4 November 2021
The Dominican Republic's Directorate General of Internal Revenue (DGII) recently published consultation letter G.L. No. 25641 in response to a question regarding a tax credit for foreign tax withheld on a payment for services from a foreign client to a resident company. The letter clarifies that the company may claim a credit for foreign tax withheld against income tax provided that the credit rate does not exceed 27%, which corresponds to the Dominican Republic's corporate rate. In order to claim the foreign tax credit, the following must be attached to the corporate tax return (IR-2): Certification of withholding issued by the client company that made the withholding; Copy of the invoice stating the amount charged for the service provided; and Certification of the competent tax authority confirming that the amount withheld was paid/remitted.
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