Report achievements progress DGII 2020-2022

Management Report August 2020 - December 2022

GENERAL DIRECTORATE OF INTERNAL TAXES (DGII)

Content Introduction.............................................................................................................................1 1. General Advances.................................................................................................................2 1.1. Improvements implemented in terms of Registration, Income, Legal, Collection, Inspection and Special Regimes........................................................................................2 1.2. Efficient Government Program – Zero Bureaucracy.............................................................3 1.3. Digital Transformation.......................................................................................................4 1.3.1. Virtual Office (OFV).........................................................................................................4 1.3.2. Tax Migration.................................................................................................................5 1.3.3. Mobile app......................................................................................................................5 1.3.4. Digital interoperability....................................................................................................5 1.3.5. Business intelligence.......................................................................................................5 1.3.6. Electronic billing.............................................................................................................6 1.3.7. Motor vehicles................................................................................................................6 1.3.8. Certifications obtained....................................................................................................7 1.4. DGII 360 Program..............................................................................................................8 2. Collection...........................................................................................................................10 3. Facilitation and Services Advances......................................................................................12 3.1 New control modality: Electronic Invoicing........................................................................12 3.1.1 Importance of Electronic Invoicing.................................................................................12 3.1.2 Count on legal bases of Electronic Invoicing and Bill......................................................12 3.1.3 Approach of the General Bill of Electronic Billing in the Dominican Republic...................13 3.1.4 Free Billing Technological Tool......................................................................................13 3.1.5 Statistics / Advances in Electronic Billing.......................................................................14 3.2 Tax Education Program....................................................................................................14 3.2.1 University Program: Tax Education Subject....................................................................15 3.2.2 Other programs created and implemented....................................................................16

3.2.3 Tax Education Program for Universities..........................................................................16 3.2.4 Accounting and Fiscal Support Nucleus Program (NAF)..................................................16 3.2.5 Program to Create a Tax Culture in the University..........................................................16 3.2.6 Program One Step from Your Formalization...................................................................16 3.2.7 Implementation of the Tax Culture Week with University Students.................................17 4. Advances in legal matters...................................................................................................18 4.1 Technical Consultations....................................................................................................18 4.2 General Standard..............................................................................................................19 4.3 Resolutions......................................................................................................................21 4.4 Reconsideration Appeals..................................................................................................24 4.5 Department of External Representation............................................................................25 4.6 Tax Fraud and Crime Investigation...................................................................................28 4.7 Prevention of Money Laundering and Terrorist Financing..................................................29 4.8 Modification project of Title I of the Tax Code..................................................................30 5. Advances in auditing..........................................................................................................31 5.1 Risk-Based Tax Compliance Management Model ...............................................................31 5.2 Development projects......................................................................................................38 6. Management and Compliance Advances.............................................................................42 6.1 Post COVID Facilities........................................................................................................42 6.2 Application Law 46-20......................................................................................................43 6.3 Agreements to avoid double taxation...............................................................................44 6.4 Digital Economy...............................................................................................................45 6.5 Implementation of the Inclusive Framework......................................................................46 6.5.1 Action 5: Minimum Standard to Counter Harmful Tax Practices More Effectively:.....................................................................................................................46 6.5.2 Action 6: Minimum Standard to Prevent Treaty Abuse....................................................46 6.5.3 Action 13: Minimum Country-by-Country (CbC) Reporting Standard...............................46 6.5.4 Action 14: Standard to Make Dispute Resolution Mechanisms More Effective.................46 6.6 Coordination and Management of International Projects...................................................47 6.6.1 Project for the Institutional Strengthening and Modernization of the DGII-JICA...............47

