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Dominican Rep

14 October 2020

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Dominican Republic Budget for 2021 Includes Special Taxes to Increase Revenue

The Dominican Republic has published the draft Budget for 2021. Some of the main tax-related measures of the budget include the introduction of new special taxes to increase revenue, including:

  • A temporary contribution of 8% on the "extraordinary profit" of legal entities earned in 2020, which is the amount of profit reported in the return filed in 2021 (for 2020) that exceeds a 5% increase in profit as compared to the previous year (not applicable to new companies whose second fiscal year is 2020);
  • A special temporary 3% tax on transactions in foreign currency using credit and debit cards, as well as any other equivalent means of payment by resident natural or legal persons for goods and services, including where residents are traveling outside the Dominican Republic, with withholding performed by the financial institution;
  • A special 1% tax on financial assets of regulated financial entities, which will be considered a deductible expense for income tax purposes.

Further to the above, the budget also includes that the annual inflation adjustment for individual income tax purposes will not be applied for 2021, and the exemption for the "Christmas salary" will be temporarily suspended for 2021. It is also provided that the charge of the tax on the transfer of industrialized goods and services (ITBIS) in relation to textile manufacturing, as a priority industry, will be reduced by 50%.

Click the following link for the Dominican Republic Budget webpage.

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