The Dominican Republic signed the international legal framework to implement the Common Reporting Standard and Country-by-Country reporting.

The Dominican Republic signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention) on June 28, 2016.

The Convention was developed jointly by the Organisation for Economic Co-operation and Development (OECD) and the Council of Europe in 1988. In 2011, it was amended by protocol to open it up to all countries and to align it with the international standard on the exchange of information on request. The revised Convention has been signed by over 97 countries.

The Convention provides a basis for several forms of mutual administrative assistance in tax matters:

— Exchange of information, which may be on request, automatic¹ or spontaneous and will apply to any foreseeably relevant information for the administration or enforcement of domestic laws concerning covered taxes²
— Simultaneous tax examinations
— Tax examinations abroad
— Tax recovery
— Service documents

The Convention also serves as a possible international legal framework to implement the standard for automatic exchange of information in tax matters (the Standard), including the Model Competent Authority Agreement (Model CAA) and the Common Reporting Standard, which contains the reporting and due diligence requirements for the automatic exchange of information for financial accounts.³ It also provides a possible international legal framework to implement the Multilateral Competent Authority Agreement for the automatic exchange of country-by-country reports (CbC) developed by the OECD as part of the Base Erosion and Profit Shifting (BEPS) project. The Dominican Republic will need to subscribe mutual agreements with other parties to the Convention in order to implement the standards provided by these frameworks.

The next step in the Dominican Republic is for the Convention to be approved by the Constitutional Court and ratified by Congress. No date has been communicated as to when this could occur. Once approved, the Convention would enter into force for the Dominican Republic on the first day of the month following the expiration of a three-month period after the date of deposit of the ratification instrument before the Secretary General of the OECD.

At this moment, the Dominican Republic has not made public whether it will reserve the right not to provide some assistance with respect to tax examinations abroad, tax recovery and the serving of documents, among others, as provided in the Convention. A follow-up Tax Alert will be issued containing this information.

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ENDNOTES

¹ The Convention conditions the automatic exchange of information to the subscription of a mutual agreement — e.g., Model CCA, CRS and CbC.

² All forms of compulsory payments to the general government except for customs duties. In the specific case of the Dominican Republic, this should include: income tax, capital gains tax, asset tax, value added tax, excise tax and transfer taxes.

³ See Tax Alert 2014-1450. The Model Competent Authority Agreement serves as a model for intergovernmental agreements and the CRS contains the reporting and due diligence standard that underpins the automatic exchange of information of financial accounts.