Income tax and "Fiscal Retention"

[JohnB]

I am shortly to relocate to DR and Dominican company in Santo Domingo has offered me a position as a freelance consultant whereby I would be working as an independent contractor.

I understand that the company will deduct at source 10% of my retainer fee and reimbursements of my out-of-pocket expenses. They call this "Fiscal Retention"

How does this affect my overall tax liability ?
As a "self-employed" person with an income of over RD$500,000 per annum would I still have to pay income tax at a flat rate 25% or graduated up to 25% ?
Is the 10% fiscal retention a part of the 25% income tax or in addition to it ?

I would be using one room of our home as my office and driving my own car for business purposes (my wife has her own car for domestic use), would I be able to claim tax relief on part of the household costs (such as; rent, electricity, cleaning, telephone, internet), and vehicle expenses?

Many thanks for you clarification.

[Fabio J. Guzman]

The amounts withheld by the company hiring you as a consultant can be deducted from your tax bill. You have to make sure that the company pays the tax withheld to the government.

As a self-employed person with an income of over RD$500,000 per annum, your income tax will be calculated as per the following schedule:

Up to RD$257,280.00 annually - exempt
RD$257,280.00-RD$385,920.00 - 15%
RD$$385,920.00-536,000.00 - 20%
Above RD$536,000.01 - 25%

The 10% tax withheld will be deducted from the tax due from applying the above.

The general rule is that you may deduct any expense necessary to obtain, maintain and/or preserve your work (Art. 287 of the Tax Code).

[JohnB]

Originally Posted by Fabio J. Guzman

The amounts withheld by the company hiring you as a consultant can be deducted from your tax bill. You have to make sure that the company pays the tax withheld to the government.

As a self-employed person with an income of over RD$500,000 per annum, your income tax will be calculated as per the following schedule:

Up to RD$257,280.00 annually - exempt
RD$257,280.00-RD$385,920.00 - 15%
RD$$385,920.00-536,000.00 - 20%
Above RD$536,000.01 - 25%

The 10% tax withheld will be deducted from the tax due from applying the above.

The general rule is that you may deduct any expense necessary to obtain, maintain and/or preserve your work (Art. 287 of the Tax Code).

Thanks for your clarification, Mr Guzman, it will be of much assistance to me, and I hope it might help other advice seekers too.