 20 to 35%, today a single rate of 3%. Donations will be subjected to a tax of 25%.

The taxes and costs applicable to the real estate transfers were reduced to approximately 4% of the estimated value instead of the former 5.5%. However, the transfers taxation carried out via financial establishments, formerly free of taxes, from now, will be calculated on the same basis as other transfers concerning properties estimated at one million pesos and more.

The taxes for a company creation increase to 0,5% on the authorized capital. The total cost for a company creation, out fees of lawyers, will amount now to approximately 1,5% of the authorized capital.