TAXATION IN THE DOMINICAN REPUBLIC

Dominican tax law is primarily territorial. In principle, the Dominican Republic only collects taxes on income from Dominican sources. On the other hand, income derived from work done outside of the Dominican Republic is not taxable, even if received by Dominican nationals or companies, foreign individuals residing in the Dominican Republic or foreign companies with branches in the country. For tax purposes, any person residing in the Dominican Republic for more than 182 days in a continuous 12-month period is considered a resident. It is mandatory for all taxpayers to register with the Internal Revenue Agency and obtain a tax number RNC.

Real Estate Tax

What taxes and fees are involved when acquiring property in the Dominican Republic? There is a one-time transfer tax of 3%. Lawyer fees are approximately 1000 USD, which is 1% of the purchase price of the property.

A 1% annual tax is assessed on real estate properties owned by individuals, based on the cumulative value of all properties as appraised by government authorities. Properties are valued without considering any furniture or equipment found within them. For developed lots, the 1% is calculated only for values exceeding (RD$9,860,649.00) (approximately $170,000). For undeveloped lots, the 1% tax is calculated on the actual appraised value without exemption.

The registration of real estate transfer with the registry of values requires payment of the following taxes and fees: 3% of the sale price if it is being transferred to an individual; or 1% of the sale value of the property if the ownership is registered under a company.

The mandatory company tax is 1% and is paid annually if the property is registered under a company. The amount is calculated based on the property value.

The real estate tax is payable every year on or before March 11, or in two equal installments: 50% on or before March 11, and the remaining 50% on or before September 11. The amount of the exemption is adjusted annually for inflation. The following properties are exempt from paying real estate tax: (a) farm properties; (b) homes whose owner is 65 years old or older, and has no other property in his or her name; and (c) properties owned by companies, which pay a separate tax on their company assets.

Tax on Corporate Assets

Companies pay an annual 1% tax on company assets. However, the amount of tax on assets paid by a company can be applied as a credit toward its income tax obligations.

Property Tax (IPI) 

TAXES AND BUILDING PERMITS IN THE DOMINICAN REPUBLIC

Before commencing construction, the owner must obtain a property certificate and acquire the complete set of architectural plans from an architect. Architectural services in the Dominican Republic range from $US 15 to $US30 per square meter, depending on the architect’s expertise level and the complexity of the building design. The approximate timeframe for this process is around 60 days.

To build a villa in the Dominican Republic, it’s necessary to obtain several permits and comply with certain tax requirements. Here are the main permits and taxes required:

  1. Municipality Permit:
    • Obtain the Certificate of No Objection to Land Use.
    • Submit documents such as a letter of request, property certificate, and project plans.
    • Payments for land use and urbanization.
    • Cost: Varies depending on municipal requirements and fees.
    • Approximate cost: RD$2,000 for land use, RD$1,000 for inspection, and RD$30,000 for urbanization/subdivision.
  2. Water and Sewer Permit (INAPA):
    • Request for no objection for connection to the water and/or sewer network operated by INAPA.
    • Submit documents and pay fees.
    • Obtain project approval and connect to the network.
    • Cost: Depends on the project and type of connection.
    • Cost: RD$10,000 for the communication with basic project information.
  3. Electricity Permit (Luz y Fuerza):
    • Obtain permits for the approved project’s connection to the electrical grid.
    • Submit plans and technical documentation.
    • Cost: RD$3,000 for projects with capacity between 10 and 300 kW, RD$6,500 for higher-capacity projects.
  4. Environmental Permit (Medio Ambiente):
    • Submit application for environmental authorization and related documentation.
    • Project evaluation by the Ministry of Environment and Natural Resources.
    • Cost: RD$5,000.
  5. Ministry of Tourism Permit (MITUR):
    • Obtain design parameters, pre-project analysis, and no objection for land use for tourist projects.
    • Submit documents and pay fees.
    • Cost: Varies depending on the type of request and processing time.
  6. Final Construction Permit (MOPC):
    • Submit application for construction license to the Ministry of Public Works and Communications.
    • Compliance with documentary and technical requirements.
    • Cost: RD$6,000.

It’s important to note that the entire process of obtaining permits can take 6 to 12 months, and total costs can amount to several thousand dollars. It’s recommended to seek assistance from local professionals such as architects and managers to facilitate and expedite the process. 

Note: Construction of houses exceeding two floors and determination of construction area require permission, taking into account regional regulations and proximity to water bodies. There exists a zoning map delineating permissible types of construction in each city. Construction of houses or apartments is prohibited in zones located less than 60 meters from the ocean.”

Key Provisions of Law 5038 on Condominiums:

  • Enables property division into units within multi-story buildings.
  • Defines the responsibilities and entitlements of individual owners.
  • Mandates the formation of a consortium to oversee common areas.
  • Prescribes protocols for decision-making and handling common expenses.
  • Regulates processes for amending regulations and conducting meetings.
  • Establishes procedures for unit sales or reconstruction.

These are the document requirements for all types of construction:

  1. Register on the plan processing portal if you haven’t already done so.
  2. Fill out the construction license application form.
  3. Submit a descriptive project memo in physical and digital formats.
  4. Provide two sets of plans stapled on white paper with the same format and scales established in Regulation R-021.
  5. Present a copy of the title or definitive titles of ownership.
  6. Submit a copy of the cadastral measurement plan(s) marked and the definitive title(s) of ownership(s) endorsed.
  7. Complete a Technical Form (Model F-3) issued by the corresponding Municipality.
  8. Present land use and building deactivation certifications issued by the corresponding Municipality.
  9. Submit a No Objection Certification issued by the corresponding Municipality.
  10. Provide a structural calculation report and load analysis.
  11. Submit a geotechnical study from a qualified company or professional.
  12. Provide a Hydraulic Calculation Memory when applicable.
  13. Pay tax receipts according to the appraisals made in the MOPC.
  14. Present evacuation route plans.
  15. Attach detailed plans and formwork specifications.
  16. Deposit all documents and plans in digital PDF or TIFF format.
  17. Architectural Services for Designing Drawings and Plans for Construction.

The process of obtaining all necessary permits to start building your dream house can take 6 to 12 months, and the costs add up to $5,000. As you can see from reading the information presented in this article, this process is very complicated and requires professional assistance. Therefore, it’s ideal for your architect to handle these processes, as their experience and knowledge of Dominican systems give you an advantage.

Building Regulations in Dominican Republic