VAT and Sales Tax in Dominican Republic

What is ITBIS and which rate applies?

ITBIS (Impuesto sobre Transferencias de Bienes Industrializados y Servicios) is the Dominican Republic's value-added tax, administered by the Direccion General de Impuestos Internos (DGII) under Law 11-92 (Tax Code), as amended by Law 253-12. The standard rate is 18%, applied to the sale, importation, and provision of most goods and services. A reduced rate of 16% applies to a defined list of processed food categories: dairy products (yogurt, butter), roasted or decaffeinated coffee, edible animal and vegetable fats, sugar-derived products, and cocoa and chocolate goods [1][2]. The reduced rate is self-applying -- suppliers invoice at 16% without filing a special exemption application. ITBIS operates as a credit-debit mechanism: registered taxpayers offset ITBIS paid on business inputs against ITBIS collected on outputs, remitting only the net balance to the DGII.

There is no registration-threshold turnover exemption. Every individual or legal entity that transfers industrialized goods, imports, or provides taxable services must register with the DGII, obtain a Registro Nacional de Contribuyentes (RNC) number, and collect and remit ITBIS from the first peso of activity [3].

Which supplies are exempt or zero-rated?

The DGII distinguishes between exempt supplies (outside the tax net entirely) and zero-rated exports (taxable at 0%, with input-credit recovery rights).

Zero-rated (0%): All exports of goods and services sold to buyers outside the Dominican Republic, and sales into Free Trade Zones under Law 8-90, are taxed at 0% [2]. Exporters may reclaim input ITBIS paid on production costs.

Exempt goods include: fresh meats, popular fish, fresh milk, honey, eggs, legumes, vegetables, tubers, unprocessed fruits, cereals, flours, bread, pasta, and baby food; agricultural inputs (seeds, fertilizers, insecticides, fungicides, livestock inputs); bottled natural and mineral water; medicines and medical devices; fuels; books, magazines, and educational materials; and wheelchairs and prosthetics [1][2].

Exempt services include: healthcare (consultations, hospitals, diagnostics, rehabilitation); education at all levels; financial services (banking, lending, insurance, pension plans, securities trading); ground transportation of passengers and cargo; residential housing rental; public utilities (electricity, water, waste collection); and cultural and artistic performances [1][2]. Services exported to foreign clients are also exempt.

How is the monthly IT-1 return filed?

Registered ITBIS taxpayers must file Form IT-1 (Declaracion Mensual del ITBIS) no later than the 20th day of the month following the reporting period -- for example, the January ITBIS return must reach the DGII by 20 February [3][4]. Submission is electronic via the DGII Virtual Office portal. The return reports: total ITBIS charged on taxable sales (debito fiscal), ITBIS paid on eligible business purchases (credito fiscal), and any applicable ITBIS withholdings made by the entity as a designated withholding agent. Payment of the net balance is made through authorized financial institutions. Late filing carries a 10% surcharge on unpaid tax for the first overdue month, plus 4% compounding interest for each subsequent month [3].

Withholding agents. The DGII designates certain entities -- large taxpayers (Grandes Contribuyentes), government entities, and payment processors -- as compulsory ITBIS withholding agents. When a designated agent pays a professional service to an individual, it must withhold 30% of the invoiced ITBIS and remit it directly to the DGII [4].

What is the e-CF electronic-invoicing requirement under Law 32-23?

Law 32-23 (effective 16 May 2023), supplemented by Decree 587-24, established mandatory e-CF (Comprobante Fiscal Electronico) electronic invoicing across all Dominican taxpayers, replacing the prior paper NCF system [5][6]. Each e-CF carries a DGII-assigned electronic tax receipt number (e-NCF). Documents must conform to an XML technical standard defined by the DGII and must be stored electronically for 10 years.

Implementation is phased by taxpayer size: National Large Taxpayers completed the rollout by May 2024; Local Large Taxpayers and Medium Taxpayers by November 2025. The final deadline for small, micro, and unclassified businesses was extended via Notice 06-26 to 15 November 2026 [5][6]. After each deadline, non-compliant entities lose the ability to issue legally valid tax invoices -- a consequence that can halt operations. Businesses must obtain a digital certificate from a recognized certification entity and receive DGII authorization before issuing e-CFs.

What is the ISC selective-consumption tax?

The ISC (Impuesto Selectivo al Consumo) is an excise tax levied in addition to ITBIS on specific goods and services. Key rates confirmed by PwC and the DGII as of 2025-2026 [2]:

The specific RD$ amounts for alcohol and tobacco are inflation-indexed quarterly by DGII resolution; Resolution DDG-AR1-2025-00008 (December 2025) set the Q1 2026 indexed amounts [7]. ISC is typically paid by the manufacturer or importer at the point of first sale or clearance through customs; it is not recoverable as an input credit by downstream businesses.

Businesses operating in the Dominican Republic should verify their e-CF compliance status well before the November 2026 deadline and confirm which rate band applies to each product or service in their mix. A full country overview, including income tax and property tax context, appears in the Dominican Republic country overview. Navigating ITBIS registration, monthly IT-1 filings, ISC obligations, and the e-CF technical rollout simultaneously is complex; engaging a qualified tax professional with Dominican Republic experience is strongly recommended.