6.6.2 Data Collection Study on Big Data and Artificial Intelligence (AI) in Tax Administration-2020-2021 with McKinsey & Company and JICA.....................................47 6.6.3 Project for the Institutional and Operational Strengthening of the DGII - UNDP...............47 6.6.4 Support in the adoption of new technologies in the tax administration with the Korea Public Development Fund for Economic Development (KPC) and IDB..............................47 6.7 Coordination and Management of International Technical Assistance...............................48 6.7.1 Public Finance Department (FAD) of the International Monetary Fund (IMF)....................48 6.7.2 IMF Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic (CAPTAC-DR)..................................................................................48 6.7.3 United States Treasury Office of Technical Assistance (OTA)..........................................48 6.7.4 Inter-American Development Bank (IDB).........................................................................49 6.7.5 Organization for Economic Cooperation and Development (OECD).................................49 6.8 Offer of International Cooperation....................................................................................50 6.9 Management of International Tax Consultations...............................................................50 6.9.1 Made by the DGII...........................................................................................................50 6.9.2 Received from other tax administrations........................................................................51 6.10 Management of International Activities...........................................................................51

Annexes....................................................................................................................................................................53 1. Statistics on the management of international cooperation in the DGII..............................53 2. International Activities according to organizations 2020-2022...........................................53

Management Report August 2020 - December 2022

Introduction Directorate and other institutions of the state apparatus, as well as business intelligence and Electronic Billing.

The General Directorate of Internal Taxes (DGII) oversees the administration and collection of local taxes and fees in the Dominican Republic. In this sense, it continuously implements improvements and international good practices that allow the simplification and streamlining of its processes for the benefit of taxpayers.

To achieve the reduction of tax avoidance and evasion, it has had the support of different international organizations through assistance and technical consultations made to other tax administrations. From August 2020 to date , 23 technical assistances have been received and 6 consultations have been made to other tax administrations regarding treatments or interpretations on the matter.

For the correct administration, application of taxes, as well as to administratively interpret the provisions of the Tax Code and its regulations, from August 2020 to December 2022, a total of 24 General Standards have been published. Likewise, to facilitate and make tax actions operational, establishing the required procedures, 27 Resolutions have been published and put into effect.

In the same way, contact with the taxpayer has been promoted through the DGII 360 program and the tax education programs, and work has been done to update and introduce improvements in Title I of the Tax Code, which dates from 1992, to streamline processes and guarantee the rights of taxpayers.

On the other hand, a digital transformation process began to improve information technologies and systems available in the tax administration, and which have included the redesign and development of all the functionalities of the Virtual Office, the institution's mobile application, digital interoperability between this General

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Below is a brief management report on the most relevant progress for the period August 2020- December 2022.

December, 2022

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Management Report August 2020 - December 2022

1. General Advances 1.1. Improvements implemented in terms of Registration, Income, Legal, Collection, Inspection and Special Regimes • Simplification and efficiency of the registration processes for taxpayers and operational areas, which allows for greater control, alerts, and a level of security;

• Modifications to the payment agreement in persuasive and coercive collection through the correction of several problems that impacted the current tax account at the time of generating payment agreements, renegotiations of payment agreements and cancellation of renegotiations;

• New RNC statuses for taxpayers with compliance with Rule 04-21, through which the name of inactive status was changed to suspended. Additionally, the temporary cessation state was created and the criteria for entering or leaving each state were updated;

• Automation of collection, with which it is possible to reduce times, reduce manual activities, human errors and have a greater systematized control of management, with the aim of increasing collection;

• Mark of obligated subjects, to identify natural and legal persons that carry out non-financial, commercial or business professional activities that by their nature are susceptible to being used in activities for money laundering and financing of terrorism supervised by the DGII;

• Creation and parameterization of loading of new delinquency inconsistencies, allowing Local Administrations to have delinquent cases available immediately upon expiration of the tax; • Phase 2 risk profile, which includes the inclusion of new indicators to support the verification of the taxpayer's profile and determine the treatment according to their level of risk;

• Generation and updating of the records to indicate various taxpayer statuses (active, suspended, temporary cessation, discharged);

• Corrections to the proforma processes and • Adjustments to the formats for sending resolutions: automation and improvement of transactions in the stock market, adding the determination resolution flow in TAX; controls to the declaration formats 654 and 655; • Creation of the automation of the asset laundering prevention processes in the TRE • Update to the form of modifications for system; companies; • Creation of an internal debt table, which shows the operational areas a standardized and automatic summary table that reflects the situation of a taxpayer, reducing processing times and possible human errors;

