Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

August 27, 2021
2021-5899

Dominican Republic enacts Law to promote trading of publicly-offered securities on Dominican Republic Stock Exchange

Taxpayers may benefit from tax incentives for the trading and transfer of shares on the Dominican Republic Stock Exchange. Most of the tax incentives apply for three years from the Law's effective date.

On 6 August 2021, the Dominican Republic enacted Law No. 163-21 (the Law), which encourages the placement and trading of publicly-offered securities on the Dominican Republic Stock Exchange. This Law applies throughout the national territory with various applicability dates. According to the Law, its ultimate aim is to encourage the involvement of the private sector in the Dominican Republic's economic recovery from the COVID-19 crisis. The Law went into effect 9 August 2021.

Capital gains tax rate

Capital gains derived from shares that are traded on the stock exchange and are part of a public offering will be taxed at a rate of 15% for the first three years from the Law's effective date. After that period, capital gains will be taxed according to the rate established by the Dominican Tax Code (i.e., 27%).

Exemption from capital gains tax on capital increases

In accordance with the Law, companies listed on the stock exchange that have capital increases resulting from public offerings of shares will be exempt from capital gains tax for three years from the Law's effective date.

Withholding of taxes

Withholding tax will not apply to capital gains from a sale of shares that entered the stock exchange as part of a public offering. In addition, stock exchanges and centralized securities depots must forward to the Dominican Tax Authority information on the purchase and sale of shares, under the conditions outlined in the Law.

Fiscal-neutral effect

Capital gains will be triggered at the time of the shares' sale, not when the shares remain in the hands of the same holder, even if their market value changes. This provision will apply equally to shares, regardless of whether they are registered in the stock exchange.

Taxation of trust funds

Value-added tax or real estate transfer tax will not apply to the transfer of goods or assets for the formation of a trust fund.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young, Dominican Republic

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more