Do retailers pay ITBIS twice for an item?

vmhatup

Member
Aug 18, 2009
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I started importing merchandise from the US and it seems that I'm paying the itbis twice for every item I bring in and then sell.

For example, let's say I purchase a $400 laptop from amazon to resell here. In order to pick it up, I need to pay the 16% ITBIS, $64. I sell it at $464, but the customer will pay $538.24 because he also has to pay ITBIS.

So essentially, the government is getting $138.24 for a $400 item, which is about 34.5%.

Does that make sense?

Thanks.
 

donP

Newbie
Dec 14, 2008
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Dominican Socialism

(...) I purchase a $400 laptop from amazon (...) I need to pay the 16% ITBIS, $64. I sell it at $464,...
Does not sound like a good profit to me... :laugh:

(...) the customer will pay $538.24 because he also has to pay ITBIS.
So essentially, the government is getting $138.24 for a $400 item, which is about 34.5%.
Does that make sense?

Yes and no.

You see, you pay double, others pay no ITBIS at all.
Applied Dominican socialism.

donP
 

SantiagoDR

The "REAL" SantiagoDR
Jan 12, 2006
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For example, let's say I purchase a $400 laptop from amazon to resell here. In order to pick it up, I need to pay the 16% ITBIS, $64. I sell it at $464, but the customer will pay $538.24 because he also has to pay ITBIS.

Does not sound like a good profit to me... :laugh:

He makes it up on volume......... :bandit:
 

Eddy

Silver
Jan 1, 2002
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I started importing merchandise from the US and it seems that I'm paying the itbis twice for every item I bring in and then sell.

For example, let's say I purchase a $400 laptop from amazon to resell here. In order to pick it up, I need to pay the 16% ITBIS, $64. I sell it at $464, but the customer will pay $538.24 because he also has to pay ITBIS.

So essentially, the government is getting $138.24 for a $400 item, which is about 34.5%.

Does that make sense?

Thanks.
No, only the final consumer pays the ITBIS. In your example above, you would deduct the original amount you paid (64.00) from the 16% you collect from the person you sell it to, If you sell the item for 464.00 you would collect 74.24 in tax. At the end of the month, you would only have to give the tax people the difference, (74.34-64.00=10.34). Now to confuse you even more, let’s say the person you sold it to re-sells it for 600.00 and collects the tax (96.00). Now, providing you gave him a proper receipt, he can deduct the 74.24 from the 96.00 he collected and send 21.66 to the Tax people. Now if that 3rd person is also a reseller, he would do the same thing. In the end the Tax people get only the 16% of the final price.
Unless of course, if someone doesn't claim it. Then the tax people make the extra $$$./
 
May 29, 2006
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No, only the final consumer pays the ITBIS. In your example above, you would deduct the original amount you paid (64.00) from the 16% you collect from the person you sell it to, If you sell the item for 464.00 you would collect 74.24 in tax. At the end of the month, you would only have to give the tax people the difference, (74.34-64.00=10.34). Now to confuse you even more, let’s say the person you sold it to re-sells it for 600.00 and collects the tax (96.00). Now, providing you gave him a proper receipt, he can deduct the 74.24 from the 96.00 he collected and send 21.66 to the Tax people. Now if that 3rd person is also a reseller, he would do the same thing. In the end the Tax people get only the 16% of the final price.
Unless of course, if someone doesn't claim it. Then the tax people make the extra $$$./


That actually almost makes sense...
 

vmhatup

Member
Aug 18, 2009
656
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No, only the final consumer pays the ITBIS. In your example above, you would deduct the original amount you paid (64.00) from the 16% you collect from the person you sell it to, If you sell the item for 464.00 you would collect 74.24 in tax. At the end of the month, you would only have to give the tax people the difference, (74.34-64.00=10.34). Now to confuse you even more, let’s say the person you sold it to re-sells it for 600.00 and collects the tax (96.00). Now, providing you gave him a proper receipt, he can deduct the 74.24 from the 96.00 he collected and send 21.66 to the Tax people. Now if that 3rd person is also a reseller, he would do the same thing. In the end the Tax people get only the 16% of the final price.
Unless of course, if someone doesn't claim it. Then the tax people make the extra $$$./

In theory, it sounds like a good idea and that's how it should be. But how would I prove that when the tax people ask?

The item costs $400 and I pay itbis to pick it up. The item is costing me $464, so I just paid 16% or $64. Your theory is that I sell the item for $464 +itbis, which would be $538.24. And at the end month I only pay them 10.24 because I already paid $64 in taxes. So far so good.

But what happens when the tax people visit me and tell me that I only paid $10.24 instead of the 74.34 that the invoice says? How am I going to explain to them that I already paid $64 when I picked up the item at EPS?
 

AlterEgo

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Staff member
Jan 9, 2009
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It's not rocket science vmhatput, Dominicans do it every month.

If you have a business, you're supposed to be sending in the tax you've collected every month. Once a month you can deduct the taxes that you've paid since the prior month. You have to list the taxes you paid, and keep the invoices in your files, just in case someone does ask.

That is why everywhere you buy something, even in supermarkets, they will ask you if you need a tax receipt. To get the receipt you have to provide your cedula #, which they enter into the computer. It is a different receipt than if you say no.
 