• Updating the affidavit form and/or payment of the selective consumption tax; • Updating the sworn declaration form and payment of the tax on lottery and sports benches;

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Management Report August 2020 - December 2022

• Update to the sworn declaration form and/or • Modifications to the exemption process of payment of the tax on gaming casinos; the Tax on the Transfer of Industrialized Goods and Services (ITBIS); • Update to the sworn declaration form and/or payment of the tax on slot machines; • Updating of the declaration forms of the Simplified Tax Regime (RST), with the aim • Creation of a new ex officio declaration for of simplifying the sworn declaration process the payment of the Solid Waste Tax, which is for taxpayers and allowing them to benefit automatically generated for the taxpayer in from this tax regime more easily. Likewise, his OFV at the time of declaring IR2 or ISFL; new boxes and validations were enabled; • Automation of the sending of daily collections to the Financial Management Information System (SIGEF);

• Creation of the declaration for the payment of contribution for the management and co-processing of solid waste for RST taxpayers, according to Law 225-20; and

• Modifications for the authorizations of tax receipt number sequences and electronic tax receipts;

• Update to the affidavit form and/or payment of the Income Tax (ISR) for individuals of the RST based on income.

1.2 Efficient Government Program – Zero Bureaucracy The Zero Bureaucracy Efficient Government Program is the first reform corresponding to the National Competitiveness Strategy and its objective is to promote efficiency in the Public Administration, through clear, timely and transparent regulatory frameworks that allow the simplification of procedures and public services, as well as the improvement in the quality of regulations, reducing times and costs for citizens and companies.

DGII is among the twenty-one (21) institutions that were prioritized for the year 2021, committing 14 procedures belonging to the Institution. Of these procedures, 10 were completed, representing 66% of the goal for that year. These procedures are:

4. Incorporation into the National Taxpayer Registry (RNC) of Physical Persons– In person 5. Incorporation to the RNC of Physical Persons - Virtual 6. Incorporation into the RNC of Foreign Legal Entities

1. Credit for Renewable Energy ISR Investment – Legal Entity

7. Request for Assignment of Sequence of Tax Receipts Legal Entities - Virtual

2. Credit for Renewable Energy ISR Investment - Physical Person

8. Request for the Assignment of the Sequence of Tax Receipts for Physical Persons - Virtual

3. Transferable Film Credit

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Management Report August 2020 - December 2022

9. Request for Assignment of Sequence of Tax Receipts Physical Persons - In person

14. Automation of Court Fees

As of December 2022, 7 of these completed procedures, related to the RNC and NCF (Tax Receipts) have been executed in 80% of the 11. Incorporation to the RNC of Legal Entities - identified stages, while the procedures for Virtual Motor Vehicles and Renewable Energy ISR Investment Credit are in process; For the 12. Transfer of Motor Vehicles – Physical Transferable Film Credit, an internal efficiency Person, Trailer or Tow module is being implemented and the payment of real estate transfers through 13. Automation of Property Appraisal for Commercial Banks and NetBanking is in the payment of real estate transfer tax, and tax process of starting. certification 10. Approval of tax receipts with fiscal value

1.3 Digital Transformation • Improvements in the user experience, enabling a personalized calendar that indicates which are the obligations that are about to expire, frequently asked questions and an expanded portfolio of services, with a friendlier and more intuitive graphical interface.

DGII began a digital transformation process to promote the efficient use of information technologies and systems available to the tax administration, as detailed below:

1.3.1 Virtual Office (OFV) • Redesign and development of all its functionalities.

• Case management module in the Taxpayer Case Monitoring System (SECCON), which allows knowing the situation of the cases notified by internal control and carrying out the necessary actions without having to attend the Local Administrations in person.

• Incorporation of soft token as a security mechanism for transactions carried out.

• Inclusion of information regarding the assigned official of a taxpayer.

