The tax on assets was established by Law No. 557- 05 and is levied on the total assets of legal entities or individuals with sole proprietorships.
The purpose of this article is to provide information on the main aspects of such tax.
ASSETS SUBJECT TO THE TAX
In principle, this tax is levied on the total assets, which are found in the Company’s Balance Sheet, for which the adjustment for inflation will not be taken into account and depreciation, amortization and reserves for uncollectible accounts will be discounted.
Taxable assets include the following:
- Cash and banks.
- Accounts Receivable from Customers less reserves.
- Accounts Receivable from Officers.
- Accounts Receivable from Shareholders.
- Leasehold improvements.
- Intangible assets.
- Fixed-term investments.
- Automobiles and Equipment.
- Prepaid expenses.
ASSETS EXCLUDED FROM THE TAX
Investments in shares of other companies, land in rural areas, prepaid tax and real estate for livestock and agriculture will not be taken into consideration for the tax base.
The asset tax rate corresponds to 1% of the taxable base.
TEMPORARY EXEMPTION FROM THE TAX ON ASSETS
Those companies that are not subject to the payment of income tax are exempted from the payment of this tax.
They may also request a temporary exclusion before the DGII:
- Companies whose net fixed assets are greater than 50% of their total assets.
- Taxpayers with losses caused by force majeure or extraordinary events.
- Companies that have investments, which by their nature have a cycle longer than one year, in such a way that certain assets are excluded from their taxable base.
FORM AND TERM TO PAY THE TAX
This tax must be filed and paid together with the Corporate Income Tax Affidavit on an annual basis, through Form 1R-2.
As for the payment, to the extent applicable, it will be made in two installments, the first one on the due date of the Income Tax Return indicated and the second one up to six months after the due date of the first installment.
It should be noted that the Income Tax is taken as a credit against the tax on assets, therefore if the former is greater than the latter only the excess Income Tax should be paid.
In case the tax has not been paid within the established deadlines, a 10% surcharge will be added or surcharged on the tax for the first month.
The following months the surcharge will be 4%, and 1.10% will be paid cumulatively for compensatory interest.