Tax Agreement in Dominican Republic

The Tax Agreement Procedure in Dominican Republic (DR) for Resolving Controversies arising from Double Taxation Treaties takes as premise the Mutual Agreement Procedure of the Treaties for the Avoidance of Double Taxation where the DR is signatory (Spain and Canada), as per Revenue Ruling 10-2022, issued by the Dominican Tax Administration (DGII) on August 30th of 2022.

Any DR resident that considers that the measures adopted by the Competent Authority of one of the two Contracting States of the Double Taxation Treaty, result or will result in taxation not in accordance with the Treaty, may file a written application before the Competent Authority of the State of residence or the other Contracting State, as applicable. The Competent Authority in DR is the DGII (as per Ministry of Finance’s Resolution 137-2014).

For the taxpayer, the purpose of the Mutual Agreement Procedure would be to reach an agreement with the DGII in the event that it can be resolved unilaterally or else, an agreement between the DGII and the Competent Authority of the other Contracting State of the Double Taxation Treaty. In both scenarios, the DGII shall establish the Dominican standpoint in a period of no longer than four months.

According to said Mutual Agreement Procedure Revenue Ruling, the application shall comply with the requirements indicated therewith and in the period established in the corresponding Treaty for the Avoidance of Double Taxation (within 2 or 3 years counted from the notification of the document which gives rise to taxation not in accordance with the Canada or Spain Treaty, respectively).

The Mutual Agreement Procedure as per DGII’s Revenue Ruling 10-2022 also regulates response periods if the Competent Authority requests documents or clarifications to the taxpayer and for the admittance or denial to start the Mutual Agreement Procedure, and cites some cases in which it may be denied.

Finally and according to the DGII, the decision of not eliminating double taxation or taxation not in accordance with the Treaty may be based in some of the following causes: (i) expired statute of limitations (ii) due to diverse interpretations by the Competent Authorities of their internal laws (iii) due to lack of information and documentation from the taxpayer, (iv) due to the non-acceptance of the agreement to avoid double taxation or taxation not in accordance with the Treaty, by the taxpayer.

ABOUT THE AUTHOR: Dra. Maria Arthur Rodger is a Partner, Head of Tax & Private Client at ACLAW, a law Firm in the Dominican Republic. She specializes in tax law, (Tax LLM in Georgetown Law Center & Tax LLM in Universidad Pompeu Fabra in Spain), including ample knowledge on the tax systems of the United States, Spain and Central America; with more than 20 years of experience in tax advisory since the enactment and development of the Dominican Tax Code. Dra. Maria Arthur is also a CPA, Certified Bankruptcy Liquidator and Legal Interpreter.

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