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Management Report August 2020 - December 2022

• Modification of the Message Box, Standard 05-21, which allows the acceptance or rejection of the virtual fiscal domicile.

• Strengthening technological solutions that facilitate interactivity with our processes for users: satisfaction surveys, digital evaluation of services, others.

• Adjustments to Standard 04-21 and the Web Portal on status queries of the National Taxpayer Registry (RNC), allowing or restricting access according to status. In the case of the suspended state, it allows you to make tax payments, declarations, change your password and request a password.

• Happy Family Plan interconnection service, which allows the interconnection between the DGII and the Presidency of the Republic through web services to obtain relevant data on real estate.

1.3.5 Business intelligence

• Implementation of the unification of reimbursements of hydrocarbons and correction of the method to allocate the requests: Creation of the activities of analysis and verification of the request of the Ministry of Finance, as well as the other activities of the process of introducing a request for hydrocarbons.

• Development and implementation of new business intelligence analysis entities that allow the elimination of manual processes in the generation of statistics on taxpayer service efforts and inconsistencies in tax information.

1.3.2 Tax Migration • Migration of the internal CORE to a more modern and efficient platform that will facilitate internal processes, guaranteeing a better service to users.

• Integration of the application module for registration and updating by OFV. • Registration of pre-registered.

• Visualization of the history of RNC Minutes of a taxpayer.

1.3.3 Mobile app • Redesign and development of the institutional mobile application, with the incorporation of multiple services.

1.3.4 Digital interoperability • Web service for interconnection with the General Directorate of Customs (DGA), from where information is obtained on customs declarations for the use of inputs in motor vehicle processes.

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Management Report August 2020 - December 2022

1.3.6 Electronic billing • Development and implementation of the Fiscal System of Electronic Billing.

• Provision of the free biller, which is a portal designed to facilitate the electronic billing process for compliance with current regulations, especially for Physical Persons and Micro, Small and Medium enterprises (MSMEs) • Access to the Electronic Billing (EB) portal.

• Simplification of the validation process in accordance with the tax obligations of taxpayers from the OFV. Taxpayers who have users in Electronic Billing may directly access the FE portal without the need to authenticate via OFV.

1.3.7 Motor vehicles • Electronic Provisional Plates: the application and payment process were enabled via the OFV, as well as the consignment of motor vehicles and trailers to duly authorized dealers, distributors, or sellers.

• Web consultation for the values of the motorcycles, which reduces the personalized services to a user who requests to know the value of the motorcycles to estimate the cost to pay for the transfer, which makes the attention time efficient for those who are going to carry out other transactions.

• Reversal of consignment and cancellation of license plates through electronic provisional license plate module.

• Cancellation of sales for the return of the vehicle.

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Management Report August 2020 - December 2022

1.3.8 Certifications obtained

• A5: Standard on the provision and automation of public services of the Dominican State.

During this period, the DGII has obtained four (04) National Certifications granted by the Presidential Office of Information and Communication Technologies (OPTIC). They are detailed below:

Likewise, a project is carried out to design and establish technology management processes in accordance with international reference frameworks such as COBIT 2019 and ITIL 4, • E1: Standard for the Management of Social which in turn are aligned with the Networks in Government Organizations. requirements of the international standard ISO/IEC 20000-1:2018, which ensures the • A3: Standard on Publication of Open Data of quality of the processes, strengthens the the Dominican Government. structure of governance and management of information technologies (IT) aligned with the • A4: Standard on Interoperability between the institutional objectives.

Organizations of the Dominican Government.

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Management Report August 2020 - December 2022

1.4 DGII 360 Program It is a television program inaugurated in June 2022, dedicated exclusively to tax education, guiding taxpayers and the public on tax administration issues. It is broadcast weekly on the following channels and times: DGII 360 Streaming Media Television channels

Days

Hours

Color Vision, Channel 9

Saturday

8:00 to 8:55 a.m.

CERTV, Channel 4

Sunday

9:00 to 9:55 a.m.

Saturday

9:00 to 9:55 a.m.

Wednesday

6:00 to 7:00 a.m.

