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 domi - ciled in the Dominican Republic will pay income tax on revenue of Dominican source and on rev - enue of foreign source originating from financial investments and gains. 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. For 2024, 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. Individuals shall be considered resident of the Dominican Republic for tax purposes if they are in the Dominican 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 tax - able 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 indi - viduals and entities. Complimentary compensation given to an employee is subject to income tax (27%) over the gross amount of such compensation. Hous - ing, transportation, mobile phone charges, among others, is considered as complimentary compensation. Unlike the income tax withhold - ing 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 quotable salary (7.09% shall be covered by the employer 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 Nation - al Institute of Technical Professional Train - ing (INFOTEP) 1% of its employee payroll and
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