Voluntary Wealth Disclosure Law 46-20

Last January, Dominican President Luis Abinader enacted Law 7-21, which extends the term to apply for the benefits of the Voluntary Wealth Disclosure Law (46-20) for an additional period of 90 days.

The Voluntary Wealth Disclosure Law No. 46-20, or popularly called Amnesty Law, is of utmost interest tohome owners and real estate investors in general. The law establishes a special and transitory amnesty tax for taxpayers to voluntarily disclose or reassess all their movable and real estate properties, including those which may have not been previously declared or registered at the tax level.

The law, which applies and benefits Dominican nationals and resident or non-resident foreigners alike, as well as local or foreign DR-registered corporate entity holdings, calls for taxpayers to normalize their fiscal obligations and voluntarily disclose their assets at market value before the Dominican Tax Office (DGII), through the payment of a one-time and definitive 2% across-the-board amnesty tax overall disclosed or reassessed assets.

According to the new extension, taxpayers will have a limited period of 90 days starting from its date of enactment to apply before the DGII in order to benefit from the tax amnesty. The new deadline to apply is April 20th.

In practical terms, this law gives taxpayers the opportunity to update the value of their properties, either because:

  • their value has increased significantly;
  • if at the time of purchase they were not recorded for their real value;
  • if they built improvements and never had them declared; or,
  • if in the purchase contract the price was established in United States Dollars and the Dominican Peso devaluation has diminished their registered acquisition value.

If you decide to benefit from this law, you would be paying 2% on the increased value, thus eliminating the risk of having to pay 25-27% taxes on capital gains in case of an eventual sale in the future.

The Amnesty Law is voluntary. Villa owners should seek advice from their tax counsel to receive an evaluation of their specific case