Does an informal lender pay taxes in the Dominican Republic?
By Equipo Prestafolio
Yes, even without an RNC: the interest you charge is taxable income. How the 10% withholding works, when you have to declare it yourself, and why ITBIS does not apply.
Yes, even if you have never gotten an RNC or issued a formal receipt to anyone: the interest you charge for lending money is taxable income in the Dominican Republic, and the obligation to pay tax on it does not depend on whether you are registered. This is the most widespread and most expensive misconception an informal lender has: thinking that "not being formalised" means "I owe DGII nothing". It is not so, and this article explains exactly which tax applies, how much it is, and in which cases the work of calculating and paying it falls on you.
Updated as of 15 July 2026. The figures in this article (ISR scale, withholding rate) were checked live against the official DGII page. The ISR scale is adjusted every year for inflation: confirm the current figure at dgii.gov.do before calculating what you declare.
The base rule: if you generate income in the DR, you owe tax in the DR
The Dominican Republic runs a territorial system: a resident pays tax on the income they generate inside the country (with a few exceptions for foreign investments that are not relevant here). If you lend money to someone in the Dominican Republic and charge interest, that interest is Dominican-source income, with no exception for the size of your operation or whether you are registered.
RNC registration is not what creates the tax obligation: the income does. The RNC is the tool to meet that obligation in an orderly way, not the condition for it to exist. See How to formalise your lending business with the DGII if you do not have one yet.
The two scenarios, and why they are different
This is the part that confuses people most, so it needs to be kept separate: the tax treatment of the interest you charge depends on who pays you.
Who pays you | What happens | Who does the work |
|---|---|---|
A company or registered taxpayer | They withhold 10% of the interest when paying you, and declare it to DGII on your behalf | The payer |
Another persona física (informal-to-informal loan) | No automatic withholding: nobody deducts anything when paying you | You, on your annual return |
If the payer is a company or registered taxpayer
Article 306 bis of the Tax Code (as amended by Article 2 of Law 253-12) sets a 10% ISR withholding on interest paid to a persona física. The company paying you is responsible for withholding that 10% and declaring it on form IR-17.
On the receipt side, there are two paths:
Your situation | Which receipt applies |
|---|---|
You are an informal lender (no RNC) | The company paying you issues a Comprobante de Compras (B11), reported on Format 606 |
You are registered as a taxpayer | You issue your own Comprobante de Crédito Fiscal (B01) |
Source: DGII help community, "Interest paid to Individual Persons".
If the payer is another persona física (the most common case for an informal lender)
Here is the scenario that describes most readers of this blog: you lend your own money to another persona física, with no company involved. In this case, nobody withholds anything at the moment of payment: nobody is required to deduct the 10% for you.
That does not mean the income is tax-free. It means the responsibility to declare it is yours, on your annual ISR return (IR-1), as part of your income for the year.
How much you actually pay: the ISR scale
If you have to declare the interest as part of your annual income, it gets added to your other income and calculated with the progressive scale of Income Tax for individuals (checked on the official DGII page on 15 July 2026):
Annual income bracket | Rate |
|---|---|
Up to RD$416,220.00 | Exempt |
RD$416,220.01 to RD$624,329.00 | 15% on the amount over RD$416,220.01 |
RD$624,329.01 to RD$867,123.00 | RD$31,216.00 + 20% on the amount over RD$624,329.01 |
From RD$867,123.01 | RD$79,776.00 + 25% on the amount over RD$867,123.01 |
This is the 2026 tax year scale (the one you use to file in March 2027, so it is the one in force for your next return). Keep one already-approved change in mind: Law 30-26, enacted on 18 June 2026, changes this scale from tax year 2027 onwards, raising the annual exempt threshold to RD$480,000 and adding a new marginal bracket of 27% for the highest incomes. It is not hypothetical, it is already enacted; it simply applies to 2027 income onwards, which you will file in 2028. On top of that, these figures are adjusted periodically for inflation, so always check the scale for the year you are declaring at the official DGII page.
The annual return (IR-1) is filed and paid by 31 March of the year following the one you are declaring.
Sources: DGII, Income Tax and, on the new scale from 2027, coverage of Law 30-26 (Revista Mercado, June 2026).
What about ITBIS? The good news
Here is something that works in your favour: interest is exempt from ITBIS. The law treats it as a financial service, and Article 344, numeral 1 of Law 11-92 (together with Article 14, literal d, of Decree 293-11) explicitly exempts financial services from ITBIS, whether or not a regulated entity is involved. In other words: it does not matter whether you are a bank, a lender, or an informal individual, the interest you charge does not carry ITBIS.
Source: DGII help community, "Is interest exempt from or subject to ITBIS".
Summary of the tax treatment, by case
Your situation | Automatic withholding? | Do you declare it yourself? | ITBIS? |
|---|---|---|---|
A company/registered taxpayer pays you | Yes, 10% (Art. 306 bis) | No, already withheld and declared by the payer | No |
Another persona física pays you | No | Yes, on your annual IR-1, per the progressive scale | No |
Why it pays to keep your numbers organised before you even formalise
A common mistake is thinking record-keeping is "for once you are already formal". It is the other way around: if DGII ever asks tomorrow, the gap between having a complete record of every loan, every interest collection and every operating expense, versus having nothing, is the gap between a calm filing and a serious problem. See Portfolio report for how to keep that figure always at hand.
Frequently asked questions
What happens if I have never declared anything and I have been lending for years? The obligation does not expire simply because time passed without DGII noticing; the safest move, if the volume is significant, is to consult an accountant or tax lawyer about how to catch up, rather than keep piling up undeclared years.
Is the arrears charge I collect also considered taxable income? Yes, arrears are additional income from the same source (the loan), so they get added to the base you use to calculate your income for the year, just like ordinary interest.
What if I lend in dollars or another currency? The tax treatment does not change because of the currency: what changes is that you have to convert the income to Dominican pesos at the relevant exchange rate for your return. Consult an accountant for the conversion details if your foreign-currency volume is significant.
Is the principal they pay back also declared as income? No. The principal you lent and that gets paid back to you is not income, it is the return of your own money. Only the interest (and arrears, if you charge them) counts as taxable income.
Summary
- The interest you charge is Dominican-source income, taxable, whether or not you have an RNC: registration does not create the obligation, the income does.
- If a company or registered taxpayer pays you, they withhold 10% (Art. 306 bis) and declare it for you.
- If another persona física pays you, there is no withholding: you declare that income on your annual IR-1, per the progressive ISR scale.
- ITBIS does not apply to interest: it is an exempt financial service (Art. 344 of Law 11-92).
- The ISR scale is adjusted every year: check the current figure before calculating what you declare.
Prestafolio calculates and stores principal, interest and arrears separately for every collection, exactly the distinction you need to know which part of your income is taxable when it is time to file: see Portfolio report and Financial statements.