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Tax Laws in the Dominican Republic

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The Dominican Republic has a complex system of tax laws that apply to various aspects of life, including real estate, vehicle transfers, inheritances, gifts, and more. In this article, we will break down the key tax laws and regulations in the country.

Real Estate Taxes

Transfer Tax

A 3% tax is assessed on any transfer of ownership of real estate. This tax applies to all property transactions, including sales and purchases.

Property Acquisition Tax (Impuesto sobre la Adquisición de Bienes Inmuebles)

This tax is levied on the acquisition of real property, with a threshold of RD$6.5 million pesos, adjusted annually for inflation.

Tax Exemptions

  • Built properties valued at RD$6,500,000 or below.
  • Farm properties.
  • Properties whose owners are 65 years old or older, who have owned it for more than 15 years and have no other property in their name.
  • Properties subject to the Tax on Assets.

Mortgage Taxes

A 2% tax is levied on all mortgages recorded in the Dominican Republic.

Vehicle Transfer Taxes

Vehicle Transfer Tax Rate

A 2% tax is levied on any change of ownership of motor vehicles, payable within three months of acquisition.

Inheritance and Gift Taxes

Inheritance Taxes

Inheritance taxes: 3% of the value of the estate, after deductions.

Gifts

Gifts are taxed at a 25% rate, except for gifts to government institutions or recognized nonprofit organizations, or to the family homestead (“bien de familia”).

Withholding Tax

  • Payments abroad to persons or entities not domiciled or resident in the Dominican Republic are subject to a 29% withholding on the amount paid.
  • Payments abroad by a subsidiary domiciled in the Dominican Republic to its parent company abroad are subject to a 10% withholding.
  • Dividends: Corporations must retain 10% of the dividends paid to shareholders.
  • Rentals, fees for services and commissions, and prizes are also subject to withholding taxes.

Deadlines

Beneficiaries must file a declaration with the tax authorities within 90 days of the death of the decedent, with an extension possible in complex cases. Delays in filing are subject to a 2% per month penalty, up to a maximum of 50% of the tax owed.

Penalties

Noncompliance with the transfer tax is subject to fines. Delays in filing inheritance and gift taxes are subject to penalties.