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The regulations set out the rules for which entity must file the country-by-country report (CbCR) and its corresponding notification and the procedures for when to file the CbCR.

On October 5, 2021, the Dominican Republic's Tax Administration (DGII) released General Norm 08-2021 on the CbCR, establishing the rules for filing the CbCR and corresponding notification.

Background

In October 2018, the Dominican Republic joined the Inclusive Framework of the Base Erosion and Profit Shifting (BEPS) Project of the Organisation for Economic Co-operation and Development (OECD), committing to implement the minimum standards in matters of tax transparency. One of those standards is the implementation of Action 13 (Transfer Pricing Documentation and CbCR).

Scope

The General Norm's provisions apply to taxpayers that are the ultimate parent entity (UPE) or constituent entity of a multinational group (MNE Group) that is tax resident in the Dominican Republic and has consolidated annual revenue equal to or greater than Dominican pesos (DOP) 38,800,000,000 (approximately 600 million euros).

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 tax year of the MNE Group.

Similarly, Paragraph I of Article 4 of the General Norm establishes that a constituent entity that is tax resident in the Dominican Republic and is not the UPE should submit the CbCR no later than 12 months after the last day of the reporting tax year of the MNE Group, provided that it meets any of the following conditions:

1. The UPE of the MNE Group is not required to file the CbCR in its jurisdiction of tax residence.
2. The jurisdiction in which the UPE is tax resident has a valid international agreement of which the Dominican Republic is a part, but does not have a competent authority agreement in effect with the Dominican Republic at the time the CbCR must be filed for the reporting tax year.
3. The UPE's jurisdiction of tax residence has made a systematic failure that the DGII has reported to the constituent entity resident for tax purposes in the Dominican Republic.

However, Paragraph II of Article 4 of the General Norm establishes that, when one or more of the aforementioned conditions occur, a constituent entity is not required to submit the CbCR if the MNE Group has filed the CbCR through a surrogate parent entity. In this case, the constituent entity must notify the DGII that the CbCR was filed in the surrogate parent entity's jurisdiction of tax residence because the following conditions applied:

1. The surrogate parent entity's jurisdiction of tax residence requires the submission of the CbCR.
2. By the time specified for the CbCR submission, the surrogate parent entity's jurisdiction of tax residence has a competent authority agreement in effect to which the Dominican Republic is part.
3. The surrogate parent entity's jurisdiction of tax residence has not notified the DGII of a systemic failure.
4. The surrogate parent entity's jurisdiction of tax residence has been notified by the constituent entity that it is the surrogate parent entity.

When several constituent entities of the same MNE Group are tax resident in the Dominican Republic and one or more of the conditions for submitting the CbCR are met, the MNE Group will designate one of the constituent entities to submit the CbCR.

Notification

A constituent entity of an MNE Group that is tax resident in the Dominican Republic must notify the DGII as to whether it is the UPE or the surrogate parent entity. The constituent entity must use the formal communication procedures for notifying the DGII and report whether it is the UPE or surrogate parent entity no later than the last day of the MNE Group's reporting tax year.

In addition, when a constituent entity of an MNE group that is resident for tax purposes in the Dominican Republic is not the UPE or the surrogate parent entity, it must notify the DGII of the legal name and tax residence jurisdiction of the reporting entity no later than three months before the end of the MNE Group's reporting tax year.

If the constituent entity fails to notify the DGII of the reporting entity, all taxpayers that are constituent entities of the MNE Group, resident or domiciled in the Dominican Republic, will be appointed, and the penalties provided in Article 281 Ter. of the Dominican Tax Code (DTC) will be applied.

Effective date

The General Norm will apply as of the 2022 MNE Group's reporting tax year.

Filing format

The DGII will establish the filing format of the CbCR and the procedures for filing it. The filing format and procedures will meet the OECD recommendations.

Penalties for non-compliance

Failure to comply with the CbCR obligations will result in penalties in accordance with Article 281 Ter. of the DTC and its modifications. The penalties for non-compliance may be as much as three times the fines for non-compliance with formal obligations.

Additionally, the General Norm includes Annex I, which provides the information that the CbCR must contain, as well as the filling instructions.

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