By Jessica Barbieri, Associate, BaseFirma Venezuela, Caracas
The Dominican Republic’s Directorate General of Internal Revenue on August 3 announced a public consultation on a draft general rule for country-by-country reporting. Under the general rule, the Directorate specifies the threshold for reporting and clarifies certain other aspects of the reporting obligation.
The general rule announcement follows a decree (Decree No. 256-21) issued by the tax authority in April that set forth various changes to the rules relating to transfer pricing documentation and country-by-country reporting. In the April decree, the tax authority explained which taxpayers are obligated to present the country-by-country report and the date the changes will come into effect (effective for fiscal year 2022).
Thresholds
In the general rule on country-by-country reporting, the Dominican Republic’s Directorate states that taxpayers are required to file the country-by-country report if they are the ultimate parent entity or a member entity of a multinational group that is a resident of the Dominican Republic and has consolidated income equal to or greater than DOP 38.8 billion (approximately USD 679 million).
Obligation to present information
The multinational group or any ultimate parent entity of a multinational group that resides for tax purposes in the Dominican Republic must submit the country-by-country report within 12 months after the last day of the fiscal year.
If the taxpayer is an “integrating entity,” it must present the country-by-country report within 12 months after the last day of the closing of the fiscal year of presentation of information of the multinational group if it meets certain conditions.
According to the general rule, an entity is considered to be an integrating entity in three circumstances. First, it is an entity independent of the multinational group that is included in the group’s consolidated financial statements for purposes of presenting financial information or that would be included if the participations in the capital of the entity were traded on a stock market. Second, the entity is excluded from the consolidated financial statements of the multinational group only for reasons of size or relevance. Third, the entity is a permanent establishment of an entity independent of the multinational group, provided that the entity prepares, for such permanent establishment, separate financial statements for financial, regulatory, tax or internal management control reporting purposes.
Notification
If a multinational group has several member entities resident for tax purposes in the Dominican Republic, the multinational group will need to designate one of the entities to submit the report.
Additionally, the general rule on country-by-country reporting has an annex, which includes a template that should be used to present the country-by-country report.
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