background image
7.1. General Rules

Operating losses can be carried forward for 5 years following the year in which the losses are incurred but the set off is capped at  20% of the total amount of losses in each year. The portion of the 20% limit which cannot be set off in a given year is forfeited and may not be carried forward to future years. For the fourth year, losses can be offset up to a maximum of 80% of the net taxable income (i.e. 20% of 80% of net taxable income). Similarly, in the fifth year, losses can be offset up to a maximum of 70% of the net taxable income (i.e. 20% of 70% of net taxable income).

Losses incurred on reorganization of business are not considered as deductible expense. Carryback of losses is not permitted in the Dominican Republic.

Capital losses may only be offset against capital gains. Capital losses on the sale of shares are not deductible for tax purposes.