Airbnb to be Regularized in DR.

This article today in Arecoa may interest those planning to buy to rent here in DR. Note that the article says DGII are in a very advanced stage of ensuring Airbnb rentals contribute taxes here. In Europe a tourist tax is imposed on Airbnb rentals. USA does it differently I believe.

Asonahores: «The flow managed by Airbnb is very high, it must be regularized now»


The Association of Hotels and Tourism ( Asonahores ), advocated that in the Dominican Republic control policies be created for Airbnb , which offers accommodation offers.

"Digital platforms are really a reality worldwide and we are not opposed to them per se," said Rafael Blanco Tejera , president of Asonahores.

He affirmed that currently thousands of tourists opt for this route to subtract real estate in the country "if we understand, that they should already be regulated, because the flow they are managing is very high."

Likewise, he gave the example of the United States and the European continent, which have already taken measures in this regard "they must be regulated in two aspects, first from the fiscal point of view, because they are not contributing from the fiscal point of view as We contribute to all the hotels and restaurants in the Dominican Republic, and it is something that, according to Lande DGII , is already very advanced,” he explained.

He added that "but we also have to do it from the point of view of quality", since according to him the safety of tourists must be guaranteed and the sector must be taken care of, according to RCN.
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All good points,  its  revenue to the  tax department and in some ways unfair competition. If they are going to regulate quality though they need to look  at their hotels and resorts as well.
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I'm guessing that most expat AirBnB owners in DR do not pay taxes on that rental income in either DR or their home country. We paid both, but of the other owners I know, I don't think any of them pay taxes on that income anywhere!
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Starting in August, the Government will regulate rentals in Airbnb format

Full article Diario Libre this morning indicating all Airbnb to be registered and meet government tourism standards, registration of guests and tax measures.

Exact model of regulation to be defined.
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Regulating Airbnb rentals is nothing more than the resorts complaining they are not getting ALL of the tourism business.  Don't kid yourself.

On the flip side doing this will discourage expats from buying properties in the DR for rental purposes.

Whichever brings the most income to the DR is what is driving this change.  The balance of nature will always prevail...imho.
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From the article...

Survey for regulatory framework

At present, the Ministry of Tourism (Mitur) is working on several initiatives regarding the resolution that is going to be issued. In this sense, Asonahores considers it necessary to demand that users be registered in some format for reasons of national security and the space they currently occupy. In terms of health, they point out that hotel establishments must comply with certain minimum health and cleaning protocols, the use of specific products for certifications that help guarantee a first-class service, an aspect that should be considered for technological platforms. On the tourist image of the country, they explain that the properties should comply with some aspects that guarantee the quality and safety of the property, because it is part of the experience and vision that the visitor will have about the tourist destination. Marranzini explained that the private sector has contributed to the Government being able to regulate rentals from Airbnb, through the provision of information at its disposal. He clarified that the models can coexist and that, together, they can enrich the national offer, but the product offered must be taken care of and that calls for a regulation that guarantees the health of the guest and the quality of the property to continue promoting the "country brand", as a tourist destination.
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Director of the DGII says taxes on Airbnb, Uber, Amazon and other digital platforms "will not aggravate consumers"

VALDEZ EXPLAINED THAT WITH THE APPLICATION OF THE TAX IT IS INTENDED TO COLLECT ONE THREE BILLION PESOS GRADUALLY.

As Listin Diario now.

It will probably affect the digital companies and those that supply Airbnb.
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The General Director of Internal Taxes, Luis Valdez, said today that the implementation of new taxes on digital platforms "does not come to aggravate consumers" , and that for this reason the draft regulation is being discussed and agreed upon before its approval. .


Valdez explained that with the application of the tax, it is intended to gradually raise three billion pesos, including all digital services provided by Amazon, Expedia, Google, Netflix, Spotify, DiDi, Uber, Airbnb , among others.

"We have discussed the preliminary draft, both with the observations that have been made to us, through our portal and also with the main service provider companies," the director of DGII told the press.

The director of the DGII pointed out that it is not only the Dominican Republic that taxes will be applied to digital services in the world of multinationals.

He argued that almost all the countries of America are receiving advice from the International World Fund IMF, as well as the International Development Bank IDB , for the implementation of this new tax.

Valdez spoke at a time when he was attending the mass for the 25th anniversary of the founding of the General Directorate of Internal Tax (DGII), held at the Santiago Apóstol Cathedral, in the heart city.
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I wonder if this will be another hit on condo sales , people that were actually buying in the hope of renting , not so much to make money but to offset the cost of owning ….        ( Just thinking out loud ).  🤔
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Probably twice over for those buying to rent. Which could help those who are buying to retire here by calming prices.

An extra charge from Airbnb.

A cost to comply with Dominican set rules and being registered here and having to pay local tax.

We will find out the details soon.

It is probably good for DR on balance. Their target buyers are retirees living here not those who speculate. Now Airbnb is getting some bad publicity in DR inflating property prices through buyers to rent and upsetting apartment owners having to put up with noisy renters. It needs regulation for sure and if it fills tax coffers to allow more investment in DR I personally have no complaints.
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Extra charge from Airbnb that will be passed down to consumer. Too large makes DR less competitive than other Carribean islands.

