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Dominican Rep

6 May 2021

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Dominican Republic Amends Transfer Pricing Regulations Including New Documentation Requirements

The Dominican Republic's Directorate General of Internal Revenue (DGII) has published Decree No. 256-21 of 20 April 2021, which amends the transfer pricing regulations established by Decree No. 78-14 of 14 March 2014. The amendments are generally meant to bring the regulations in line with the outcomes of the OECD BEPS project. This includes:

  • New rules on performing a comparability analysis in line with OECD standards in terms of:
    • contractual terms;
    • functions performed, assets used, and risk assumed;
    • characteristics of goods, services, or intangible property used or transferred;
    • commercial and economic circumstances; and
    • business strategies;
  • New rules on acceptable transfer pricing methods, which includes the five standard OECD methods:
  • New requirements for the submission of the Informative Return for Transactions with Related Parties (DIOR), with the deadline unified with the annual income tax return with effect from the 2022 fiscal year (due within 120 days after the year-end);
  • New documentation requirements, including:
    • Country-by-Country (CbC) reporting requirements for taxpayers that are part of an MNE group meeting a consolidated revenue threshold to be provided in a general rule from the DGII, including a primary requirement for ultimate parent entities to submit a report for the 2022 reporting fiscal year in 2023, as well as secondary local filing requirements for non-parent constituent entities;
    • Master File requirements, which must be submitted electronically within 180 days following the due date for the DIOR, with information requirements in line with OECD guidelines;
    • Local File or Transfer Pricing Study requirements, which must be submitted electronically within 180 days following the due date for the DIOR, with information requirements generally in line with OECD guidelines, as well as the requirement to provide information on the organization structure and value chain or business model of the business group if not required to submit a Master File; and
    • requirements for the submission of additional documentation and supporting information when requested by DGII, which must be translated into Spanish if in another language;
  • Exclusions from the documentation requirements are amended, including that an exclusion from the Master File and Local File or Transfer Pricing Study requirements applies for:
    • taxpayers whose transactions (operations) with related parties do not exceed, in the aggregate, DOP 12,193,981.70 (adjusted annually for inflation), and who do not carry out transactions with residents of jurisdictions with preferential tax regimes with low or no taxation, non-cooperative jurisdictions, or tax havens; and
    • taxpayers whose related-party transactions are only carried out with resident related parties, provided that such transactions do not result in a tax deferral or overall reduction of tax revenues.

Decree No. 256-21 is effective from the fiscal year beginning on 1 January 2021, except for the changes specified as applying from 2022, such as the CbC reporting requirement. Further details on the CbC reporting requirement will be published once available.

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