In an effort to increase the government's income to better balance the annual budget and increase spending on education as a strategic component of economic and social development, the Dominican fiscal system was recently amended by Law No 139-11. The amendments made by such law primarily relate to (i) an increase in the corporate annual income tax rate; (ii) a change in the fiscal system applicable to casinos and other gambling centres; (iii) a new tax on financial assets of banking institutions; and (iv) a change in the system applicable to the importation of goods from Dominican free zones into the domestic market.
The most important amendment made by Law 139-11, as it relates to all companies in all industries, is to the income tax rate applicable to companies and entities generating Dominican source income, which has been increased from 25% to 29% for a period of two years.
The new law also increased the taxes payable by casinos operating in the country, based on the amount of tables in operation and a tax on gross sales of slot machines. With respect to sports gambling centres, a new registration fee and process was established, as well as a tax applicable on gross sales. A fixed annual payment, depending on the geographical location of the centre, was also provided. Telephone gaming operations and internet gambling was also subjected to prior registration requirements and a tax on gross sales.
A tax of an annual 1% has been provided over net productive financial assets owned by financial institutions in the country, payable on a monthly basis, and later deducted from the annual income tax payment of the banking institution at the end of the year. This tax is also applicable for only two years from the enactment of the law.
Importers bringing products manufactured in Dominican free zones into the Dominican market will now pay the import tariff applicable to the importation of all goods from outside Dominican territory. These goods will also be subject to an Excise Tax, if applicable to its category, as well as the Tax on the Transfer of Industrialized Goods and Services (known as ITBIS). Free zones will also now pay an income tax of 2.5% on the income received from the sale of goods and services in Dominican territory.