The Dominican Republic has enacted Law 30-26, bringing significant changes to the national tax system, including adjustments to income tax brackets and corporate rates.
Presidential authorities promulgated the Pro-Economic Growth, Tax Simplification and Mitigation of the International Crisis Law on June 18, 2026. The legislation modifies the tax code to adjust income tax, withholdings, advance payments, and wealth taxes.
Personal income tax changes
The law increases the tax free threshold for individual workers. During 2026, the annual exemption remains at 416,220 Dominican pesos, which equals 34,685 pesos per month.
Starting in the 2027 fiscal year, the annual exempt amount will rise to 480,000 pesos, or 40,000 pesos per month.
The new structure maintains progressive tax rates for income above this threshold. Earnings between 480,000.01 pesos and 685,000 pesos will be taxed at 15 percent on the excess. Income from 685,000.01 pesos to 910,000 pesos will face a 20 percent rate. Earnings from 910,000.01 pesos to 4,800,000 pesos will be taxed at 25 percent.
The law introduces a new top tax bracket. Annual income exceeding 4,800,000 pesos will be taxed at 27 percent starting in 2027. The income scale will be updated annually based on accumulated inflation from the previous year.
Corporate and business taxes
The legislation temporarily increases the corporate income tax rate for the largest firms. Companies with revenues exceeding 1,000 million pesos will see their rate rise from the general 27 percent to 30 percent for the 2026 to 2028 fiscal years.
Smaller businesses will see changes to advance payment requirements starting in 2027. Microenterprises that fall within established income limits will be fully exempt from advance tax payments. Small businesses will move to a three installment payment scheme.
The law alters several withholding taxes. Effective July 1, 2026, the withholding rate on independent professional fees and services provided by individuals increased from 10 percent to 15 percent. The withholding rate on rental payments to individuals also rose from 10 percent to 15 percent.
Payments made abroad for specific technology services now face a 15 percent withholding rate as of July 1, 2026. This applies to software licenses, digital advertising, cloud storage, and specific technological concepts, representing a reduction from previous rates that reached 27 percent for certain items.
Property and financial taxes
The legislation implements immediate changes to property taxation. It establishes a 10 percent capital gains tax on real estate income for individuals. However, it creates an exemption for capital gains from the sale of a primary residence for people over 65 years old, subject to legal conditions.
The tax on cheques and electronic transfers increased from 0.15 percent to 0.20 percent on July 3, 2026.
Late payment surcharges are set at 3 percent as of July 1, 2026, with a maximum limit of 100 percent of the tax owed.
Several taxes will be phased out or abolished. The tax on life insurance policies will drop to 11 percent and then 6 percent before being completely abolished between 2027 and 2029. The tax on company incorporation and capital increases will be abolished in 2027. The 1 percent tax on mortgage registration and conservation will be abolished between 2027 and 2028.
National revenue structure
The Dominican Republic relies heavily on domestic taxes, which accounted for 91.6 percent of revenue at main collection offices in 2025. Taxes related to foreign trade made up the remaining 8.4 percent, reflecting a gradual replacement of trade tariffs with domestic taxation.
The General Directorate of Internal Taxes, known as the DGII, collected 913,775.1 million pesos in 2025.
The consumption tax, known as ITBIS, is the largest single source of government revenue. It generated 216,389.4 million pesos in 2025, representing 23.7 percent of the directorate's total collection.
The state provides significant ITBIS exemptions for essential goods and services. The official estimate for tax expenditure associated with ITBIS exemptions in 2025 was 192,190.0 million pesos, which equals 2.37 percent of gross domestic product and 50.1 percent of total estimated tax expenditure.
Corporate income tax provided the second largest share of revenue at 200,077.5 million pesos, or 21.9 percent of the total. Personal income tax generated 133,750.1 million pesos, accounting for 14.6 percent.
Selective taxes on goods such as alcohol, tobacco, and fuel generated 143,243.7 million pesos, or 15.7 percent of revenue. Within this category, the specific tax on hydrocarbons raised 53,534.0 million pesos, while the ad valorem hydrocarbon tax brought in 32,808.6 million pesos.
Property taxes accounted for 61,919.9 million pesos, representing 6.8 percent of total revenue. The Real Estate Wealth Tax paid by individuals, known as the IPI, contributed 6,032.1 million pesos.
Other significant revenue sources included the first license plate tax, which generated 22,685.2 million pesos, and the tax on cheques and electronic transfers, which produced 20,009.7 million pesos.
Economist Tomas D. Guzman Hernandez wrote that the new legislation combines tax relief measures with provisions that increase or expand the tax collection base.
Guzman Hernandez noted that while progressive income taxes relate the tax burden to income levels, capital is more mobile than labor. He stated that the legislation aims to simplify compliance, adding that reducing administrative costs can broaden the tax base and improve adherence for smaller businesses.
