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What income tax and social security contributions must be paid by the employee and the employer during the employment relationship?
Tax resident employees
Tax resident employees must pay income tax on their gross Dominican-source income to the DGII at the following progressive rates:
- Income up to DOP416,220.00: exempt from tax.
- Income between DOP416,220.01 and DOP624,329.00: 15% of the amount which exceeds DOP416,220.01.
- Income between DOP624,329.01 and DOP867,123.00: DOP31,216.00 plus 20% of the amount which exceeds DOP624,329.01.
- Income of DOP867,123.01 or above: DOP79,776.00 plus 25% of the amount which exceeds DOP867,123.01.
(Article 296, Tax Code.)
It is the responsibility of the employer to withhold the corresponding amounts on account of income tax at the time of payment of the salary.
Tax resident employees must also pay:
- 2.87% of their gross salary into the old age, disability and survival insurance scheme, with the employer paying 7.10% of up to 20 minimum social security quotable salaries (DOP11,826.40).
- 3.04% of their gross salary to the family health insurance scheme, with the employer paying 7.09% of up to ten minimum social security quotable salaries.
- 0.5% of their bonus as profit sharing, with the employer paying 1% without a top limit.
Non-tax resident employees
Officially, non-tax resident employees must pay income tax at 25% on their Dominican-source net income. However, in practice, the DGII applies the progressive rate applicable to tax resident employees.
Employers must pay:
- 1.2% of each employee's gross salary into the Workers Compensation Plan. This rate can vary by up to 1.6% (depending on the degree of risk involved in the activity undertaken by each employer).
- 1% of the company's payroll to the government's Professional and Technical Training Institute (INFOTEP), on a monthly basis.
- 27% Fringe Benefit Tax (Impuesto Sobre Retribuciones Complementarias) on all other non-cash benefits that an employee receives (such as school tuition, car and property leases, and mobile phones).