Mauricio

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Nov 18, 2002
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You dont pay them 'only' 10.24, you file your taxes in which you report sales of 464 excl itbis, being 538,24 including itbis and paid itbis to be reimbursed of USD.64. DGII will know you have to pay them what you charged your client as itbis while you filed it like that, and they will know they have to pay you back what you paid your supplier in itbis. In other words they know where the 10,24 comes from.

ITBIS (or IVA) is just like VAT a Value Added Tax, you only pay tax on the value you add. In this case you added 64 dollars of value (you bought for 400 and sold for 464) no matter what that added value is (in your case maybe only the knowledge that someone wants to pay 464 for a device you can buy for 400). 16% of your added value is 10.24. Through the whole channel the DGII will get 16% of the value added to the prime materials to make a product a product, and its always the end user who is paying the full tax, he wont be able to ask it back (except that in DR many business owners deduce the itbis they paid for complete consumption when they file itbis, some even confirming me that's allowed and telling me I am an idiot and dont know how it works here when I tell them it's not and if they are checked they will be in big trouble.
 

Eddy

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Jan 1, 2002
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But what happens when the tax people visit me and tell me that I only paid $10.24 instead of the 74.34 that the invoice says? How am I going to explain to them that I already paid $64 when I picked up the item at EPS?
Not going to happen. Just go by the book with the proper receipts and things will go fine. Get an accountant to set you up online and take over from there. Keep him full time if volume warrants it.
 
Jan 17, 2009
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"(except that in DR many business owners deduce the itbis they paid for complete consumption". That is correct. You can deduct ITBIS that you consumed in your business. If I buy ink for my printer and I use the printer only for business, say I have a resutaurant, it's part of my costs reflected in my prices on which I charge ITBIS. Basically you can deduct the ITBIS of any business-related expense, including your operating and admin expenses.
 

Mauricio

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Nov 18, 2002
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"(except that in DR many business owners deduce the itbis they paid for complete consumption". That is correct. You can deduct ITBIS that you consumed in your business. If I buy ink for my printer and I use the printer only for business, say I have a resutaurant, it's part of my costs reflected in my prices on which I charge ITBIS. Basically you can deduct the ITBIS of any business-related expense, including your operating and admin expenses.

I wasn't clear enough...I mean their private consumption, supermarket bills, electro domestics, furniture, paint for the house, new bathrooms, litterally everything. Ofcourse that happens everywhere, but I have met more than one business owner claiming that that's allowed.
 
Feb 7, 2007
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But what happens when the tax people visit me and tell me that I only paid $10.24 instead of the 74.34 that the invoice says? How am I going to explain to them that I already paid $64 when I picked up the item at EPS?

Aqui esta el maco .... EPS MAY be doing their rejuego and charging you taxes while pocketing them because they cut a deal with aduana (DGA). When you get your laptop and pay ITBIS to EPS, you MUST ask for FACTURA CON COMPROBANTE FISCAL PARA CREDITO FISCAL. For that to happen you must give them (EPS) your RNC#. They will issue NCF Type #01 which must detail the ITBIS you paid. If it does not, they are pocketing it, so COMPLAIN COMPLAIN COMPLAIN. You will then report the ITBSI paid on a form 606 which you will upload every month, then file online IT1 where you will list ITBIS paid and ITBIS charged to your clients, the form will calculate ITBIS due to the gubmit automatically.
 
Feb 7, 2007
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I wasn't clear enough...I mean their private consumption, supermarket bills, electro domestics, furniture, paint for the house, new bathrooms, litterally everything. Ofcourse that happens everywhere, but I have met more than one business owner claiming that that's allowed.

Well who can prove that the paint was used on a house rather than painting the warehouse....??? There are some grey areas ... but there are some where one should not cross...like a liquor store / disco club bill. Yes there were people deducting them, in 2010 DGII issued statement they won't be allowed to deduct them.

DGII no deducir? de pago de impuestos gastos personales - listindiario.com

Depending on your business type, you could deduct some personal expenses (e.g. gasoline) but most likely lots of personal expenses is a no-go. A paint, toilet paper, soap, Cloro etc you could claim as business expense (limpieza).

La medida est? contenida en la norma 05-10, sobre gastos no deducibles del Impuesto Sobre la Renta de las Empresas, emitida ayer, que se?ala que no ser?n admitidos como gastos deducibles del ISR y por tanto no ser?n v?lidos los NCF emitidos para fines fiscales los servicios de diversiones, entretenimientos y disfrute de personal ofrecido por parques de diversiones, teatros, cines y discotecas, como tampoco por la compra de joyas, juegos de azar, apuestas, casinos, bancas deportivas ni las adquisiciones de bebidas en “liquor store”.
 
Feb 7, 2007
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It's the same in the USA I have had businesses in several states and if you don't get a tax number you have to pay tax when you buy the item and then charge it again as you sell it. No real difference here.

In the USA there is a sales tax. Sales tax is only charged at the final point (if you are buying for reselling you do not pay sales tax on the item to the seller). If you are selling to final consumer, yes, if for further resale, no tax charged.
Value added tax - Wikipedia, the free encyclopedia
Sales tax - Wikipedia, the free encyclopedia
Difference between Value Added Tax (VAT) and Sales Tax | Economy Watch