They can talk about high standards but some how the alcohol deaths  at the resorts fell out of the news.
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Apparently Dominicans represent the  majority of the owners using Airbnb to rent out their properties. And as such they are probably distorting the property market by purchasing to rent? Expats buying to rent are a small percentage.

Will the charge be to Airbnb and passed to consumer or renter? The renter appears to be in line for domestic tax.
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As an Expat living in the US, I have investment/rental condos on the North Coast.  I will not use Airbnb due to the short-term rental nature of their business.  My units go for months at a time empty, but that is much better than being 2,000 miles away and having problems and added expenses with damages for the party type rentals.  It is so difficult to get a decent property manager on the North Coast, that will do their job.  Any Expat that can legally work and would open up a good property management company can make a ton of $$.  A reliable property management person comes at a premium.  Renting a condo for a week for $500, and then have $1,000 in stolen and damaged property, and then add the other $1,000 in airfare to get repairs done, plus a week off work.  Better to sit empty!!!  Make your money on the resale side.
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There are definite challenges to being that far away!  Its very hard to run any business here if you are not in country.
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@DominicanadaMike Agree, there can be a lot of unintended consequences to these proposed changes. If the goal of the resorts is to fill up their expensive rooms, well that may or may not happen. But you could hamper foreign or domestic investment in condominiums and also start to limit overall tourism. I rent my condo when possible to offset the cost of ownership and to help pay for travel back and forth during multiple yearly visits. But I also pay U.S. income taxes while contributing to the local economy either through my or my tenants visits to the country. All this to say, I'm not smart enough to know if this tax should be levied and especially at the proposed 18% rate, but this seems to be driven by the powerfull hotel and resort union.

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@DominicanadaMike Agree, there can be a lot of unintended consequences to these proposed changes. If the goal of the resorts is to fill up their expensive rooms, well that may or may not happen. But you could hamper foreign or domestic investment in condominiums and also start to limit overall tourism. I rent my condo when possible to offset the cost of ownership and to help pay for travel back and forth during multiple yearly visits. But I also pay U.S. income taxes while contributing to the local economy either through my or my tenants visits to the country. All this to say, I'm not smart enough to know if this tax should be levied and especially at the proposed 18% rate, but this seems to be driven by the powerfull hotel and resort union.

- @Allor925

If you're only paying US income taxes and not Dominican taxes then I can completely understand why the Dominican government wants to regulate this sector, and I think they're on the right path.
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Frankly this govt does not care if anyone pays US, Canadian or any other taxes. They care about the taxes here.

They are not worried about filling up "expensive hotel rooms" as that already happens.  They care about tourists having choice. 

The all inclusive option isn't great for this country.  Air bnb, regular hotels etc add the much needed options.  Resorts pay taxes. Hotels pay taxes.  So should air bnb.

Tourists and users of air bnb also have the right to get what they pay for.  And owners have the right to be protected from lousy renters. 
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So, let's forget about tax treaties and all that stuff for a minute.  The Dominican Government wants to charge 18% tax on the rental - ok.  Then they want to come after the owner for income tax on the earnings - ok.  But if you take your money and invest it in mutual funds instead of a rental property in the DR, there is no income tax and your earnings are clear money no expenses, no work.  If you have a rental apartment, there are expenses.  Even if you don't deduct expenses, you are still able to make $7500.00 usd per year personal income (per person) without paying income tax.  Also, what if you are only managing properties on Airbnb?  Who pays the income tax?  What if you don't meet the $7500.00 per year threshold?  So many undocumented people in this country, renting, owning, managing... what a nightmare.  Nothing new for this country.

They could at least establish a threshold.  Lots of luxury properties here making thousands of dollars per night...yes they should pay something but those that are lucky to rent for 20-30 dollars per night, really?  Tax the user not the owner then at least there is a choice involved and everyone will be on the same page.
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I have not read of anywhere of what level of taxation will be applied to Airbnb so floating percentages is premature. How Airbnb deal with any extra taxes levied is also yet be seen.

Having Airbnb properties registered is a separate matter and owners could well have to declare any rental income annually and then be subject to the existing terretorial tax regime. Owners will also have to abide by any regulations set, such as complying with tourism codes and community rules.

There are over 30k Airbnb properties in Santo Domingo alone (out of 80k nationally which is the same number as hotel beds) with Dominicans buying property to rent and pricing locals out of renting and inflating property prices. They probably are buying up heavily in tourist areas too and the expat owner renter is a smaller percentage and unlikely to sway any decisions.

There are various factors in play such as renting location and type. The association of Dominican realtors is behind this proposal too and not just tourism and finance ministry. It is broadly popular and happens elsewhere worldwide as digital platforms get taxed.

