DOMINICAN REPUBLIC Law and Practice Contributed by: Sarah de León Perelló, Elizabeth Silfa Micheli and Naomi Rodríguez Manzueta, Headrick Rizik Álvarez & Fernández
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers An employer is under the obligation to withhold income tax on salaries paid to its employees. All natural and legal persons residing or domiciled in the Dominican Republic will pay income tax on rev - enue of Dominican source and on revenue of foreign source originating from financial investments and gains. Currently, individuals residing in the Dominican Republic are subject to income tax ranging from 15% to 25% of their taxable net income for each fiscal year. The exempted annual income is adjusted every year according to the inflation rate for the previous year published by the Central Bank of the Dominican Republic. The annual income of up to DOP416,220 is exempted from income tax and, above that sum, the following scale would apply. • Annual income from DOP416,220.01 to DOP624,329.00: 15% for the sums exceeding DOP416,220.01. • Annual income from DOP624,329.01 to DOP867,123.00: DOP31,216.00 plus 20% for the sums exceeding DOP624,329.01. • Annual income from DOP867,123.01 and above: DOP79,776.00 plus 25% for the sums exceeding DOP867,123.01. Notwithstanding the foregoing, pursuant to Law 30-26, effective 1 January 2027, annual income of up to DOP480,000.00 shall be exempt from income tax. Annual income in excess of such amount shall be subject to the following progressive income tax rates: • From DOP480,000.01 to DOP685,000.00: 15% of the amount exceeding DOP480,000. • From DOP685,000.01 to DOP910,000.00: DOP30,750.00, plus 20% of the amount exceeding DOP685,000.00. • From DOP910,000.01 to DOP4,800,000.00: DOP75,750.00, plus 25% of the amount exceeding DOP910,000.00.
• In excess of DOP4,800,000.00: DOP1,048,250.00, plus 27% of the amount exceeding DOP4,800,000.00. Individuals shall be considered resident of the Domini - can Republic for tax purposes if they are in the Domin - ican Republic for over 182 days, continuously or not, during a fiscal year. National or foreign individuals who come to reside in the Dominican Republic will only be subject to the payment of income tax on their revenues of foreign source from investments and financial gains from the third year or taxable period to be counted from the period on which they became residents. Additionally, if a non-resident employee receives income from a Dominican source, those amounts shall be subject to local taxes, specifically income tax, amounting to 27% for foreign/non-resident individuals and entities. Complimentary compensation given to an employee is subject to income tax (27%) over the gross amount of such compensation. Housing, transportation, mobile phone charges, among others, is considered as com - plimentary compensation. Unlike the income tax with - holding on the salaries of employees, this tax is to be covered by the employer and not by the employee. All companies that have salaried employees must be registered with the Social Security Treasury (TSS) and make their payments on a monthly basis as follows. • Family health insurance (SFS): 10.13% of the quot - able salary (7.09% shall be covered by the employ - er and 3.04% by the employee). • Pension fund (AFP): 9.97% of the quotable salary (7.10% covered by the employer and 2.87% by the employee). • Occupational risk insurance (SRL): the employer must pay a fixed fee of 1% on the salary of the employee and an additional variable fee of up to 0.6% on the salary of the employee depending on the risk level of the activities performed by the company. In addition, the employer must pay the National Insti - tute of Technical Professional Training (INFOTEP) 1%
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