Sunday

8:00 to 9:00 a.m.

South TV, Channel 57 CTT (Santiago)

As of December 2022, the topics discussed have been the following:

• Projects of the Legal Sub direction.

• Default Reduction Plan.

• Billing components, sequence of Tax receipt numbers, allocation algorithm, progress in Latin America with interviews from Chile, Brazil, and Mexico.

• Functions and achievements of lawyers before the courts.

• What are obligated subjects?

• Functions and processes of the Department of Motor Vehicles.

• Administrative executor and conservatory measures.

• Experience of the taxpayer and the citizen facing the tax administration.

• Technical inquiries and formal duties.

• Virtual office.

• Functions of the Fraud and Tax Crimes Investigation Management.

• Know your Local Administration.

• Real estate value, property registry, what to do when a property is acquired? what is the IPI? etc.

• Role of the DGII in the prevention of money laundering, the law that regulates this matter, as well as the standard that regulates cash payments and reliable proof of payment.

• Functions of the Examination Branch, tax risks, control functions of examination management.

• Educational Expense Report • Goods and Services (ITBIS), its behavior and impact on collections and details to consider in commercial operations related to IT-1

• Simplified Tax Regime, types of taxpayers eligible and advantages.

• Free biller as a facility for RST taxpayers.

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Management Report August 2020 - December 2022

• Information related to tags.

• Advances in the fight against corruption and policies implemented to improve transparency in the procurement and contracting processes.

• Information related to Income Tax (ISR) and some of the important processes that revolve around this tax.

• Elements to consider on invoices when making purchases during the Christmas season.

• Special transmission in celebration of the School Day of Tax Culture with coverage of the activities carried out in 25 educational centers throughout the country, the General Director shared the vision of management regarding tax education.

• Tax on inheritance and donations and the process for the transfer of vehicles by inheritance.

• Processes related to vehicle registrations and the main procedures that are carried out in the DGII offices and important aspects that revolve around the acquisition of the first license plate.

• Selective Consumption Tax and the fiscal control and traceability system (TRAFICO), its objectives and contributions of this system to the collection process.

• Basic Internal Control Standards (NOBACI), its implementation and the launch of the internal Self-control contest "INNOBACIÓN".

• Special transmission on the eve of the Christmas holidays, where a compilation of the DGII 360 program is detailed throughout its first months on the air.

• Simplified Tax Regime System, the important aspects to be considered by taxpayers when applying for this modality of taxation and the issue of the DGII's inspection and control power is discussed.

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Management Report August 2020 - December 2022

2. Collection Since August 2020, the General Directorate of Internal Taxes has been focused on strengthening trust and transparency for Dominican citizens through the efficient administration of their resources and promoting tax compliance, through closeness and openness towards taxpayers and control measures through risk perception. These strategies have been the impetus to guarantee compliance with the budget goal during the period August 2020 until December 2022.

Vaccination Plan, the monetary stimuli implemented and the tax facilities granted, among others, which allowed a recovery in collection, returning to levels similar to those observed prior to the start of the pandemic.

When evaluating the behavior of collections in the period August 2020 to December 2022, it is observed that the effective collection exceeded more than one hundred percent of what was budgeted by the Ministry of Finance in the reformulated estimate. This performance is also perceived when evaluating collections with the original estimate for the years 2021 and 2022, with a compliance of 125.1% and 110.9% respectively. Similarly, this positive behavior is evident when comparing the interannual growth of collections.

Although the Tax Administration began in a stage of great challenges and challenges, after a period of economic slowdown and health crisis in 2020, this was not an obstacle to the implementation of economic and health strategies such as the flexibility of mobility measures, the execution of the National

Reformulated estimate and effective collection of the General Directorate of Internal Taxes August 2020 – December 2022; in millions of RD$

749 ,000.0

113.0%

102.0%

101.0%

100 .0%

599 ,000.0

50. 0%

449 ,000.0

0.0 %

299 ,000.0

-50.0% 149 ,000.0

177,116.4 200,163.8

601,554.5 607,446.4

643,801.6 656,812.1

2020

2021

2022

-1,000. 0

-100.0%

Restated estimate

Cash

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Compliance

Management Report August 2020 - December 2022

In the period from August to December 2020, the observed collection was RD$200,163.8 million, presenting a compliance of 113.0%, for a positive difference in relation to the reformulated estimate of RD$23,047.4 million.

