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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

Expenses incurred for the purpose of business are deductible unless they are specifically disallowed.

The following general expense types are not deductible or have limited deductibility for tax purposes in Dominican Republic:

  • Personal expenses
  • Goodwill
  • Fines and penalties
  • Income tax and interest and surcharge imposed on such taxes
  • Undocumented expenses
  • Prior period tax adjustments
  • Profits to be capitalized
  • Loss incurred under Illicit business operations
  • Donations made to registered charitable institutions in excess of 5% of the taxable income
  • Donations made to unregistered charitable institutions
  • Expenses paid in cash over DOP 50,000
  • Expenses  incurred with related parties in respect of expense distribution agreements on fulfilment of certain conditions
  • Deduction of Interest is subject to following conditions:
    • Interest is related to acquisition, maintenance and/or operation of taxable income-producing assets
    • Interest is not related to loans taken for purchasing shares
    • Interest expense is recognized on accrual basis
    • It is supported by documents like loan agreements, invoices etc
    • Loan and interest must be on arm's length basis
    • Tax is withheld on such interest and deposited with tax authorities