Broadly, the entire remuneration in cash for personal services rendered in the Dominican Republic is subject to income tax, except Christmas bonus, contributions to the social security system, severance, and pre-notice payments. Non-cash compensations given to officers or employees by companies (compensations in kind) are taxed at a rate of 27% (Fringe Benefit Tax or FBT), which is undertaken by the company. These compensations include car, housing, relocation allowances expenses, club memberships, etc. However, the calculation for the FBT on vehicles is different. The table shown below includes the percentages that should be taken into account.
|Calculation of FBT on vehicles|
|Ownership of vehicle||Assigned to habitual working employee||Personal use (%)||Values subject to proportionality|
|Employer or rented to third party||In the office||40||Depreciation or rent, fuel, insurance, etc.|
|Employer or rented to third party||Outside the office||20|
|Employee||In the office||20||Fuel, repairs and maintenance, insurance, etc.|
|Employee||Outside the office||10|
The company must pay taxes for this compensation on a monthly basis. This tax is required in order to consider these expenses as deductible.
Capital gains are taxed as ordinary taxable income and are determined by deducting the acquisition cost adjusted by the inflation rate from the sale amount.
Cash dividends are exempt, provided the 10% WHT was applied by the entity.
Shares dividends are also exempt.
Interest received by resident individuals from time deposits, savings accounts, and other sources that is received from financial institutions in the Dominican Republic is tax exempt.