Double Taxation Relief in the Dominican Republic: How the Mutual Agreement Procedure Works

A company taxed in both Santo Domingo and Madrid on the same income has a remedy most taxpayers never invoke: the Mutual Agreement Procedure, or MAP. The Dominican Republic regulated it in Revenue Ruling (Norma General) 10-2022, issued by the DGII on August 30, 2022, giving practical teeth to the country’s two double taxation treaties, with Spain and with Canada.

The mechanism is straightforward in design. A Dominican resident who considers that the actions of either treaty state result, or will result, in taxation contrary to the treaty may file a written application with the competent authority of its state of residence or, where applicable, the other contracting state. In the Dominican Republic, the competent authority is the DGII, designated by Ministry of Finance Resolution 137-2014.

Timing is the first hurdle. The application must be filed within the treaty’s own window: two years from notification of the act producing the improper taxation under the Canada treaty, three years under the Spain treaty. Miss the deadline and the door closes, whatever the merits.

Once admitted, the DGII must set out the Dominican position within four months. From there, the case is either resolved unilaterally or negotiated between the DGII and the foreign competent authority. Norma 10-2022 also regulates response periods when the DGII requests documents from the taxpayer, and the grounds for refusing to open, or for closing, a MAP: an expired statute of limitations, divergent interpretations of domestic law by the two authorities, insufficient information from the taxpayer, or the taxpayer’s own rejection of the proposed agreement.

That last point carries a strategic lesson: MAP is not arbitration. The authorities are obliged to endeavor to agree, not to reach agreement, and there is no guarantee double taxation will be eliminated. The taxpayer’s file, contemporaneous documentation, coherent transfer pricing support, a clear treaty argument, is what moves the process. Filing MAP should also be coordinated with any domestic appeal, since the two tracks interact.

If you face double taxation involving Spain or Canada, our international tax team can assess treaty relief, prepare the MAP application and manage the procedure before the DGII from start to finish.

Do you want more information about our services for Double Tax Agreements in Dominican Republic? Contact Us.

ABOUT THE AUTHOR: Maria Arthur Rodger is a Partner leading the Private Client, Successions and Tax areas at Arthur & Castillo Advisers and Consultants in the Dominican Republic. She specializes in private client, successions, tax, real estate valuation and advisory (Master in Tax and Finance Studies from Georgetown University in Washington, D.C. & Universitat Pompeu Fabra in Barcelona) with more than 20 years of experience. She is also a Certified Public Accountant (CPA), Certified Valuator, Business Bankruptcy Expert and English and Spanish Interpreter.

Email: marthur@aclaw.com

Disclaimer: This publication is not intended to provide advice or suggest a guaranteed outcome as individual situations will differ and the situation may have changed since publication. For specific advice on the information provided and related topics, please contact the author.

© Arthur & Castillo ®. All Rights Reserved.