Countries › Dominican Republic › Guide › 5. FX and capital controls › Foreign loans into the Dominican Republic: no approval, a statistical report and the tax limits that matter
Foreign loans into the Dominican Republic: no approval, a statistical report and the tax limits that matter
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Last verified: 2026-10-30 · Status: Stable
A Dominican company can borrow abroad in any currency without approval, and interest rates are free. The borrower reports the commitment to the Banco Central for statistics, and a shareholder loan to the company does not count as registered investment. The real cost sits in tax: 10% withholding, a 10/27 deduction limit and the 3 to 1 test.
USD figures use the Banco Central de la República Dominicana reference selling rate of RD$60.9007 per US dollar for 29 October 2026, as shown on its home page on the verification date, rounded to the cent.
Key facts
| Prior registration or approval of foreign loans | None. Statistical report to the Banco Central textReglamento Cambiario art. 70, as of 2026-10-30 · in force |
|---|---|
| Interest rates on FX loans | Freely agreed textLey 183-02 art. 24, as of 2026-10-30 · in force |
| Interest withholding, non residents | 10 %Ley 11-92 art. 306, as of 2026-10-30 · in force |
| Thin capitalization ratio | 3:1 ratioLey 11-92 art. 287 paragraph III literal a, as of 2026-10-30 · in force |
The rule
1. Agents may transact in foreign currency on freely agreed terms, and interest rates in national or foreign currency are set freely among market agents.Ley 183-02 Monetaria y Financiera, art. 24 and art. 28, 2002-11-21 official text · verified 2026-10-30
2. Natural or legal persons taking on commitments in foreign currency inform the Banco Central for statistical purposes, within the terms of the relevant instructivo, on the form in the public services section of its website. Non compliance carries Ley 183-02 sanctions.Reglamento Cambiario, Primera Resolución JM 250911-01, art. 70, 2025-09-11 official text · verified 2026-10-30
3. All persons must give the monetary authorities the information they need. Failure to do so may be published in a national newspaper and reported to Congress, on top of sanctions.Ley 183-02 Monetaria y Financiera, art. 5 literal d, 2002-11-21 official text · verified 2026-10-30
4. A loan from abroad registers as foreign investment only when the credit is to the foreign investor and not to the company receiving the investment.Decreto 214-04, Reglamento de Aplicación del Registro de la Inversión Extranjera, art. 3 paragraph III literal c, 2004-03-11 official text · verified 2026-10-30
5. Principal and interest of foreign loans are bought in the exchange market through authorized entities like any other exchange operation.Reglamento Cambiario, Primera Resolución JM 250911-01, art. 72 literal c, 2025-09-11 official text · verified 2026-10-30
6. Buying financial services from foreign providers, by persons located in the Dominican Republic, is subject to the exchange rules adopted by the Junta Monetaria.Reglamento Cambiario, Primera Resolución JM 250911-01, art. 72 literal d, 2025-09-11 official text · verified 2026-10-30
7. Free zone operators and companies may obtain loans or guarantees in national or foreign currency from private, public, national or international institutions, under Junta Monetaria rules.Ley 8-90 de Zonas Francas, art. 40, 1990-01-15 official text · verified 2026-10-30
8. Anyone paying or crediting Dominican source interest to non residents withholds 10% as a sole and final payment.
Cost to do it: 10% of gross interestLey 11-92, Código Tributario, art. 306, 2012-11-09 official text · verified 2026-10-30
Cost to do it: 10% of gross interestLey 11-92, Código Tributario, art. 306, 2012-11-09 official text · verified 2026-10-30
9. The borrower's deduction is limited to 10/27 of the interest unless the lender is taxed abroad at an effective rate of at least 27%. No deduction is allowed if the withholding was not paid.Ley 11-92, Código Tributario, art. 287 paragraph III literal a, 2012-11-09 official text · verified 2026-10-30
10. Deductible interest cannot exceed interest multiplied by three times average equity over average interest bearing debt, and disallowed interest carries forward for three years.Ley 11-92, Código Tributario, art. 287 paragraph III literal a, paragraphs I and V, 2012-11-09 official text · verified 2026-10-30
11. Unrealized exchange differences on foreign currency obligations at year end are taxable income or deductible expense, as the case may be.Ley 11-92, Código Tributario, art. 293, 1992-05-16 official text · verified 2026-10-30
| Item | US$ | RD$ at 60.9007 |
|---|---|---|
| Interest | 80,000.00 | 4,872,056 |
| Withholding at 10% | 8,000.00 | 487,206 |
| Deductible interest at 10/27 | 29,629.63 | 1,804,465 |
| Tax saved at 27% | 8,000.00 | 487,206 |
| Tax saved on a fully deductible loan | 21,600.00 | 1,315,455 |
US$1,000,000 loan at 8%, one year, low tax foreign lender, 27% tax rate (assumed loan terms)
Worked example
- With a low tax lender, the borrower deducts only US$29,629.63 of US$80,000 of interest, so the tax shield of US$8,000 is exactly offset by the US$8,000 withheld. A lender taxed at 27% or more abroad keeps the US$21,600 shield, subject to the 3 to 1 test.
Step by step
- Sign the loan and decide the currency with the exchange difference in mind.
- Bring the funds in through a bank.
- Send the Banco Central statistical form, taking the current term from the Banco Central or your bank.
- Withhold 10% on each interest payment and file IR-17.
- Run the 3 to 1 test at year end and post the exchange difference.
Common traps
- The deadline and thresholds for the art. 70 form sit in an instructivo that could not be located in this review. Confirm them with the Banco Central before closing.
- A shareholder loan does not earn a registration certificate, so its repayment is a contract payment, not repatriation under Ley 16-95.
- Interest deduction fails entirely if the withholding was not paid.
- Local banks face a 25% cap on foreign currency credit to non generators of foreign currency, which is a reason some borrowers look abroad. See the accounts and lending page.
Sources
- Ley 183-02 Monetaria y Financiera, Superintendencia de Bancos copy
- Reglamento Cambiario, Primera Resolución de la Junta Monetaria of 11 September 2025
- Decreto 214-04, DGII copy
- Código Tributario Title II, DGII
- Ley 8-90, DGII copy
Related pages
- taxes/interest-withholding
- taxes/thin-capitalization
- fx/foreign-currency-accounts-and-bank-lending
- fx/accounting-and-taxes-in-foreign-currency
- fx/fx-derivatives-and-hedging
Related: Dominican Republic country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide
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