Community, tourism, security and uncollected revenue will be the focus.
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Agreed.
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@lennoxnev 


Santo Domingo.- As in some Latin American countries, companies providing digital services abroad would have to pay taxes through special mechanisms in the Dominican Republic, in this case it would be a rate of 18% for the Tax on Transfers of Industrialized Goods and Services (ITBIS).
This is explained by the Directorate of Internal Taxes (DGII) in a statement released this Tuesday, in which it seeks to clarify the doubts generated by the call for public discussion on the project entitled “Regulation that regulates the procedure for the application of the Itbis to the digital services captured in the Dominican Republic and that are provided by foreign providers.
“They will pay taxes virtually, presenting the ITBIS through a special declaration that must be settled before the 20th of each month,” specifies the DGII on the collection initiative for the use of platforms such as Amazon, Expedia, Google, Netflix, Spotify, DiDi, Uber, Airbnb, Indriver, among others.

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  FYI that article is from   February of this year.  Looks like they are going after  Air BnB first.
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@planner
Right, I tried to add an article that updates the process and Government intentions to tax multiple digital platforms. But platforms like Expedia is Vrbo and going after Uber users too. I'm all for the RD gaining taxes rightfully like a lot of other countries, in the end it always gets past to consumers.
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Understood honey.  And yes we all end up paying the price, ALWAYS. 
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@sberger50 do you currently rent your property or you hv decided not to?

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The Abinader Administration needs to remember that they charge a huge tax on most goods and services, a whopping 18 or 28 percent.  Higher than in most countries.  I can live with that if this is the only means of collecting tax but it seems like they are trying to steal from the rich to give to the poor and I don't agree with that either.  Everyone should pay their share...  Taxing items that only richer people use is a non-transparent Robin Hood approach. Lower paid people (under $7500US) are exempt from personal taxes.  Maybe they need to increase that to $15,000US with everything else doubling in price.   I paid $25.00 US for a hamburger and fries from Wendy's for my son and I.  Those prices are worse than in N. America!  We are in a time of tax restraint not tax revolution.  I understand most governments blew away their funds on covid but we have to pick up the pieces and move forward without making problems worse.  Think before acting would be 1 method to tackle the problem...see the bigger picture.
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@dominicianvisitor, At present I have two beautiful beachfront condos in Cabarete, large one bedrooms, furnished and ready, that sit empty because I am picky about who I rent to, and for how long.  Would love to rent them to cover some expense, but I only want quality renters.  I don't need the money, so they could rent cheap to the right individual.  I do not have a property manager.  Hope that answers your question.
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With nothing being certain but death and taxes,  are Airbnb taxes at 18% now an absolute certainty?
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Not certain until laws are passed and implemented but I think its highly likely!  They need money and the other players in the industry are screaming.
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I have three one bedroom apartment's , and a three bed room house attached….what's the difference between just renting , or renting on Airbnb , every day I have 3-4 people stopping by  to ask about the availability  of the apt. …. I don't rent because I don't need the money and not sure I want the headaches  , I only bought because I got tired of the hotel's ….. but what's the real difference
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Renting on Airbnb you are in their system and sign up for their "rules". And there are plenty of rules and regulations with Airbnb.  Each day Airbnb seems to become more anal retentive.  It will be fairly "easy" for the DR government to impose their taxes within the Airbnb system if that is what is actually going to be done.  I am guessing they will stick about an 18%  tax upon Airbnb rentals applied by Airbnb to the total price paid for a rental done through them and then collected directly from Airbnb. 

Of course that depends upon the laws the DR government comes up with and how those taxes can legally be applied.  Is it from dollar one of rentals or do you get to keep up to a certain amount without tax before taxes are applied, for example. Knowing how badly the DR words its other laws, I don't expect much clarity.

If you rent out apartments on your own without using Airbnb, then the answer is very open ended since there are multiple ways to do that not using Airbnb.
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and what happens if the rent is 1 peso and the cleaning charges are $600 US???
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Puerto Rico has had a tax on Airbnb since 2020. The tax levied on Airbnb thee is 7% per listing inclusive of cleaning fees.

The regularization proposal for Airbnb in DR, indicates that the renter may also need to be registered with government and provide details of the guests staying.

It is all speculation for now but we will know all soon.
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and what happens if the rent is 1 peso and the cleaning charges are $600 US???
- @DominicanadaMike

If you do that, you better set a stay limit or someone could really take advantage of that pricing! 1f603.svg You could rent for a year and pay just over $600!

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It's a hypothetical question, but cleaning charges can be set by the day as can "other" charges and you can limit the days booked.
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It's a hypothetical question, but cleaning charges can be set by the day as can "other" charges and you can limit the days booked.
- @DominicanadaMike

Setting the cleaning charges by the day must be something new in the past year, since we've sold our rentals. I never had the option to have a cleaning fee other than a one time charge per stay.

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There are enough tools in Airbnb to jiggle the prices anyway you want.  There are also Management fees, resort fees, rules, discounts...lots of ways
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Hypothetical question if cleaning charges are set by the day….
You can list the Airbnb for free each night , but must pay the
cleaning fee ……. Just hypothetical cleaning fees $75 USD$
each night…….😏
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