Income derived from certain sources outside the Dominican Republic is not taxable. However if you receive income from financial sources outside the country such as stocks, investments, bonds etc then these are taxed in the Dominican Republic, with pensions and social security benefits exempt.
Taxation for resident foreigners only begins three years after taking residency. Bear in mind, for tax purposes, any person living in the Dominican Republic for more than 182 days in a year is considered a resident.
Self-employed expats should register with the Bureau of Internal Revenue (Direccion General de Impuestos Internos DGII). All taxpayers must register or be registered by their employer and obtain a tax or RNC (Registro Nacional de Contribuyentes) number.
On average only 8% of the population pays tax, since the majority of inhabitants earn below the minimum threshold.
The following are income tax rates for individuals. The income tax thresholds are adjusted every January to allow for inflation, as set by the Central Bank of the Dominican Republic.
The taxes rates are as follows:
- Income up to RD$371,124.00 annually exempt
- RD$371,124.01-RD$ 556,685.00 15% on the excess of RD$371,124.01
- RD$556,685.01-RD$773,173.00 RD$27,834 plus 20% of income above RD$556,685.01
- Income above RD$773,173.01 RD$71,132 plus 25% of income above RD$773,124.01
Employers must pay, within the first 10 days of the month, any tax owed on wages paid to workers the previous month.
State health insurance
In 2001, the social security law was introduced that covers retirement and health insurance. The social security system is not fully developed thus the service provided is very limited. According to the labor law in the Dominican Republic, employers are responsible for payment of social security contributions.