background image

Dominican Republic Publishes Consultation Letter on Withholding Tax and Deductions for Interest Payments — Orbitax Tax News & Alerts

The Dominican Republic's Directorate General of Internal Revenue (DGII) published a consultation letter on 13 January 2023 in response to a question regarding the treatment of interest payments on a loan with a related party in Panama. The letter clarifies that, as long as payments are made for interest generated on loans obtained abroad, tax must be withheld at a rate of 10% as a single and final payment in accordance with Article 306 of the Tax Code. Further, the letter clarifies that the interest payments may only be deductible for tax purposes if the tax is withheld and effectively paid in accordance with Article 287 of the Tax Code, as well as the provisions of Articles 5 and 6 of Decree No. 50-13 of 2013 and Article 3 of General Rule (Norm) 02-14 of 2014 (interest limitation rules).