WITHHOLDING Legal entities and single owner businesses act as withholding agents for the tax authorities whenever they make a payment or credit to the account of other physical persons or undivided successions, as well as oth- er entities not exempt from the payment of taxes, except to legal entities. The following are the applicable withholding rates, according to the Dominican Tax Code: a) 10% over the amounts paid or credited as payment for leases or rental of any type of movable prop- erty or real estate, as an advance payment on the yearly income tax;
b) 10% over the fees, commissions, and other remunerations and payments for the rendering of servic- es by individuals, as an advance payment on the yearly income tax of such individual;
c) 15% over the amount of prizes or earnings derived from lotteries and any other prize offered through promotions or public campaigns, as a tax payment separate from income tax;
d) 3% over the payments made by the state or its agencies to individuals and legal entities for the ac- quisition of goods and services in general, as an advance payment on the yearly income tax; and, e) 10% for any other kind of payment not established above, as an advance payment.
Payments or credits from Dominican sources to nonresident persons or persons not domiciled in the country that are not interests paid to the accounts of financial institutions abroad, and dividends, are subject to with- holding of 29% to Dominican tax authorities. Payments or credits of interests of Dominican sources from loans contracted with foreign credit institutions must withhold and pay the Dominican tax authorities 10% of those interests, gross up provisions are usually incorporated to cover the tax impact over the financing transaction.
TAX ON THE TRANSFER OF INDUSTRIALIZED GOODS AND SERVICES (ITBIS) ITBIS is the tax applicable over the transfer and import of industrialized goods, as well as the rendering of ser- vices. Individuals and legal entities (foreign and domestic) transferring and importing industrialized goods or rendering services in the country (with limited exceptions) must pay this tax. The rate of this tax is 16% and is calculated over the price of the transfer of the good or the service provided.
REAL ESTATE PROPERTY TAX The real estate property tax is levied on real estate properties that are destined for housing, commercial, and industrial activities belonging to individuals whose value – including the land – surpasses RD$5,000,000.00. The value is adjusted annually for inflation.