Buyer's Guide Tax Exemption for Investors and Pensioners

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Buyer's Guide: Tax Exemption for Investors and Pensioners in the Dominican Republic

The Dominican Republic is primarily a service economy and, like other countries in the world has a system of tax collection, which is covered under Law 11-92 of the Dominican Tax Code. Dominican tax system covers source income of individuals or entities, whether Dominican or foreign, who are based in the country.

Among the taxes prevailing in the country are: The Income Tax (IRS) Tax on Transfer of Industrialized Goods and Services (ITBIS / IVA), Real Property Tax (IPI), Real Estate Transfer Tax; among others of importance. However, in order that the country has a favorable climate for investment, the government has created special tax laws aimed specifically at foreign investors, favoring certain types of investments and giving people who are interested in residing in our countryfavorable legal facilities for them.

Among the taxes collected in the country are:

• The Income Tax or ‘Impuesto Sobre la Renta’ (ISR)
• Tax on Transfer of Goods and Services, known as “Impuesto a las Transferencias de Bienes Industrializados y Servicios” (ITBIS / IVA).
• Real Property Tax, or “Impuesto a la Propiedad Inmobiliaria” (IPI)
• and Real Estate Transfer Tax,…among others of importance.

However, in order to foster an inviting environment for foreign investment, the government has created special tax laws aimed specifically at foreign investors, favoring certain types of investments and providing those who are interested in residing in our country, more favorable legal advantages.

Among the tax benefits available, are those for foreign retirees, pensioners and annuitants from foreign sources, which allows for easy permanent residency within 45 days of application.  This benefit allows for exemption of tax on;

• Furnishings, Personal articles and Partial taxes on vehicles brought into the country
• as well as vehicles that are purchased on the local market, which will be exempt from the ITBIS and Selection Consumption Tax or (ISC).

In addition to the aforementioned benefits, there are others benefits of great importance, such as:

• The exemption from real estate transfer taxes (Impuestos sobre Transferencias Inmobiliarias) for the first property acquired, which is an equivalent of 3% of the value of the property.
• 50% exemption of Real Property Tax (Impuesto a la Propiedad Inmobiliaria,) when applicable, for example, when the property exceeds Five Million Pesos (RD$ 5,000,000.00).
• 50% exemption of tax on mortgages, for lending institutions when financial institutions are regulated by law.
• Exemption from taxes levied on dividends and interest generated in the country or abroad.
• 50% exemption on capital gains tax (Impuesto sobre Ganancia de Capital,) provided the annuitant is the major shareholder of the company and is he that is subject to the payment of this tax and that such activity is not engaged in commercial and industrial activities.

There is no doubt that the Dominican Republic is a paradise of which to think about as an option when retirement comes to mind, as this provides excellent benefits to the investor or retiree, differing from other countries where these taxes must be paid.  If a foreigner decides to take up residence in the Dominican Republic, he will find there are many advantages to make a permanent stay here!

Information submitted by: Lic. Yaneiry Jiménez Arias  |  LEBRON & JIMÉNEZ
Phone:  (809) 466-0009  |  Email: yjimenez@lebronjimenez.com  |  Web: www.lebronjimenez.com

*Courtesy translation provided by Punta Cana Lifestyles Real Estate.