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Countries › Dominican Republic › Guide › 6. Taxes › Tax losses in the Dominican Republic: five years, 20% a year and profit caps in years four and five

Tax losses in the Dominican Republic: five years, 20% a year and profit caps in years four and five

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Last verified: 2026-10-30 · Status: Stable

Companies carry losses forward for five years, deducting 20% of the loss per year, with no chance to recover a slice not used in its year. In the fourth year the slice is limited to 80% of taxable income and in the fifth to 70%. Losses of the very first fiscal year can be used up to 100% in the second year, and there is no carryback.

USD figures use the Banco Central de la República Dominicana reference selling rate of RD$60.8594 per US dollar for 28 October 2026, the latest row in its published rate file on the verification date, rounded to the cent.

Key facts

Loss carryforward5 yearsLey 11-92 art. 287 literal k, as of 2026-10-30 · in force
Annual usage limit20 % of the loss per yearLey 11-92 art. 287 literal k, as of 2026-10-30 · in force
Loss carrybackNot provided in art. 287 ruleLey 11-92 art. 287 literal k, as of 2026-10-30 · in force

The rule

1. Company losses are deductible from profits of the following years, for no more than five years.Ley 11-92, Código Tributario, art. 287 literal k, 2012-11-09 official text · verified 2026-10-30
2. Losses are deductible at 20% of the total per year. In the fourth year that 20% is limited to 80% of net taxable income, and in the fifth year to 70%. A slice not deducted in its year cannot be used later and gives no refund. Deductions are made only on the annual return.Ley 11-92, Código Tributario, art. 287 literal k numeral 2, 2012-11-09 official text · verified 2026-10-30
3. Losses shown on the return of the first fiscal year can be offset up to 100% in the second year. Any balance follows the general mechanism.Ley 11-92, Código Tributario, art. 287 literal k paragraph I, 2012-11-09 official text · verified 2026-10-30
4. Losses of another entity in a reorganization and losses generated by non deductible expenses are never deductible.Ley 11-92, Código Tributario, art. 287 literal k numeral 1, 2012-11-09 official text · verified 2026-10-30
5. Taxpayers with a loss can ask to lift the percentage limits, and DGII may agree if it considers there are force majeure or extraordinary causes.Ley 11-92, Código Tributario, art. 287 literal k paragraph II, 2012-11-09 official text · verified 2026-10-30
6. Capital losses offset capital gains of the same year, and the balance goes against capital gains of later years.Ley 11-92, Código Tributario, art. 289 literal i, 1992-05-16 official text · verified 2026-10-30
Year after lossTaxable income before lossSliceCapUsedLost
1RD$5,000,000RD$2,000,000NoneRD$2,000,000RD$0
2RD$1,000,000RD$2,000,000NoneRD$1,000,000RD$1,000,000
3RD$5,000,000RD$2,000,000NoneRD$2,000,000RD$0
4RD$2,000,000RD$2,000,00080%: RD$1,600,000RD$1,600,000RD$400,000
5RD$2,000,000RD$2,000,00070%: RD$1,400,000RD$1,400,000RD$600,000

Using a loss of RD$10,000,000 from a year other than the first

Worked example

  • In the table the company uses RD$8,000,000 (about US$131,450.52) of the loss and permanently loses RD$2,000,000 (about US$32,862.63), a tax cost of RD$540,000 (about US$8,872.91) at 27%.

Step by step

  1. Record each year of loss separately.
  2. Compute the 20% slice by loss year.
  3. Apply the fourth and fifth year caps.
  4. Keep support, since art. 287 bars losses from non deductible expenses.
  5. Request relief only with evidence of extraordinary causes.

Common traps

  • A slice unused in its year is gone, so low income years destroy loss value.
  • A loss year does not stop the asset tax.
  • After a merger the absorbing company cannot use the absorbed company's losses.
  • The text does not state that a change of owner ends the carryforward, and art. 287 only addresses reorganizations.

Sources

Related pages

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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