Regulation for Transfer of Motor Vehicles

Dominican Regulation of Transfers and Endorsements of New and Used Motor Vehicles, 06-2013 was issued on December 12, 2013 and provides for a procedure  to formalize the transfers of vehicles in favor of concessionaires and dealers.

Said procedure includes the duty, by the owner of the vehicle, to notify the transfer or exchange of the vehicle to the Dominican Tax Administration (TA), through a Sworn Statement Form for Motor Vehicle Transfers.

It should be noted that the Vehicle Transfer Regulation defines “transfer” as “the transmission of the domain or of the property of the motor vehicle”

In view of the above, once the owner files the Sworn Statement Form for Motor Vehicle Transfers before the TA, the declared vehicle would be registered under the name of the concessionary or dealer, who would then be subject to the application of the 1% Assets Tax over such vehicle, pursuant to the provisions of Articles 6 and 7 of such Regulation.

Once the vehicle is transferred by the concessionary or dealer to a third party, the payment of the 2% tax over the transfer of the motor vehicle should apply. Said transfer should be supported by an invoice with Fiscal Supporting Number, in which the commission value charged shall be clearly stated.

It is our understanding that the Vehicle Transfer Regulation is looking for a solution to offset the evasion in the payment of taxes derived from the income generated by intermediaries and dealers. Nonetheless, we consider that certain provisions regarding motor vehicle transfers set forth under Law 241 of Motor Vehicle Transit and in the Civil Code may have been distorted, since Vehicle Transfer Regulation establishes that the transfer of domain of the vehicle should be considered as a property transfer of the same.

On the other hand, Article 4 of the Vehicle Transfer Regulation establishes the valuation transfer rules for endorsements of imported vehicles, which shall depend on whether the endorsement is made before or after the year in which the vehicle was imported.

 

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