The Dominican government presented a four-pillar tax reform on 11 June 2026 that raises the corporate income tax rate from 27% to 30% for three years for companies earning over 1 billion pesos, while exempting microenterprises and small businesses representing 78% of all registered taxpayers. 

RF Report

The Dominican Republic’s Ministry of Finance and Economy has unveiled a pro-growth and anti-crisis fiscal package on 11 June 2026 that has been presented to the National Congress for consideration. This fiscal package is designed to shore up public finances while sheltering vulnerable households from international economic pressures.

The key measures are as follows:

Corporate income tax increase for large firms

The most significant change affects the country’s largest businesses. The corporate income tax (ISR) rate will jump 3 percentage points—from 27% to 30%—for three years, but only for companies reporting annual incomes exceeding DOP 1 billion.

Microenterprise and small business relief

Administrative relief extends to the vast majority of taxpaying firms, targeting entities representing 78% of all companies that reported income tax in 2025.

  • Elimination of advance payments for microenterprises: Advance income tax payment obligations for microenterprises are being fully abolished, removing a key administrative burden. The reform eliminates the need for regular prepayments, improves cash flow management for small startups, and reduces the payment schedule from twelve instalments per year to three, while keeping total tax revenue unchanged.
  • Agricultural and formality exemptions: The agricultural sector will receive broad tax relief, including exemptions from advance payments and asset taxes to support rural livelihoods and employment. In addition, taxes on company formation and life insurance—seen as barriers to competitiveness—will be phased out to ease business registration and reduce incentives for informal economic activity.

Customs collection and sector-specific withholding tax

  • Customs authorities will now collect VAT on imports made by informal taxpayers—closing a notorious loophole where undocumented traders evaded ITBIS on foreign goods.
  • Income tax withholding mechanisms expand across sectors historically difficult to audit, capturing value that would otherwise escape the tax base.
  • The Ministry of Finance gains veto power over incentive laws, preventing legislative erosion of the tax base through carve-outs and exemptions.

Expansion of selective consumption and transfer taxes

  • The tax on checks and electronic transfers rises from 0.15% to 0.20%, targeting financial transactions without disrupting commerce.
  • New selective consumption taxes debut on electronic cigarettes and vaping products, while casinos and gambling operations face elevated rates.
  • Airline tickets carry a USD 10 surcharge, generating modest revenue from international travel while minimising impact on domestic operations.

Traceability systems for controlled goods

Traceability controls target three high-evasion sectors: alcoholic beverages, cigarettes, and fuels. These mechanisms track goods from production through retail, creating an audit trail that enables cross-verification of reported sales against tax filings. Electronic tracking for excisable products reduces opportunities for underreporting and diversion to untaxed markets.

Simplified tax regime expansion

The government asserts that broadening the RST will benefit small taxpayers and accelerate formalisation—bringing informal operators into the registered system where they contribute to the tax base and access formal credit and services.

Tax amnesty and simplification

The package includes a tax amnesty addressing certain outstanding obligations—a one-time offer to bring delinquent taxpayers into compliance without full penalties. Simultaneously, the Simplified Tax Regime (RST) expands its scope and eligibility thresholds, encouraging small taxpayers to formalise and transition from cash-based operations to the tax system.

Accelerated depreciation and export refunds

  • Accelerated depreciation schedules incentivise capital investment by private firms, allowing faster cost recovery on machinery and facilities.
  • Exporters receive refunds of selective taxes on fuels and insurance—reducing export costs and enhancing international competitiveness.
  • The selective tax on ethyl alcohol used in medicines is refunded, supporting the pharmaceutical industry’s cost structure.

New Income tax brackets for high-earning individuals

A new individual income tax bracket takes effect on 1 January 2027. Taxpayers with monthly incomes exceeding BOP 400,000 pesos will face a marginal rate of 27%.

The bill must be approved by the National Congress before it can enter into force.