WHT on dividends
Dividends paid in cash to resident and non-resident individuals or corporations are subject to a WHT of 10%.
WHT on transfers of shares
There is a 1% WHT on the value of the transfer of shares received by the seller in regard to transactions between local entities. Even though transactions between foreign entities are not subject to the 1% WHT, they are subject to capital gain tax.
Such WHT is a payment on account against capital gain tax, payable by the seller through the Form IR-2 (legal entities) or Form IR-1 (individuals), as applicable. However, if they can substantiate that the transaction will not generate a capital gain or that the 1% WHT would generate a capital loss, they may request of the tax authorities, no later than 30 days prior to withholding filing/payment's due date, to be exempt from this obligation.
This 1% WHT should be filed and paid to the tax authorities through the monthly WHT return (IR-17 Form) within the first ten days of the month following the payment to the seller. In case the purchaser is an individual, the 1% WHT is not applicable.
WHT on interest payments
Financial institutions are appointed as 1% WHT agents on the value paid or credited on account for interest payments of any nature to legal entities.
The interests paid by financial institutions will constitute a deductible expense for tax purposes, provided the WHT was made.
In addition, this rule obligates financial institutions to provide a monthly electronic file, directly to the tax authorities or through the Banks Superintendency, containing all the information related to the interest payment, including the date, value, and identity of the beneficiary.
WHT on payments to foreign corporations
The WHT on payments to foreign corporations, which are not permanently established in the Dominican Republic, are as follows:
|Dividends and interest
|Up to 10
|Up to 10
- 0% or 10% depending on the type of ownership since the Canada-Dominican Republic Treaty contains the more beneficiary treaty clause.
- 0% or 10% depending on if the Spanish parent company has more than 75% participation in the Dominican subsidiary. Branches are not subject to profit remittance tax.