SANTO DOMINGO – Several real estate agents expressed their discontent, alleging “ double” by companies that, they explained, deduct 28% from their commissions. Those affected call the practice “illegal.” However, tax attorney Erick Santiago asserts that applying both withholdings may have a legal basis in cases where the individual is not registered with the Dominican Republic's Internal Revenue Service (DGII).
Julio Antonio Fumero Gálvez, a real estate broker specializing in warehouses and buildings, told El Inmobiliario that in a recent transaction, a 28% withholding tax was applied to his final invoice, corresponding to 18% of the ITBIS (Value Added Tax) and 10% for individuals.
“What they did was apply two withholdings to the same commission, which makes no sense,” said Fumero Gálvez, explaining that, due to the magnitude of the operation, the discount represented a considerable loss for him.
“It wasn’t 20,000, or 10,000, or 5,000. A quarter of a million pesos. Because it was a rent of 17,000 dollars,” he declared.
Regarding this, the legal specialist explains: “If the real estate agent does not have a Taxpayer Identification Number (RNC) or issue valid tax receipts, they cannot collect the ITBIS (Value Added Tax) because they have no way to declare it to the State. In that scenario, the company receiving the service is obligated to withhold it and report it to the tax authorities,” Santiago stated.
Fumero Gálvez asserted that this is not an isolated case, and that other real estate agents, such as Josy Reyes, Héctor Rodríguez, and Miguel Ángel Leger, have also been subject to simultaneous discounts of 18% and 10%.
“We all claim that these discounts are being applied under the pretext that they are established taxes, but they don't provide us with a clear legal basis. And meanwhile, we are the ones who suffer,” he stated.
Lawyer explains legal basis for the measure
When asked about the issue, tax lawyer Erick Santiago explained that the application of both withholdings may have a legal basis, depending on whether the real estate agent is formally registered with the DGII.
“If the agent does not have a Taxpayer Identification Number (RNC) or issue valid tax receipts, they cannot collect the ITBIS (Value Added Tax) because they have no way to declare it to the State. In that scenario, the company receiving the service is obligated to withhold it and report it to the tax authorities,” Santiago explained.
The lawyer clarified that the ITBIS (Value Added Tax) does not belong to the agent, but to the State, and that only those who are regulated can collect it and then remit it.
“The problem arises when the service provider is not part of the system. In that case, the tax authorities consider them the end consumer and, therefore, withholding tax is applied,” he explained.
Santiago indicated that even within the legal field there are various interpretations regarding the correct application of withholdings.
“Withholding isn’t black and white. It has nuances, just like the laws. Some interpret cases like these as resulting in double taxation. That’s why it’s important to review each contract and specific situation before taking legal action,” he concluded.
They did not sign a contract
Fumero Galvez said that there was no signed contract clarifying the scope of the negotiation by both parties and that with his statement he only seeks to ensure that the law is applied correctly.
