Capital Gains Taxation in the Dominican Republic
In the Dominican Republic, capital gains are subject to taxation under Law No. 11-92 on Income Tax. Capital gains are defined as the profit or gain derived from the sale, exchange, or other disposition of capital assets. Capital assets include real estate, stocks, bonds, and other investments.
The calculation of taxable capital gains involves determining the difference between the selling price of the asset and its acquisition cost. Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale and improvements made to the property.
Capital gains are taxed at a flat rate of 27%. However, certain exemptions and preferential treatments may apply under specific provisions of the Income Tax Law. For instance, gains from the sale of a principal residence are exempt from taxation if the proceeds are used to purchase a new principal residence within two years.
The legal framework governing the taxation of capital gains in the Dominican Republic is outlined in the following articles of Law No. 11-92:
- Article 25: Definition of capital gains
- Article 26: Calculation of taxable capital gains
- Article 27: Tax rates applicable to capital gains
- Article 28: Exemptions and preferential treatments
These provisions aim to regulate and influence investment decisions by providing incentives for certain types of investments and ensuring that individuals and businesses contribute their fair share of tax on profits realized from asset disposals.
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