By the year 2021, the Dominican economy begins to perceive both an economic and health recovery when compared to the year 2020, thus allowing the relaxation of curfew measures and increased mobility. The above allowed the collection of the year 2021 to be RD$607,446.4 million, for a compliance of 101.0%, equivalent to RD$5,891.8 million above the reformulated estimate. This year's collection was boosted by Barrick's payments for RD$28,721.5 million, advances from Financial Entities RD$20,000.0 million, income received by Law no. 46-20 on Transparency and Patrimonial Revaluation, of RD$29,594.5 million and the liquidation of Income Tax in April 2021.

Electronic Billing model, the transformation of the Virtual Office, the reduction of service response times, new strategies control using the risk classification method, among others, thus allowing an accumulated collection of RD$656,812.1 million, for a compliance with collections of 102.0%, equivalent to RD$13,010.5 million more than the estimate in the reformulated General State Budget for the 2022.

In short, the period from August 2020 to December 2022 has benefited from fiscal and health strategies implemented by the authorities to mitigate the effects of the Pandemic, serving as a boost for budget compliance for this period. On average, the DGII contributed 72% of the total income obtained by the State through the collection entities and which is used transparently by the Government to cover the actions of providing public goods and services for the population and carrying out infrastructure works and investments, as well as for the payment of the public debt.

In 2022, different actions and measures were carried out to further promote tax compliance, such as the large-scale implementation of the

Growth of the effective collection of the General Directorate of Internal Taxes 2022 vs. 2021; in millions of RD$

607,446.4

656,812.1

Effective 2021

Effective 2022

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Management Report August 2020 - December 2022

3. Facilitation and Services Advances 3.1 New control modality: Electronic Invoicing 3.1.2 Count on legal bases of Electronic Invoicing and Bill

Electronic Billing is an innovative billing modality, which allows the exchange of Electronic Tax Receipts (e-CF) between an issuer and a receiver in a standard invoice format; guarantees the authenticity of the tax documents issued, as well as the integrity of their content.

In August 2020, Electronic Invoicing was at the conclusion of the pilot phase where 11 large companies participated, in this year the General Standard 01-2020 was issued that regulates the issuance and use of Electronic Tax Receipts (e-CF), where the mechanisms that guarantee the integrity of documents using digital certificates are incorporated.

3.1.1 Importance of Electronic Invoicing Esta modalidad de facturación incentiva y facilita el cumplimiento tributario de los contribuyentes a través del uso de las nuevas herramientas tecnológicas, a la vez garantiza y posibilita a la Administración Tributaria obtener informaciones de calidad y fiables para la correcta aplicación de los impuestos utilizando nuevos mecanismos para recolección y procesamiento de la información.

In 2021, General Standard 10-2021 was published, which establishes the procedure for the certification of Providers for Electronic Invoicing Services, with this the bases are laid for the certification of taxpayers as providers of Electronic Invoicing services and thus encourage the massive incorporation of Taxpayers to this billing mechanism.

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Management Report August 2020 - December 2022

• Improve efficiency, productivity, and tax transparency, as well as the fight against evasion and facilitate the exchange of tax information.3.1.4 Herramienta Tecnológica Facturador Gratuito

The Executive Power deposited on September 13, 2022, before the Senate of the Republic, the General Electronic Invoicing Bill, which seeks innovation in legal systems to establish the mass use of Electronic Invoicing as a mandatory commercial modality. The initiative sent by the Executive Power has the purpose of regulating and establishing the electronic invoice to optimize the tax system. In it, entry deadlines are established gradually, as well as incentives for those who adopt it in the voluntary period.

