Trade and store crypto
How can I trade Bitcoin and cryptocurrency in the Dominican Republic?
Introduction to Bitcoin and cryptocurrency trading in the Dominican Republic
When it comes to the Dominican Republic we find, yet again, a sunny Caribbean country that isn’t content with offering gorgeous beaches, swanky expensive resorts, and endless Pina Coladas – it also offers a very favorable tax environment that attracts international investors and companies by the private jet-load. As with many of the other tax havens listed in our rankings such as the Bahamas, the Caymans, and Bermuda, the Dominican Republic has welcomed crypto investment more readily than larger, tax-based economies around the world
There’s plenty to attract holidaymakers such as mountains, rainforests, and, er, golf (if you like that sort of thing) but of more interest to the financial community is that Dominica has no laws restricting or regulating the use or trade of crypto. There was once even talk of a scheme to promote Bitcoin to the wider population – but that was back in the days when Bitcoin was riding high (value-wise).
Central Bank Digital Currency, CBDC, in the Dominican Republic
Early on, the Dominican Republic participated in a pilot scheme to test the use of digital currency alongside the country’s national currency. The Eastern Caribbean Central Bank (ECCB) and the Barbados-based fintech company, Bitt, signed a contract to conduct a blockchain-issued Central Bank Digital Currency (CBDC) pilot scheme within the Eastern Caribbean Currency Union (ECCU). The pilot was one of the first of its kind, involving a digital version of the EC dollar (DXCD) to be used for financial transactions between consumers and businesses, including peer-to-peer transactions, all using smart devices. The ECCB was and has been at great pains not to refer to its so-called ‘D-cash’ as a cryptocurrency – which is fair enough – but you get the idea. At the time of writing, technical hitches and platform breakdowns -and a wider lack of education amongst participants in the scheme, seem to be hindering the assessment of Dcash.
Crypto regulation in Dominican Republic
Bitcoin regulation in the Dominican Republic
In a drive to enhance economic growth and promote digital innovation, the Dom Rep passed new virtual asset business legislation in mid-2022 involving an agreement to appoint TRON Protocol as its designated national blockchain infrastructure. TRON Protocol – a global blockchain platform offering a cost-effective crypto settlement system, it is hoped, will enable Dominica to better consolidate itself within the global economy. The Dominican Republic’s Virtual Asset Business Bill puts it on a par with St. Kitts-Nevis, Antigua and Barbuda in the nine-member sub-regional Organization of Eastern Caribbean States (OECS) that follow similar legislation.
The Virtual Asset Business Bill, drafted in consultation with the Eastern Caribbean Central Bank (ECCB) has been designed to provide harmonized legislation across the Eastern Caribbean Currency Union (ECCU). The latest plans for virtual asset trading come on the back of very light regulation in the past, but as we have seen with firmer regulation elsewhere, the effect is usually to build confidence rather than take it away, helping to legitimizing the crypto industry and protect consumers. Under the regulations, Bitcoin exchanges will be required to obtain a license from the Financial Services Commission. They will also be subject to Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.
Taxes in Dominican Republic
Bitcoin taxation in the Dominican Republic
With so many attractions, not to mention low tax and light regulation, Bitcoin trading has been gaining popularity in the Republic, even with 2022’s low Bitcoin price. It remains to be seen what the fall out is from FTX in terms of public appeal, but that’s the same in all countries. Despite its small size, the Dominican Republic has long been a thriving financial economy driven by many overseas businesses and entrepreneurs. The Republic offers a very favorable tax regime for Bitcoin investors and, in particular, there is no capital gains tax on profits derived from Bitcoin trading. Anpother factor is that the Dominican Republic has enjoyed a degree of political stability which would seem to offer less risk of the unexpected governmental ‘about turns’ that have affected the crypto economies of certsain other countries, one way or another.
Tron-linked tokens such as BTT, JST, and NFT, including stablecoins— USDD, USDT, and TUSD accepted as a medium of exchange and the Dominican Republic allows these tokens to be used for public payments, including tax. This situation also extends to businesses which may receive digital currencies for services rendered. A tax resident of the Dominican Republic is required to be resident in the country for a minimum of 183 days annually and pay taxes on global income. Non-residents pay a personal income tax based on their capital gains.
The income tax rate is based on a progressive scale with the first $30,000 of taxable income not taxed. After $30,001, the following $20,000 is subject to 15% income tax. After $50,001 the following $30,000 is subject to 25% income tax. All income after $80,001 is subject to 35% income tax. Taxable income is stated as any derived from capital gains, royalties, interests, bonuses, etc.
Gaining taxpayer status of an individual is a willingness to pay the minimum amount of income tax on an annual basis and the government has always looked at ways to simplify its tax system. Legal entities which become tax residents need to pay global income tax, whilst non-residents pay taxes only on the profits received within the state’s territory. Offshore companies registered in the state receive 20-year tax holidays and do not pay income, profits, inheritance, wealth, and other taxes. Instead, such companies pay a registration fee and government levy annually.