Special Tax Incentives
Tax Incentives in Dominican Republic
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Special Tax Incentives for Retirees and Investors
In recent years, the Dominican Republic has grown significantly in the flow of foreign investments, mainly due lo tourism development and the consequent entry into the country of foreigners interested in settling permanently in the Dominican territory.
The law No. 171-07 on Special Incentives for pensioners and foreign source Annuitants, dated July 13. 2007. has joined the rules that encourage the flow of foreigners and foreign investments in the Dominican Republic.
The main purpose of Law No. 171-07 is to promote the appropriate legal framework for foreign retirees and annuitants who choose to reside in the Dominican Republic can enjoy special benefits.
For these purposes, pensioners or retirees are “foreigners or Dominican citizens who are beneficiaries of a corresponding monthly pension or retirement plan of an official government or agency or private company of foreign origin, who are interested in transferring their permanent residence into the country and receive their pension or retirement benefits in the Dominican Republic”. (Article 1, Law No. 171-07).
The annuitants are those people Who enjoy stable and permanent income, Whose capital comes from abroad, due to one of the following reasons:
An Indispensable condition to take advantage of the benefits established in Law No. 171-07 is that the retiree receives a monthly income of not less than US S 1,500.00. and that the annuitant. meanwhile, receives no less than US S 2,000.00 or its equivalent in Dominican pesos. For each additional dependent, a monthly income of US $ 250.00 per person is required. These amounts declared as income are exempt from income tax.
Those who receive the income described in the preceding paragraph may obtain a residence for investors, under the conditions that were set out in Decree 950-01 and Law 98-03 which creates the CEI-RD.
Benefits and Scope of the Law No. 171-07
Law No. 171-07 benefits those foreigner pensioners and annuitants wishing to permanently reside in the country. subject to their compliance with certain requirements. The benefits and exemptions that qualified applicants are entitled to are as follows:
The benefits of this law apply equally to Dominican citizens pensioned or retired by institutions of foreign governments , and those who do not have that characteristics, evidencing perceiving incomes on the conditions laid down in Article 1 of the Law.
Articles 45 and 46 of Law No. 253-12 for Strengthening Tax Collection Capacity of the Sate for Fiscal Sustainability and Sustainable Development (Fiscal Reform) provide that government institutions that administer laws that provide for waivers or exemptions for certain sectors or social groups must submit to the Ministry of Finance, prior knowledge of classification application, the feasibility study having to identify the source of compensation of the tax expenditures that would represent the exemption. On this basis, the Ministry prepares a cost-benefit analysis of the incentives awarded. In this connection, the Ministry of Finance will grant a no objection to the classification of the beneficiaries of incentives.
Persons who request the benefits of Law No 171-07 and that consciously provide false information to take advantage of the concessions granted by this legislation will be subject to penalties and be fined an amount equal to twice the corresponding amount of taxes that they must have to pay to the Dominican treasury.