Comprehensive Guide to the Tax Obligations of a Limited Liability Company (S.R.L.) in the Dominican Republic

 

Establishing a Limited Liability Company (S.R.L.) in the Dominican Republic involves not only corporate and administrative advantages, but also strict compliance with tax and fiscal obligations. Below is a detailed summary of the main tax responsibilities that every S.R.L. must comply with in order to operate regularly and efficiently. 

 

 

1. Registration and Formalization

 

Payment of Incorporation Tax: 

 

At the time of incorporation, the company must pay an Incorporation Tax equivalent to 1% of its authorized capital. This payment must be made to the Dirección General de Impuestos Internos (DGII) as part of the requirements to complete the formalization process. 

 

 

Registration with the DGII: 

 

Every S.R.L. must be registered with the National Taxpayer Registry (RNC) immediately after incorporation. This registration enables the company to: 

 

• Issue tax receipts (fiscal invoices). 

• File and pay the applicable taxes. 

• Be formally recognized by the tax authorities. Failure to register may result in penalties and operational restrictions. 

 

1. Tax Filing and Payment

 

Corporate Income Tax (ISR):  

 

S.R.L.s are required to calculate and pay Income Tax (ISR) on the net profits generated during each fiscal year. The general rate is 27%. To comply, companies must: 

 

• File Form IR-2 annually within 120 days after the close of the fiscal year. 

• Maintain organized accounting records supporting all income, costs, and expenses. 

• Retain supporting documentation for the period required by tax law. 

 

ISR Advance Payments: 

 

Based on the previous year’s ISR filing, companies must make monthly advance payments toward the following year’s income tax. Payments are due by the 15th of each month. The monthly installment is based on the higher of 1.5% of gross income, or the previous year’s calculated tax divided into 12 installments. 

 

Impuesto a la Transferencia de Bienes Industrializados y Servicios (ITBIS) – Value Added Tax (VAT) 

 

The S.R.L. must: 

 

• Charge ITBIS on taxable goods and services. 

• File Form IT-1 monthly within the first 20 days of the following month. 

• Report both ITBIS collected from clients and ITBIS paid to suppliers (tax credit). The general ITBIS rate is 18%, although basic goods may be exempt or subject to a reduced 16% rate. 

 

 

Withholding Tax Obligations: 

 

The S.R.L. acts as a withholding agent in cases such as: 

 

• Payments to independent service providers (10% withholding). 

• Rent payments for commercial premises owned by individuals (10% withholding). 

• Employee salaries, in accordance with the ISR scale, filed via Form IR-3. ayments to non-employees, declared and submitted via Form IR-17, by the 10th of the following mont. 

 

Asset Tax: 

 

In addition to ISR, S.R.L.s are subject to the 1% Asset Tax on taxable assets. This is declared annually with the IR-2 filing. If the calculated ISR is less than 1% of taxable assets, the company must pay the Asset Tax as a minimum. 

 

Selective Consumption Tax (ISC):  

 

If the company sells specific goods or services such as alcohol, tobacco, or telecommunications, it must file and pay the ISC according to applicable rates and deadlines. 

 

III. Information Reporting Obligations 

 

Beyond tax payments, S.R.L.s must also comply with information and reporting duties to the DGII by submitting various forms. 

 

Financial Statements and Audits: 

 

If the company exceeds income, asset, or employee thresholds established by the DGII, it must: 

 

• Hire a certified public accountant or audit firm 

• Prepare audited financial statements to support the ISR filing, which must be available upon reques. 

 

Informative Returns: 

 

Monthly or annually, S.R.L.s must submit: 

 

• Form 606: Purchases of goods and services (due by the 15th of the following month). 

• Form 607: Sales of goods and services (due by the 15th). 

• Form 608: Cancelled tax receipts (due by the 15th). 

 

 

Foreign Payment and Withholding Declarations: 

 

• Declare and submit ISR withholdings on payments to foreign suppliers within 10 days of the following month in which the payment was made 

 

Electronic Invoicing (e-CF): 

 

S.R.L.s must comply with the new electronic invoicing system according to the implementation schedule established by the DGII. 

 

Updating RNC Data: 

 

Any significant change (e.g., address, business purpose, shareholders, trade name) must be reported and updated in the RNC. 

 

1. Labor and Social Security Obligations

 

To comply with labor and social security laws, S.R.L.s must fulfill several obligations related to hiring and managing personnel. 

 

Labor and Social Security Compliance: 

 

Each S.R.L. must: 

 

• Register with the Social Security Treasury (TSS) 

• Enroll all employees and make the required contributions 

• Report monthly payroll changes and payments by the 15th of each month 

 

 

1. Other Obligations

 

Sworn Declaration of Taxable Assets for Inactive Companies: 

 

If the company ceases operations without being formally dissolved, it must file this declaration with the DGII to avoid penalties. 

 

 

Registry Updates: 

 

In addition to tax obligations, S.R.L.s must also: 

 

• Keep their information updated with the local Chamber of Commerce and Production. 

• Renew the mercantile registry every two (2) years as required by law. 

 

Sector-Specific Regulations: 

 

Comply with any specific regulations applicable to their economic activity. 

 

Conclusion 

 

Complying with tax and fiscal obligations is essential to ensure the legal stability and growth of an S.R.L. in the Dominican Republic. In addition to maintaining orderly and transparent financial management, timely compliance helps avoid fines, interest, and legal sanctions that could impact the company’s operations and reputation. A proactive and updated tax strategy is key to ensuring business competitiveness and sustainability in a constantly evolving fiscal environment.