Income Tax

[Jeremy]

I have a question about salaries tax in the DR. What would the income tax rate be on an annual gross income of, say, $250K (USD)? How much would be deducted from the employee's monthly pay cheque? FYI, the employee will not be liable for taxes in other jurisdictions.

If the employer provides free housing and a company car, would these employment benefits also be taxable?

What would the advantages/disadvantages be of having such salary paid off shore?

Thanks for your help!

Jeremy

[GringoCArlos]

The website for DGII must be down, but here is a link to calculating the income tax:

http://www.dgii.gov.do/servicios/calculadoras.html

The maximum rate has now been raised to 30% , above a certain level (in the ballpark of about US$ 25,000.) If the salary is to be paid monthly, then the amount being paid in USD must be converted at the tasa at the time of payment and the tax calculated. (yes, it's a pain in the a** - use an accountant to do any filings and paperwork connected with this payroll.)

The housing provided would also be included as taxable income to the individual enjoying its use, but the car expense could be covered by the company "as for company use".

The best advice with a salary of this amount would be to invest in a few hours time of a good commercial attorney who could provide the best advice.That attorney could probably also make an excellent referral to a good dominican accountant to keep things legal and avoid any major problems with DGII.

[mountainfrog]

http://www.dgii.gov.do/dgii/PDF/ISR.pdf
seems to be outdated...

[mountainfrog]

Originally Posted by Jeremy

... income tax rate... on an annual gross income of, say, $250K (USD)? How much would be deducted from the employee's monthly pay cheque?

At today's exchange rate:
250,000 x 32.46 = 8,115,000 RD$
For 900,000 RD$ they seem to deduct 134,011.35RD$.
The rest is taxed with 30%:
7,215,000 RD$ x 0.30= 2,164,500RD$ p.a.
Monthly = (134,011.35 + 2,164,500) : 12= 191,542.61RD$
or 5,900 U$
or about 28 %

m'frog

[Jeremy]

Thanks everyone for the information and advice. It's very much appreciated.

Jeremy.

[HOWMAR]

Don't forget, if you are an American, foreign income of that amount is subject to US taxes in addition.

[Fabio J. Guzman]

Here is the correct calculation:

Income = US$250,000 x RD$32/US$ = RD$8,000,000

First RD$276,422 are exempt

From RD$276,422 to RD$414,632 (15% tax rate) = RD$ 20,732

From RD$414,632 to RD$575,878 (20% tax rate) = 32,249

From RD$575,878 to RD$900,000 (25% tax rate) = 81,031

From RD$900,000 to RD$8,000,000 (30% tax rate) = RD$2,130,000

Total Income tax Due = RD$2,264,012

Effective Tax Rate = 28.3%

The Christmas bonus is exempt.

[laurapasinifan]

dammmmmmmm

and no monkey buisness with deductions!!!

ouch.

I bet with a decent accountant, and a normal life style you could end up paying in the 20% range after deduction in america

would make for some creative thinking on where excatly you are ACTUALLY employed!!!!

bob

[Jeremy]

A far as the US IRS is concerned, I will be a non resident alien employed by a US based employer and therefore will probably be liable for US Federal tax. Obviously I will need to get some advice from a good accountant as to how best I should structure my employment to minimize my tax exposure.

Meanwhile, does anyone have any idea as to how the DR tax authority will assess/calculate taxes due on employer provided housing?

Many thanks,

Jeremy

[GringoCArlos]

As I said before, the value of the housing provided to the employee is included in the employee's taxable income. Therefore , if the monthly rent paid for the employee is $3000 US, converted at 32:1, equals another RD $96,000 a month of taxable income.

The vehicle provided can probably not be included in the employee's income calculation as a legitimate company-use vehicle.