3.1.4 Free Billing Technological Tool During 2022, the Free Invoice was implemented, which consists of a free technological facility provided by DGII that allows issuing and receiving e-CF, in accordance with the Electronic Invoicing tax system established in the Dominican Republic, for those taxpayers who wish to invoice electronically. operating from your computer with internet services, especially Liberal Professionals, Individuals and Mipymes, who do not have any system for these purposes.

On December 13, 2022, the Plenary of the Senate began the second (2nd) reading of the bill, leaving the continuity of its review on the table.

3.1.3 Approach of the General Bill of Electronic Billing in the Dominican Republic

In September of this year, a survey was carried out on users who have issued e-CF through the Free Biller, with the aim of evaluating the level of satisfaction with the tool and knowing their suggestions and comments, with a view to optimizing the operation of it.

• Innovation in legal systems to establish the mass use of electronic invoicing as a mandatory commercial modality.

• Establishment of electronic invoicing tax systems, which brings advantages for taxpayers by reducing the cost of compliance with tax obligations.

In this sense, the users agreed that the Free Biller is a friendly and intuitive tool, since it facilitates the process, both in the issuance and reception of e-CFs, as well as in the assignment of sequence, likewise, a positive impact in administrative processes. In conclusion, the vast majority are very satisfied when using this new tool.

• Make available to small and medium taxpayers electronic invoicing applications in free lines or downloadable electronic invoicing systems.

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Management Report August 2020 - December 2022

3.1.5 Statistics / Advances in Electronic Billing

Electronic Billing Service Providers, we have a total of ten (10).

To date, more than 126 MM of Electronic Tax Receipts (e-CF) have been successfully issued, and a total of 270 taxpayers have been certified as Electronic Issuers, of which 146 issue their invoices through the Free Invoice tool.

3.2 Tax Education Program DGII is committed to actions that promote a new tax culture in the Dominican Republic.

For this reason, during the period August 2020 - December 2022, a total of 2,887 meetings were held in which 139,783 people have been trained, as detailed below

We currently have 278 taxpayers who are in the certification process. About certified

Segments targeted by the Tax Education Program August 2020 – December 2022 Meeting

Trained

Primary and Secondary Level Students (Tax Culture)

661

45,598

MINERD Teaching Staff

262

8,196

Teachers and University Students

638

23,497

Micro, Small and Medium enterprises (MiPymes)

220

6,259

Physical Persons, Legal Entities, and the General Public

986

53,011

State Employees

120

3,222

Total

2,887

139,783

2022 reflects an increase in participants of 67% compared to 2021.

77,327 46,287

2021

14

2022

Management Report August 2020 - December 2022

3.2.1.2 Description of the subject La Asignatura Educación Tributaria es de formación especializada. Consta de seis (06) unidades las cuales desde una visión holística buscan desarrollar competencias profesionales en el área tributaria, la conciencia fiscal, y los valores ciudadanos.

3.2.1.3 Course objectives

3.2.1 University Program: Tax Education Subject Tax issues in the universities of the Dominican Republic over time have been applied in careers directly related to the field of taxes, such as Accounting, Law, Auditing and Administration. It is important to highlight that the curricula of these careers develop technical skills exclusively for the future professional practice of the university; Leaving aside, what corresponds to Education and Tax Culture, the importance of correlating taxes on their Social Role and what it represents at the State and Citizen level.

Recognize the importance and value of the constitutional duty to pay taxes, compliance with the duties and rights of citizens as a guarantee of citizen coexistence and contribution to the sustainable development of the nation and build a healthy tax culture and social responsibility in educational institutions superior.

3.2.1.4 Learning Competencies within the subject • Values the social meaning of the taxes.

• Shows fiscal awareness in accordance with citizen values.

For this reason, the General Directorate of Internal Taxes (DGII) and the Ministry of Higher Education, Science and Technology (MESCYT) presented a program proposal for the Tax Education subject to be incorporated into the curricular offer in universities and higher institutions of the country.

• Explains the structure and characteristics of the Tax Administration and its role with respect to taxes.

• Conceptualizes taxes to contribute to the quality of goods and services offered by the State to citizens.

