The Dominican Republic, located in the heart of the Caribbean Sea, has experienced strong economic growth in recent years. 

In 2024, it closed the year with favorable economic data, leading the Latin American region with a 5% GDP growth, according to the IMF. 

This growth has consistently placed the Dominican Republic ahead of countries like Panama, Chile and Mexico.  

Fiscal modernization 

On October 7, 2024, the Government presented the Fiscal Modernization Bill. This new law aims to increase the State’s tax revenues to improve electric infrastructure, which is crucial for attracting new projects and investments. The lack of investments in these areas has also affected the construction of new transportation infrastructure. 

The new law seeks to modernize the tax system and include measures to prosecute tax crimes by the General Directorate of Internal Taxes (DGII). 

The four main objectives are: 

• Strengthen tax administration to reduce fraud and evasion. 

• Broaden the tax base and reduce the levels of informality. 

• Simplify the tax regime and ensure efficiency. 

• Increase the progressivity and equity of the system. 

Government proposals 

The Government has proposed significant reforms to the tax system, focusing on major taxes. 

VAT changes 

The Value Added Tax (VAT), will be set at a generalized rate of 18% excluding certain basic foods and services. Digital services will be subject to VAT, and some exemptions for goods consumption will be eliminated. The DGII will ensure compliance in a region where fiscal and financial culture is still developing 

CIT reform 

Corporate Income Tax (CIT), will see changes, including an increase in the collection rate from 10% to 15% for foreign companies earning income from transportation and insurance. The estimated collection is RD$ 22,195,100,000 (approximately USD 346,798,438). 

Income Tax reform 

Personal Income Tax will introduce a new bracket is added for income over RD$2.4 million, with a 27% withholding rate compared to the current 25%. 

Property Tax Reform 

The property tax (IPI, in the Dominican Republic) will increase collections by exempting properties valued below RD$ 5,025,380.75 (approximately €79,290). Properties exceeding this value will be taxed at 1%.  

Given the numerous tax reforms in the country, it is essential to rely on a firm like Auxadi for managing tax obligations in the Dominican Republic.   

About Auxadi 

Auxadi offers international accounting, tax, payroll, and legal services to multinationals and funds in over 50 jurisdictions, with 22 wholly-owned subsidiaries worldwide. Our experience and global presence allow us to provide tailored tax solutions, ensuring efficient management in compliance with local tax regulations.  

Contact us today and discover how we can facilitate your international expansion. 

Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.