Employer Payroll ISR withholding vs ISR Invoice

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Sorry for posting in English, but I need some clarity on common practice regarding ISR withholding in Payroll.

When withholding is made on a weekly or semi-monthly payroll, how should the Annual ISR table be applied?

Should income for example from Week 1, be used to determine the correct ISR scale for withholding in Week 2, by adding Week 1 and Week 2 together and dividing it by 2 weeks to get an average to determine the correct scale? Would this then further be Annualised by multiplying by 52 to apply the Annual Table?
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George Pearson

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Marjorie Campos

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Hi,

There is an annual scale according DGII's notices. However, the ISR's withholding in Employeer Payrolls must to be made monthly. So, if your employeer pays you weekly, then your employeer must to make a proportion of your monthly earns, for each week. 
For example: If you earn RD$42,500.00 by month, and that money is distributed each week, then your withholding it must be RD$1,172.25 by month and it must be distributed each week too. But, if one month you earn more than your salary (vacations, extra hours...), that increase the withholding only by that month, always according the withholding table provides for the DGII.

At the end of the year the DGII add each monthly withholding and calculate if it corresponds with the annual scale and, if there was more withholding than it must be, then generate a credit that can be compensated when there is another withholding.

This is the link for the monthly withholding's table: http://www.dgii.gov.do/informacionTributaria/publicaciones/tablaRetenciones/Documents/Retenciones201...

And this is the link for the annual scale's notice: http://www.dgii.gov.do/informacionTributaria/publicaciones/avisosInformativos/Documents/01-17.pdf
(Editado)
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George Pearson

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Thanks for this.

For over deductions - This could potentially exceed the monthly withholding, will this then be offset in subsequent months, assuming that it can't go into the negative?

How are under-deductions dealt with, is this an external process or does it also filter back into payroll to recover this?
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Marjorie Campos

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For over deductions - This could potentially exceed the monthly withholding, will this then be offset in subsequent months, assuming that it can't go into the negative?No inmediatly. The DGII sums up every monthly withholding and then calculates if it applies to the annual scale. But they do so in march of every year , when your employer fill the form IR13 and presents it to DGII. So, from that moment the over deductions can be compensated.
If you have some over deduction from 2016, you can compensate it with your monthly withholding since march or april 2017, until the over deduction is exhausted.

How are under-deductions dealt with, is this an external process or does it also filter back into payroll to recover this?
Everything about ISR's withholdings in this case, must be trated into the payroll, and you have the right to request this information from your employer. 
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George Pearson

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Thanks again!

For over deductions - This could potentially exceed the monthly withholding, will this then be offset in subsequent months, assuming that it can't go into the negative?No inmediatly. The DGII sums up every monthly withholding and then calculates if it applies to the annual scale. But they do so in march of every year , when your employer fill the form IR13 and presents it to DGII. So, from that moment the over deductions can be compensated.
If you have some over deduction from 2016, you can compensate it with your monthly withholding since march or april 2017, until the over deduction is exhausted.
So assuming the compensation will take place from March, if the withholding for March was calculated at 300 and the credit is 400, you would apply 300 in March and 100 in April? 
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Waldys Hernandez

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The scale of retention does not change, all depends on the amount entered that in the month has accumulated the employee. This tax is paid monthly before the 10th of each month.
The scale to calculate the isr in the payroll is found at http://www.dgii.gov.do/informacionTri..., this scale is annual, or use a calculator for Obtain it in the following page http://www.dgii.gov.do/app/WebApps/Ca....
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Marjorie Campos

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I see, he is the employer, is he?
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Yonan Rodriguez-Consultor

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The order of the factors does not alter the product. The annual scale can be converted into months or weeks. In the end, such retention has to match the data of the DGII.
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George Pearson

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Considering only monthly values will result in overs and unders at year end. Is it practice to then not consider year-to-date values?
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George Pearson

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 i

In the example, the Monthly is according to that month, but over 12 periods it is over-stated if you use the Annual Taxable income to determine the ISR which should of been withheld for the year

Where as considering YTD values it would match at the end of the year.

Like is said, is it practice to match the monthly calculation and deal with differences via credits or can a calculation which considers YTD be used, which will match the annual withholding for the actual income received during the year.

Thanks for your input
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EYAA, Employee

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Respuesta oficial
To obtain personalized assistance with the accounting and tax treatment you must give to this transaction, you must go to the Internal Control area of ​​the Local Administration to which you belong.
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Yonan Rodriguez-Consultor

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¿Do you need the steps to register your company in Dominican Republic?
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George Pearson

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I responded to your feedback on the main thread with a bit more specifcs on the YTD view. I am doing research on payroll withholding calculations/practices and processes. A lot of information from a legal point of view can be found, but one always lacks the practice infomation.
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Yonan Rodriguez-Consultor

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-For example, monthly salaries up to RD $ 34,685 are exempt from ISR.
-The withholding applies after deductions from the Social Security Treasury.
-If you have a monthly salary of RD $ 38,500, the calculation would be as follows:

Gross salary = 38,500.00
TSS (5.91%) = (2.115.78)
Base for ISR 36,384.22
Tax exemption (34,685)
Amount subject to withholding = 1,699.22 * 15% = 254.88

Net salary receivable = 38,500-2,115.78-254.88 = 36,129.34
(Editado)
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George Pearson

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Thanks, that is my understanding of the monthly calculation as well, could you look at your first comment, where I attached a screenshot of this over a year? 
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Wilkin A. Maceo

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Good Morning,According to current legislation, withholding tax has to be done using the monthly you still know that your annual income will not reach the annual retention scale.

In practice, what happens is that at the end of the period when the employer submits IR-13, the employee who was withheld and did not apply, is generated a balance in favor, a credit that can use when in one of the months The salary increases again and they have to withhold ISR again, in the following period.

These cases are frequent with bonus payments to employees who are below the scale.

For example:
If as indicated in the month of April you have had an increase of the salary, for reasons of bonus or other payable quote.

According to the example you show
If we apply the scale to RD $ 53,684.21
The value to be withheld would be RD $ 2,932.69, if at the end of the period the total income does not reach the annual scale, this retained value becomes a balance in favor for the following period.