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- Basic Facts
- Statutory Labor Requirements
- Employee Income Tax In Brazil
- Employee Social Security In Brazil
- Deductible Expenses In Brazil
- Immigration In Brazil
- Value Added Tax (VAT) In Brazil
- Withholding Tax In Brazil
- Terminating Employee In Brazil
- Statutory Employee Benefits In Brazil
- Payroll In Brazil
- Ease Of Doing Business In Brazil
- Business Opportunities In Brazil Section
- Why Use Global Expansion To Hire Your Employees In Brazil
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BASIC COUNTRY FACTS
Dominican Republic
Santo Domingo
- Spanish
- Dominican Spanish
- Haitian creole
10.63 million
Dominican peso
.do
+1
Dominican peso
STATUTORY LABOR REQUIREMENTS
Probation Period
- Probationary periods are allowed, but cannot last longer than three months.
Annual Leave
- Employees are entitled to 14 days of vacation after working for a company for more than a year, and the 13 public holidays in the country.
Public Holidays
- New Year's Day (1st January)
- Epiphany (6th January)
- Altagracia Day (21st January)
- Duarte Day (26th January)
- Dominican Republic Independence Day (27th February)
- Good Friday (10th April)
- Labour Day (4th May)
- Dominican Republic National Election Day
- Corpus Christi (11th June)
- Restoration Day (16th August)
- Our Lady of Mercy Day (24th September)
- Constitution Day (9th November)
- Christmas Day (25th December)
Maternity Leave
- The Labor Code of the Dominican Republic had previously provided in its article 236 that: "The pregnant worker has a right to a mandatory rest during the six weeks that precede the probable date of the childbirth and the six following weeks.
- However, maternity leave was extended by 2 weeks in 2018
Paternity Leave
- Fathers are entitled to 2 days of paid paternity leave
Sick Leave
Employees generally use their vacation time as sick time as employees are not entitled to separate sick pay.
Work Hours
- A regular workweek is 44 hours, with most employees working 8 hours a day.
Overtime
- Work for more than 44 hours a week is considered overtime and must be paid with a 35% premium over regular hours.
- Hours worked in excess of 68 hours a week are paid at a 100% premium.
- Overtime pay does not apply to managers.
Notice Period
- The party that terminates the employment contract must give an advance notice to the other party, the extent of which depends on the length of the employment, as follows:
-
- 7 days of notice for 3 to 6 months of employment
- 14 days of notice for 6 to 12 months of employment
- 28 days of notice for more than 12 months of employment
Severance
- Employers who exercise their right to terminate their employees without cause must make severance payments to the terminated employee as detailed below:
-
- 6 days of salary for 3 to 6 months of employment
- 13 days of salary for 6 to 12 months of employment
- 21 days' salary per year of employment for 1 to 5 years of employment
- 23 days' salary per year of employment for more than 5 years of employment
13th Month Salary in Brazil
- Yes
- There is a statutory requirement to pay the 13th month salary.
- This payment must be completed by the 20th of December.
- The employer is also required to share their profits with the employee for their participation.
INCOME TAX
- The Dominican Republic follows a territorial concept for the determination of taxable income.
- Dominican-source income is subject to tax, while foreign-source income is generally not.
- However, residents are subject to taxation on foreign investments and financial gains.
- In the case of individuals who become residents, this foreign-source income is taxed only after the third year.
- Individuals pay tax on income in excess of 416,220 Dominican pesos (DOP).
- Personal income is taxed at the following rates (the scale is based on annual income):
|
Taxable income (DOP) |
Tax on column 1 (DOP) |
Tax on excess (%) |
|
|
Over (column 1) |
Not over |
||
|
0 |
416,220 |
0 |
0 |
|
416,220 |
624,329 |
0 |
15 |
|
624,329 |
867,123 |
31,216 |
20 |
|
867,123 |
and above |
79,776 |
25 |
DEDUCTIBLE EXPENSES
Personal Deductions
- Individuals (who are income taxpayers) may deduct educational expenses incurred by them and their direct dependent non-wage earners from gross income subject to tax.
- Educational expenses include those incurred in connection with elementary, medium, technical, and university education.
- The deduction is allowed only up to 10% of gross taxable income.
- Other non-business expenses are not deductible.
Standard Deductions
- Residents have a standard deduction of DOP 399,923 annually, which is adjusted by the annual inflation rates.
- Christmas bonuses, severance, and pre-notice payments are tax exempt.
