The Donations Tax in the Dominican Republic applies to all transfers of property made through a Donations Act, at the same taxable rate in place for the income tax of legal entities (currently 27%), over the value of the goods donated; payable by the donatee or recipient, or by the donor if stipulated therein; according to the provisions of Law 2569 of Successions and Donations dated December 4 of 1950. 

When donating real estate property subject to liens or encumbrances in the Dominican Republic, the donations tax should apply to the extent of the benefit received. A donation of real estate property with a life interest reserved, shall be taxed at the level of the bare ownership at the time of the donation and later on when the life interest has elapsed.

Most importantly, there are certain transactions are imputed as donations by the revenue service, when carried out among direct and close family members, or with a third party when the recipient lacks proof of having the means to acquire property or of having made the corresponding payment; such as sale contracts, life interests, and company incorporation or its amendments when awarding interest or stock.    

A filing of a donations tax return is required within thirty days of the donation. Therefore, the importance of gathering and obtaining the pertinent documents on time, or of requesting an extension to file at a later date, given that surcharges and interest penalties may apply to late filing.

The relevance of a specialized tax attorney for preparing and filing the donations tax return on your behalf lies in the difficulties that may arise in determining the “value” of the property when real estate property, stock or other capital assets are involved; allowable income tax deductions by the donor, donations tax exemption scenarios, and the rightful means to contest or appeal a donations tax liquidation by the revenue service.    

ABOUT THE AUTHOR: Dra. Maria Arthur Rodger is a Partner, Head of Tax & Private Client at ACLAW, a law Firm in the Dominican Republic. She specializes in tax law, (Tax LLM in Georgetown Law Center & Tax LLM in Universidad Pompeu Fabra), including ample knowledge on the tax systems of the United States, Spain and Central America, and with more than 20 years of experience in tax advisory, tax disputes with the revenue service and tax litigation; since the enactment and development of the Dominican Tax Code. Dra. Maria Arthur is a CPA, Certified Bankruptcy Liquidator and Legal Interpreter.

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Disclaimer: This publication is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. For specific technical or legal advice on the information provided and related topics, please contact the author.