VAT Standard rate
The standard VAT rate in the Dominican Republic in 2024 is 18%.
ITBIS, or Impuesto sobre Transferencia de Bienes Industrializados y Servicios, is the Dominican Republic’s version of VAT (Value Added Tax).
VAT Reduced rate
16%
- This reduced rate applies to specific food products (sugar, coffee, butter, margarine, oils, yogurt, and other dairy products).
0%
- This rate applies for goods export.
Additionally, some supplies are exempt from VAT, such as the online sale of e-books.
Thresholds
Dominican tax law does not require a minimum sales amount for a business to register and pay VAT.
Registration procedure
– Obtain a Tax Identification Number (RNC). The first step for any business is to obtain a Registro Nacional de Contribuyentes (RNC), the tax identification number.
– Submit Documentation. The business must submit the required documentation to the Dirección General de Impuestos Internos (DGII). It typically includes:
- Completed registration forms;
- Identification documents of the business owner(s) or legal representatives;
- Proof of address;
- Certificate of incorporation or equivalent document for legal entities;
- Any other documents specified by the DGII.
The Tax Office often offers the possibility of online registration on its official website, which makes the process more accessible.
Tax representative
In the Dominican Republic, foreign entities that engage in economic activities within the country may be required to appoint a tax representative. In what cases may the entity need a representative?
- No Permanent Establishment;
- Specific Tax Obligations;
- Legal Requirements.
Keeping records
Businesses must maintain accurate records of all transactions, including sales and purchases, to support the ITBIS filings. As for record retention period, conforming to the Dominican Republic tax code, accounting records need to be kept for 10 years.
VAT payment
Once registered, businesses must file monthly ITBIS returns, typically by the 20th day of the following month. These returns detail the ITBIS collected from sales, and the ITBIS paid on purchases.
Filing VAT returns
VAT return must be submitted to the DGII by the deadline. Businesses can typically submit returns electronically or other approved channels. Along with the VAT return, any VAT liability for the reporting period must be paid to the DGII by the filing deadline. Payment can usually be made online or through authorized banking institutions.
Penalties for Non-Compliance
Failure to register for ITBIS, file returns, or pay taxes can result in penalties, fines, and interest charges. The DGII has the authority to enforce these penalties to ensure compliance.