Business Deductions
- Individuals performing commercial or industrial activities can deduct expenses incurred in the production of business activities, whether or not they keep organized accounting records.
- Otherwise, they have the option to deduct 40% on the gross revenue as total deductions to get the net taxable income.
- In these cases, the standard/fixed deduction is not applicable.
|
Deductible Expenses |
|
|
Personal Deductions |
|
|
Standard Deductions |
|
|
Business deductions |
|
IMMIGRATION
- Depending on their country of citizenship, individuals may be required to apply for and obtain an entry visa before traveling to the Dominican Republic.
- The government of the Dominican Republic grants a work authorization to foreign employees who have special knowledge or experience in a certain field.
- The granting of a work authorization is subject to certain rules that must be checked on a case-by-case basis because the rules may vary.
- In addition, nonresident employees who intend to work in the Dominican Republic in a dependent employment relationship for a local entity must obtain a work visa.
- The NM1 Visa for work purposes is granted to individuals who, as a result of the nature of their occupation, remain in the country for one year.
- In general, this visa is granted to people who fulfill contracts for a specific time period.
- The visa can be renewed for one-year periods during the term of the contract.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Business /Working Visa (NM1) |
|
1 year (can be extended) |
|
VALUE ADDED TAX
- Tax on the Transfer of Industrialized Goods and Services (ITBIS) is a value-added tax (VAT) applied to industrialized goods (movable) and services at a rate between 13% and 18%, with exemptions established by law to certain goods and services.
|
VAT |
|
|
Standard Rate |
18% |
|
Reduced Rate |
13% |
WITHHOLDING TAX
Dividends
- The withholding tax on dividends paid to a resident or nonresident is 10%
- The same withholding tax applies to dividends or benefit remittances by free trade zone entities
Interest
- The withholding tax on interest paid to a resident individual or a nonresident (individual or entity) is 10%
- No tax is withheld on interest paid to a resident legal entity
Royalties
- The withholding tax on royalties paid to a nonresident is 27%
- No tax is withheld on royalties paid to a resident legal entity, and royalties paid to a resident individual are subject to a 10% withholding tax
Fees for Technical services
- Fees for technical services paid to a nonresident are subject to a 27% withholding tax, regardless of where the services are provided
- No tax is withheld on fees for technical services paid to a resident legal entity, and fees paid to a resident individual are subject to a 10% withholding tax
|
Type of Payment |
Residents |
Nonresidents |
||
|
Company |
Individual |
Company |
Individual |
|
|
Dividends |
10% |
10% |
10% |
10% |
|
Interest |
0% |
10% |
10% |
10% |
|
Royalties |
0% |
10% |
27% |
27% |
|
Technical Service Fee |
0% |
10% |
27% |
27% |
TERMINATION
There are 4 ways to terminate an employment contract
- At Will Termination ("desahucio")
-
- Any party to an employment contract has the right to terminate it unilaterally without having to specify a cause.
- The party that terminates the employment contract must give an advance notice to the other party
2.For Cause Termination by the Employer ("despido")
-
- Employers may dismiss their employees alleging one or several of the specific causes listed in the Labor Code.
- For cause termination by an employer (despido) requires evidence of the commission by the employee of one or several of the listed grounds for termination.
- It also requires that the employer give notice of the termination and the grounds on which it is based to the Department of Labor within 48 hours of the dismissal.
- The right of the employer to base the dismissal on a specific cause for termination expires 15 days after the employee has committed the act alleged as grounds for termination.
-
- An employee may resign from his or her job for cause (dimisión).
- For cause termination by employees also requires evidence of the commission by the employer of one or several of the listed grounds for termination.
STATUTORY BENEFITS
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
PAYMENTS AND INVOICING
- The tax year-end is 31 December.
- Spouses are required to file separate income tax returns covering their respective incomes.
- Income from property held in common is included in the return of the husband, so it should not be included in the spouse’s return.
- Individuals are required to file a personal tax return only when income from sources different from the salaries, wages, and bonuses (in which the employer makes withholdings) is received
- If salaries are paid outside local payroll, individuals shall file a personal tax return.
- The personal tax return is due 31 March of the year after the tax year-end.
- Employers are required to withhold income tax from employees’ remuneration on a monthly basis.
- Tax on income from sources different from the salaries, wages, and bonuses received is due 31 March of the year after the tax year-end.
EASE OF DOING BUSINESS
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Dominican Republic ranked 115th in the World in 2019 in terms of ease of doing business.
