Dominican Republic: Withholding tax, dividends of free trade zone companies

Withholding tax, dividends of free trade zone companies

Measures concerning a withholding tax, imposed at a rate of 10%, on dividends distributed by companies that are located in free trade zones have been implemented.

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The tax authority (DGII) for the Dominican Republic published a general notice—No. 28-2016 (5 October 2016)—that establishes the rules for the 10% withholding tax on dividends paid by free trade zone companies to their shareholders, whether the shareholders are residents or non-residents of the Dominican Republic for tax purposes.


The withholding tax on dividends distributed by companies located in free trade zones was introduced as an amendment to section 308 of the Dominican tax law by the “tax reform legislation” in 2012. Implementation of the withholding tax, however, was suspended until such time that any of the signatory countries to the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) also approved a similar tax with respect to their free trade zones. In 2013, El Salvador and Honduras each passed legislation introducing a similar tax on dividends distributed by companies located in free trade zones. 

The withholding tax in the Dominican Republic is applicable to all taxpayers classified under the special tax regime (pursuant to Law No. 8-90) that applies to free trade zones. The general notice (No. 28-2016) does not affect any other special tax regime in the Dominican Republic.


Read an October 2016 report (Spanish) [PDF 171 KB] prepared by the KPMG member firm in the Dominican Republic

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