Dominican Republic updates transfer pricing documentation thresholds, tax haven list

By Elisa Kaminsky, BaseFirma, Miami

The Dominican Republic earlier this month issued notices changing the threshold amount for transfer pricing documentation purposes and updating a listing of countries that will not be considered preferential regimes for tax purposes

 Dominican Republic transfer pricing regime

As a reminder, taxpayers subject to Dominican Republic transfer pricing include not only companies carrying out intercompany transactions with foreign related parties but also with domestic corporations.

Furthermore, companies engaged in transactions with entities located in states or territories with preferential tax regimes, with low or no taxation, or considered to be tax havens are required to disclose and file their controlled transactions.

Transfer pricing disclosure form

The Dominican Republic requires taxpayers subject to the transfer pricing regime to file a transfer pricing disclosure form called DIOR. In this form, companies are required to disclose all their controlled transactions, including the amount, exchange rate, related parties involved, the methodologies applied for each transaction analysis, arm’s length ranges and the results of the tested party.

At the time of the filing of the disclosure form, taxpayers need to have the transfer pricing study with the respective analyses ready should the tax authority request it.

The due date for filing the disclosure form is the end of June 2020.

Threshold for documentation

Each year, the Dominican Republic tax authority amends the thresholds for transfer pricing documentation purposes.  In January 2020, the DGII issued Notice No. 8 adjusting the threshold from DOP 11,144,913 (USD 208,413.52) to DOP 11,552,402 (USD 216,033).

Entities that do not meet this threshold are not required to prepare the transfer pricing study and inform the arm’s length range on the disclosure form.

If a controlled transaction is carried out with a low tax jurisdiction, however, this threshold does not apply.

Dominican Republic white list

Also, during January 2020, the Dominican Republic tax authority issued Notice No. 10 where the list of countries that are not considered a tax haven for transfer pricing purposes is updated. Countries like the Bahamas, Bermuda, Aruba, Venezuela, Iran, and Iraq, among many others, are not included in this list and as such are considered to be under a preferential regime.

–– Elisa Kaminsky is a transfer pricing manager at BaseFirma, Miami.