This content is from: Local Insights

Inflation Adjustments for 2010

Pursuant to the provisions of the Dominican tax code, the General Internal Revenue Department, based on information supplied at the end of each year by the Central Bank of the Dominican Republic, on the basis of changes in the consumer price index, released the multiplier with which inflation is to be calculated and adjusted for all tax purposes.

This index, set at 1.0624 for 2010, is important in order to adjust any monies expressed in Dominican pesos in the accounting books of companies operating in the Dominican Republic.

It is used to adjust the value of capital assets on a yearly basis as well as any net participation in the capital of a business enterprise. It must also be applied to adjust the value of the transfer of operational losses from one year to the next as well as dividend accounts, and credits for taxes paid abroad.

This adjustment is also applied, as stipulated in the Dominican tax code, to the income brackets for individuals and their exempted income. Its effect is to increase the amount of yearly income that is exempted from taxes and the amounts at which the various tax rates shall apply to such individuals.

In this aspect, the Tax Authorities also published a revised chart informing the public of the changes made to individual tax brackets after applying such adjustment for inflation.

Milciades Rodríguez

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