Dominican Republic
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Dominican Peso (DOP). In 2013, the average exchange rate was DOP 41.81 to USD 1. In that year, the average worker earned DOP 225 960.84.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The fiscal year is the calendar year.
1.1. Central government income tax
The personal income tax is levied on income from all sources (domestic and global), including those obtained by performing personal work (salaried or independent). Employment income includes salaries, bonuses, premiums, commissions and allowances (housing and education) and in-kind benefits.
The main exemptions for the personal income tax are:
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Compensation paid due to work injury.
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Amounts paid in compliance with life insurance contracts.
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All severance and job termination compensation received in accordance with the Labour Code.
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Compensation paid due to disability or illness.
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Alimonies determined by law.
1.1.1. Tax unit
Members of the family are taxed separately
Resident individuals are subject to the income tax on their domestic and global income. Non-residents are subject to the tax on their income derived from Dominican Republic sources.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax allowances and tax credits
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Contributions to approved social security plans that benefit the employee up to 5% of the taxable income during a fiscal year.
1.1.2.2. Main non-standard tax allowances and tax credits
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Expenses incurred to maintain a source of income.
1.1.3. Tax schedule
The annual income tax liability is calculated on the taxable income according to the following schedule in 2013:
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contribution to schemes operated within the government sector
2.1. Employee contributions
Employees pay social security contributions on their gross wages. The lower earnings threshold is the minimum wage (DOP 8 648 per month and DOP 103 776 annually in 2013). The upper earnings ceilings for contributions vary between programs. The old age, disability and survivor’s program has a ceiling of 20 times the minimum wage; the ceilings for the health care program and the professional training institute contributions are 10 times the minimum wage.
2.2. Employer contributions
Employers are required to contribute to the following public programs.
The employer social security contribution rates are applied to the payroll. The upper earnings ceiling for the old age, disability and survivor’s program is set at 20 times the minimum wage. The corresponding ceilings for the Healthcare program, Professional Training Institute and Work injury programs are 10 times the minimum wage.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
None.
4. Main changes in tax/benefit since 2013
The new income tax legislation specifies that from the beginning of 2016, the personal income tax thresholds will be adjusted annually for inflation.
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.