When it comes to setting up a business in the Dominican Republic, you must consider all local regulations, including accounting and tax requirements. In this way, you will ensure a smooth market entry and avoid compliance issues.
To support your company incorporation and ongoing operations in the Dominican Republic, be aware of and comply with the following accounting and tax requirements.
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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: Persons who received an income through wages or investments, loans, property, or services 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 instalments.
- 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: Income tax for persons of self-employment, there are gradual rates which range 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 cancelled 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.
Common Questions 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 Ministerio de Hacienda 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).
All listed companies must follow IFRS 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.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.