Dominican Republic filing deadline approaches for Country-by-Country Report

The deadline for filing the Country-by-Country Report (CbCR) in the Dominican Republic is 31 May 2024.

Background

In October 2021, the Dominican Republic's Tax Administration (DGII) released the General Norm 08-2021 on the CbCR. Further, on 12 January 2024, the DGII released Notice 01-24, announcing that the portal on the DGII website is available for filing of the CbCR.

Scope

The provisions established in General Norm 08-2021 apply to taxpayers who are the Ultimate Parent Entity (UPE), or Constituent Entity of a Multinational Group (MNE Group) who are tax residents in the Dominican Republic and have consolidated annual revenue equal to or higher than 38,800,000,000 Dominican pesos (DOP38.8b) (i.e., €750m according to the 2015 exchange rate established in Notice 18-22).

Obligation to submit the CbCR

A UPE of an MNE Group that is tax resident in the Dominican Republic is required to file the CbCR no later than 12 months after the last day of the Reporting Fiscal Year of the MNE Group.

In addition, paragraph I of Article 4 of the General Norm 08-2021 establishes that a Constituent Entity that resides for tax purposes in the Dominican Republic, and that is not the UPE, should submit the CbCR no later than 12 months after the last day of the Reporting Fiscal Year of the MNE Group, if any one of the following conditions is met:

a. The UPE of the MNE Group is not obligated to file the CbCR in its jurisdiction of tax residence.

b. The jurisdiction in which the UPE is resident for tax purposes has a current International Agreement to which the Dominican Republic is a party, but does not have a Qualifying Competent Authority Agreement (QCAA) in effect to which the Dominican Republic is a party by the time specified for filing the CbCR for the Reporting Fiscal Year.

c. There has been a Systemic Failure of the UPE's jurisdiction of tax residence and the DGII has notified the Constituent Entity that is resident for tax purposes in the Dominican Republic.

However, under paragraph II of Article 4 of General Norm 08-2021, a Constituent Entity is not required to file the CbCR with the DGII if the MNE Group has made available a CbCR through a Surrogate Parent Entity. In this case, the entity must notify the DGII that the CbCR was filed in the Surrogate Parent Entity's jurisdiction of tax residence and that the Surrogate Parent Entity's jurisdiction of tax residence:

a. Requires filing of the CbCR aligned with Article 18 of Decree 78-14 (modified by Decree 256-21) and Article 6 of General Norm 08-21

b. Has a QCAA in effect to which the Dominican Republic is a party by the time specified for filing the CbCR for the Reporting Fiscal Year

c. Has not announced a Systemic Failure to the DGII

d. Has been notified by the Constituent Entity that it is the Surrogate Parent Entity

MCAA and QCAA

On 6 July 2023, the Dominican Republic signed the Country-by-Country Multilateral Competent Authority Agreement (CbC MCAA). The CbC MCAA establishes the necessary rules and procedures that enable competent authorities in different jurisdictions to exchange information automatically and periodically regarding CbCRs submitted by reporting entities of MNE Groups to their resident tax authority.

Nevertheless, as of 2 May 2024, the Dominican Republic has not activated the exchange relationships for CbCRs with other jurisdictions under the CbC MCAA.

Also, as of 2 May 2024, the Dominican Republic is not a party and does not have in effect a QCAA with other jurisdictions (e.g., with the United States).

As a result, according to the General Norm 08-21, a Constituent Entity that resides for tax purposes in the Dominican Republic should submit the CbCR in the Dominican Republic if the jurisdiction in which the UPE or Surrogate Parent Entity is resident for tax purposes does not have a QCAA in effect to which the Dominican Republic is a party by the time specified for filing the CbCR for the Reporting Fiscal Year.

Filing the CbCR

DGII Notice 01-24 announced that the platform for filing the CbCR is available for submission and established filing deadline for the CbCR as 31 May 2024.

When more than one Constituent Entity of the same MNE Group are resident for tax purposes in the Dominican Republic, the MNE Group will designate one of the Constituent Entities to file the CbCR and to notify to the DGII that the filing is intended to satisfy the filing requirement of all the Constituent Entities of the MNE Group.

Sanctions for noncompliance

Failure to comply with the CbCR obligations will result in penalties in accordance with Article 281 Ter. of the Dominican Tax Code and its modifications. The penalties for noncompliance can be up to three times the fines for noncompliance with a formal obligation.