Dominican Republic signs Multilateral Competent Authority Agreement for automatic exchange of transfer pricing information

• The Dominican Republic signed the multilateral competent authority agreement on the exchange of Country-by-Country (CbC) Reports as part of its commitment to the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting.
  
  
• Exchanging information in CbC Reports will provide the Tax Administration with more information on transfer pricing matters.

On 6 July 2023, the Dominican Republic signed the "Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (pdf)" (CbC MCAA).

Background

In October 2018, the Dominican Republic joined the Inclusive Framework of the Organisation for Economic Co-operation and Development (OECD) and the G20 for the Base Erosion and Profit Shifting Plan (BEPS Plan).

As part of this commitment, the country pledged to adopt the minimum standards of the BEPS Action Plan, including Action 13, which is related to transfer pricing documentation and Country-by-Country Reporting (CbCR).

Furthermore, in December 2019, the Convention on Mutual Administrative Assistance in Tax Matters entered into force in the Dominican Republic. This convention allows for the automatic exchange of tax information under Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters, subject to the scope and procedures agreed upon by two or more jurisdictions.

Likewise, on 5 October 2021, the Dominican Republic issued General Regulation 08-2021 regarding CbCR. This regulation stipulates that every Ultimate Parent Entity of a Multinational Group that resides for tax purposes in the Dominican Republic is obligated to submit a CbC Report no later than 12 months after the last day of the fiscal year. It also specifies that taxpayers subject to General Regulation 08-2021 must inform the General Directorate of Internal Revenue (DGII) whether they are the Ultimate Parent Entity or the Surrogate Parent Entity no later than the last day of the fiscal year for reporting. Similarly, when a taxpayer is neither the Ultimate Parent Entity nor the Surrogate Parent Entity, they must notify the DGII of the Reporting Entity's legal name and country of tax residence no later than three months before the fiscal year-end for multinational group reporting.

Multilateral competent authority agreement on the exchange of CbC Reports

The CbC MCAA signed by the Dominican Republic is one of the model agreements designed to facilitate the implementation and operationalization of the automatic exchange of information pursuant to Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters. In this regard, it establishes the necessary rules and procedures that enable competent authorities in different jurisdictions to exchange information automatically and periodically on CbC Reports (BEPS Action 13) submitted by reporting entities of multinational groups to the tax authority of their residence.

This automatic exchange of information can be conducted with all signatory jurisdictions of the CbC MCAA (100 jurisdictions as of 5 September 2023) with which there is an active relationship.

Next steps

It is expected that, in the future, the DGII will issue statements or guidelines on the implementation and operationalization of this new commitment.

For additional information with respect to this Alert, please contact the following:

EY República Dominicana

• Rafael Sayagués
  
  
• Ludovino Colón
  
  
• Paul de Haan
  
  
• Maria José Luna

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.