- Thread starter jeb321
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Sales tax...at the cleaners?
What's the 'cleaners'?
On the 10%, that's by law, no matter if you pick up the pizza or have it delivered or eat in the restaurant. A bad thing do is that some restaurants use the 10% to give ex-salary compensation to any of the staff, including those not in contact with customers, which is not legal.
On the 10%, that's by law, no matter if you pick up the pizza or have it delivered or eat in the restaurant. A bad thing do is that some restaurants use the 10% to give ex-salary compensation to any of the staff, including those not in contact with customers, which is not legal.
The charge is correct.
Tax on the Transfer of Industrialized Goods and Services (ITBIS)
The ITBIS is a value-added tax applicable to the transfer and importation of most goods, and to most services (Art. 335). The rate of the ITBIS is 16% (Art. 341) of the Tax Law.
Guzman & Ariza explains this at An Overview on Dominican Tax Law
Tax on the Transfer of Industrialized Goods and Services (ITBIS)
The ITBIS is a value-added tax applicable to the transfer and importation of most goods, and to most services (Art. 335). The rate of the ITBIS is 16% (Art. 341) of the Tax Law.
Guzman & Ariza explains this at An Overview on Dominican Tax Law
consumption tax on a service
in the case of the cleaners, it is a consumption tax on a service, not a value added tax.
it's stlll a value added tax. If you provide a service and charge for it, you add value, that's taxed. If you need to spend money to be able to provide that service you deduct the paid itbis on that spending from what you have to pay in charged itbis to the DGII, in the end only the end consumer is paying the itbis without a possibility to charge to anyone or get it back from DGII, truly a value added tax.
Your shirt was dirty and now its clean. It's about economical value, not necessarily material.
Added value is determined by capital and labour as production factors. Services tend to be more labour intensive and production often more capital intensive but both add value. If you are willing to pay for a dry cleaner putting his capital and labour to work to clean your shirt he is adding value, which is taxed.
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not to hijack but since you have the tax team assembled here.. just exactly what is the comprobante fisical and why do I want or not want one? I keep getting asked and always say no since I figure it will involve sitting down and filing out some form in triplicate and take three hours. I also figured that not giving one made it easier for the merchant to hide money but I was ok with that.
But today I was asked at La Cadena and I know that they have the ITIBIS all figured out and I pay with a card so they cannot bury it.
So what is it, and do i want it?
But today I was asked at La Cadena and I know that they have the ITIBIS all figured out and I pay with a card so they cannot bury it.
So what is it, and do i want it?
this is how they taught it to me in college
A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.
The value added to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed.
mountainannie said:
It's your taxpayer registration - if you have a business or provide products/services on a commercial basis you're supposed to have one. You have to charge your clients ITBIS and pay it to the tax authorities every month. When you spend money, can provide your number and present the receipts together with your monthly accounts - some of your expenses will be considered as tax deductible.
Mauricio, by your analysis, i should be able to get a better price on a Benz if i buy it just after it went through a puddle and ended up with some mud on it.
Well in a sense that is true. You probably wouldn't negotiate it because of the small amount washing the car represents compared to the value of the car but you might say: I would be willing to pay 500,000 pesos for the benz, but you need to either wash it before giving it to me or I will deduct 300 pesos for having it washed. However, you are mixing two products here: 1 the car, 2 the service of washing the car. The car is worth 500,000 (TOTAL added value: 500,000) washing it is worth 300 pesos (TOTAL added value: 300 pesos). I actually don't know if in DR you have to pay ITBIS when you buy a used car from a dealer. In my homeland you have to if it's from a dealer, if you buy from a private person you don't need to.
I bought a car last year with the fabric on the roof (inside) getting lose (never buy a french car in a hot country) and I deducted 3,000 to be able to handle that (slightly different example, I know), I still have to have it fixed though.
So VAT / ITBIS in the end is a value added tax, but also a consumption tax. It's called value added while it avoids double taxing but in the end, the added value of a product is the complete purchase price. The first actor in the value chain starts with nothing and the end consumer ends up with a product of a price, which represents the added value (price - 0).
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i know i am piling on with this , Mauricio, but let me close on this note. i just bought a new car, and, as i drive it off the showroom floor, i end up in a massive puddle of mud. do i add to the value by driving it through a car wash? can i now turn around and sell it for more than i paid for it, because it is no longer dirty?
hehehe...I would say no, because the added value of the car is separated from the added value of washing the car. If you would buy the car and pay for the service of a driver, the car doesn't get any extra value, two separate items 1. the car, 2 the driver. the same for a car you just washed. Unless you close a deal with a car wash that you can wash that car every week and you pay in advance (for that car) (I used to have that license plate based back in Holland). Then you would sell both products at once if you sell the car, and charge more for it for the washing contract (same could happen if it has an insurance still valid for almost a year.)
you are obviously confusing depreciation with ADDED VALUE..a dirty shirt is DEVALUED by the presence of dirt. removing the dirt restores it to its original value. it does not ADD anything. it does not make it more valuable. you cannot get more for a laundered shirt than one that has not been worn, so washing does not add value. it merely removes the depreciation factor, and restores it to its optimal value.
I also always thought they ask for it so if you don't need one they can just charge you the ITBIS and not pay it to DGII, but lately I noticed (or at least I think it's like that) that DGII wants to clearly separate bills being able to be used to deduct ITBIS from those that can't, so there can not be any double (or triple, or quadruple) use of a bill to deduct ITBIS. If you plan on deducting you HAVE to provide your RNC and that bill cant be used for any other company anymore to deduct ITBIS. And since more and more establishments are working now with fiscal printers it's getting more and more difficult to not pay the charged ITBIS to the DGII.
Anyway, as a private person you don't need a 'comprobante fiscal' and in the supermarket many products (basic needs) are exempt of itbis.
No, I'm definitely not kidding. The example you gave is not a valid example while you are mixing two products / services. The added value of the car is one thing, the added value of washing the car is another thing. If you buy the car, made it dirty and washed it the car didn't accrue any value, that's clear. But the service of having it cleaned by itself has an added value, which should be taxed. It doesn't raise the value of the car, obviously.