Dominican income tax and your retirement income

This is an interesting question, and it sounds like many people who have lived in the DR for a while may have to pay these taxes, such as Ken, Escott, Chris and others.

Does anyone know more about this rule for foreigners becoming residents and being taxed on all offshore income after 3 years?

My understanding is that ALL income earned or BROUGHT INTO this country, is deemed taxable. There are provisions for this in the Rentas Internas rule books!! HOWEVER, there ARE ways to minimise taxation on monies brought in to the country from earnings/savings that you receive from OUTSIDE the country. At this time (& it could change with this Governments needs to UP their taxation income) attention to receipts into the country & investments made in the country, is pretty much left to the receiver to 'announce' to Rentas Internas. ~ GWB.

It's amazing the board hasn't responded to your inquires. To my knowledge the Dominicans as a whole, have no annual income tax that they fill out. If you have a job that operates on the up and up they deduct taxes and retirement out of your pay weekly but there is no yearly filing that is done by the employee. Your employer is supposed to pay those deducted taxes and pension to the government but there are a number of cases where this isn't done and these monies find there way into the pockets of business owners.

The main reason for a lot of this and other corruption in this country is due to a lack of accountability in record keeping. The majority of all records in all aspects of the Dominican government are still being done with pen and paper. Until such a time as they convert everything to computer the government will not have the control of its people like the IRS does in the USA.

It has been my experience that a request for credit and such usually requires a statement from your bank showing your average balance, length of service by that bank etc. A lot of times credit checks are done by phone. There are a lot of instances where an applicant is required to go to different parts of a city with papers in hand to get a notarization here and a signature there and returning said forms to where the process started. The DR does have a couple of credit agencies that do operate by computer within this country and throughout the world. As time goes by and the DR continues to switch to computers you will find a better system of record keeping and a means by which the government will have more control over its population.

There are a lot of people here that operate on a complete cash basis but this has nothing to do with trying to keep secrets from the government but rather because of a mistrust and a lack of knowledge about the banking system. The banking crisis of 2003 only helped reinforce this mistrust in the eyes of the average Dominican.

Rick

CaliforniaGeorge,
They are presently trying to open the banking system so that records can be viewed but I don't see much chance of that passing as that would open those accounts that the corrupt use to place their money. And the corrupt are the ones in power and pass the laws.

It's not a case of filing any returns. The employers are required to PAY the taxes for their employees and pensions so they therefore deduct this from the employee wages. An employer could claim he has 50 employees when in fact he has 54 and those extra 4 are his wife and 3 children. If he doesn't claim them then he neither pays nor deducts pensions nor taxes on their wages. There is a set amount on which the rich must pay taxes on earnings but I don't remember what it is, maybe RD$ 900,000 a month. I think there was an article in the DR1 news last week on this.

As for self employed, to my knowledge they pay no taxes on their wages as there is no way for the government to know he is employed. In this undocumented mode of self employment the owner is unable to purchase his supplies at wholesale and therefore must make the profit by over charging on parts and or labor. Of course self employed can register and submit monies for taxes and his retirement pension if he so wishes.

As to those wealthy and living off their investments. Housing is a little tight here in that if you have a house worth over 5 million pesos you pay a yearly property tax. The government knows where the houses of this value are located and those people, to my knowledge, pay their yearly property taxes. My house is nowhere near 5 million so I don't pay any property taxes. I also do not own a car and this is a place that the government raises a large amount of their monies from sale, registration and plates. There is a large sales tax, presently 16%, on a lot of items. Communications i.e. telephones and cable have a 10% and 2% tax added to their bills.

Because of the bald monkey's reign of power from 2000 till 2004 the DR went deep into dept and there were things like the banking crisis that put this country in a very bad position. In order to get the DR back up to good standings within the international community the present president has had to raise the amount of the taxes to make the necessary payments and to fix those pot holes you mentioned plus all the other items the government pay for. There is a high subsidy that the government pays on liquid gas, propane, and electricity. These subsidies put the country into a bottomless pit.

To give you an idea of the record keeping here. A child is born in a public hospital. It is up to the parents to take the paper issued by the hospital, not a birth certificate, to the local registry. The local registry writes the information in a book, gives you a birth certificate and they send a copy off to the capital. If, at a later date, you want a copy of the birth certificate you must go to the local registry and they will search their hundreds of books to find where it is registered. Upon finding it they make another birth certificate and give this to you. The agency in charge of all the local registries has issued an order that birth certificates are free and good for as long as you have it in your possession. The problem here is that a lot of the local registries will charge you for a copy of a birth certificate and it will only be good for 90 days at which time you will need to purchase another one if needed. This illegal money collected by these registries do not make it into the public coffers.

Hope this little information will help you understand better the situation here faced by the common people and help you to understand why so many people have a fatalistic view on the world they live in.

Rick

Yeah I don't think a single person actually pays this income tax (non-deductions).

The one thing we do not have here is an anarchy. You could call it a barbarocracy or a demonocracy but in reality it's an oligarchy with a heavy leaning toward kleptocracy.

Rick

Laugh if you wish but it's very, very, very true!!!!!!

http://en.wikipedia.org/wiki/Kleptocracy

Rick

CaliforniaGeorge did you see this?

http://www.dominicantoday.com/app/article.aspx?id=8569

Silence is golden. People don't discuss this for obvious reasons. You will figure it out.

It is this silence the perpetrates this problem and almost all the problems within the DR. The philosophy of looking the other way or saying that nothing can be done to change it or the old proverbial Dominican phrase, "that's the custom", is and will always be the principle reasons that no change transpires here in the DR.

Your words of " However, the rules of the game can be discussed without disclosing how one plays.", are very true and for this reason I fail to understand why you haven't gotten more responses.

The failure to follow the established law of documenting your income and assets here is something that must be done yearly and for years the politicians fail to do it without any repercussions from the judicial branch.

The irony of this article by this newspaper and all media here is their willingness to fortify your knowledge of an existing problem within your mists without divulging where the problem originates or who the active players are. All this action does is substantiate the Dominicans belief that the system is corrupt allowing them to say "I told you so". Without the knowledge of who the culprits are nor any guidance as to what direction the populace might follow to eradicate stated problem only further enhances the fatalistic view of most Dominicans in their belief that there is nothing that can be done to change things.

Rick

Hi I realize that this discussion is focusing on taxable income. However,
I just joined this Forum to hopefully get some answers to some real estate questions. We just purchased ( haven't closed the deal yet) an apartment Condo right beside Ocean Hotels on the first Calle. We are currently using the Vendors lawyer- notary Republics handle real estate deals in the DR. As far as taxes on buying a property, you pay approximately 3.8% after the final balance is paid on closing. To make matters more interesting if the property is valued at over 150,000 US Dollars you need to pay a 1% property tax annually. We haven't closed our deal yet because purchasing property in the DR is quite hairy. The Vendor seems to have almost all of the rights. I'm currently trying to find a good lawyer who can speak English too. DR1 has an excellent piece written on "Due Diligence" when buying property in the DR. But, there are still many risks that I feel I'm running into.
Actually I am going to post this to another DR1 thread under real estate. Cheers!

Encorefun, Let me welcome you to DR1 and I hope all your endeavors turn out well and hope to hear from you many times in the future

Rick