3.2.1.1 Foundation of the subject The Tax Education subject is based on the need to train future professionals with the skills of knowledge, procedures, values and attitudes, which allow them to enter the tax environment of the Dominican Republic, fully aware of their duties and rights as citizens and professionals, with a high social sense, tax morale, fiscal conscience, and civic values.

• Analyzes the tax cycle, as well as the duties and rights of taxpayers.

• Analyzes the duties and powers of the Tax Administration.

• Exhibits professional ethical conduct and social civic commitment.

• Recognizes the importance of knowledge in Tax Education.

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Management Report August 2020 - December 2022

3.2.2 Other programs created and implemented:

3.2.5 Program to Create a Tax Culture in the University:

3.2.3 Tax Education Program for Universities It consists of accompanying university professors in the content of their subjects, developing activities that reinforce the content that they share in that current semester or four-month period. Coordinate directly with the teacher.

It is a program that we have just started, it has been designed with the purpose of deploying a series of educational strategies with the purpose of Promoting and Creating Tax Culture in university environments. This program aims to achieve its objective through the following strategies: Cultural Days on Social Role of Taxes for all university actors, especially students and teachers.

3.2.4 Accounting and Fiscal Support Nucleus Program (NAF)

3.2.6 Program One Step from Your Formalization

The objective of this program is to train a group of university students so that they can serve the public in basic orientation on tax processes; This program is developed with the signing of an agreement between the Tax Administration and the University, promotes the Tax Culture and Social Responsibility in the student body. We currently have two (2) universities participating in the program.

Develop an exclusive training program for university students, from various areas who wish to start a business and who need the essential tools to carry it out, linking Entrepreneurship centers of the country's Universities as promotion and dissemination allies.

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Management Report August 2020 - December 2022

3.2.7 Implementation of the Tax Culture Week with University Students: EIt is a project designed to promote fiscal awareness, develop in students a critical attitude, voluntary and reflective compliance with social responsibility.

Another of the strategies developed was because of the Covi-19 pandemic, which prompted us to innovate, creating new ways of approaching the university public; creating virtual training of open call at the national level, on different tax topics. This modality provides the facility for the university student to participate in the subject of his interest according to his availability of time, and for personal interest in terms of expanding his knowledge. The calendar is shared through mass mailings to the universities, as well as using social networks. This program facilitates activities from the basics, which is to understand the Dominican Tax System, the process for formalization, and the main taxes and tax procedures.

Also included was the presence of tax educational materials in university libraries nationwide, a club or specialized study groups to strengthen the filling of forms, learn in depth about specialized topics, as well as provide practical activities that the university requires strengthening, on tax processes. This program is made known through mass mailings to universities, as well as through social networks.

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Management Report August 2020 - December 2022

4. Advances in legal matters 4.1 Technical Consultations With the aim of promoting transparency and complying with the duty of publicity provided for in the Tax Code, the DGII, as of June 2021, has taken the initiative to publish the technical queries issued on its website.

with the principle of equal treatment established in our Constitution and in the Law 107-13 2.

The following table shows the detail of technical consultations received and processed in the periods between August 2020 and December 2022, divided by calendar year:

Through this publication, citizens can have access to the criteria and interpretation of the Tax Administration on a certain legal text and its correct application and, in turn, comply

Detail of Technical Consultations Aug – Dec 2020

2021

2022

Total

Inquiries received

2,535

6,507

8,779

17,821

Queries answered on time

2,372

5,945

7,711

16,028

Observations

Technical Consultations 20,000 17,821

18,000

16,028

16,000 14,000 12,000 10,000

8,779

8,000

6,507

6,000 4,000 2,000

2,535

7,711

5,945

2,372

0 Aug – Dec. 2020

Inquiries received

2021

2022

Queries answered on �me

18

Total

Management Report August 2020 - December 2022

From May 2021 to October 2022, more than The following table shows the detail of the 609 responses to technical queries have been technical queries published by year: posted. This initiative has improved the unification of criteria within the Administration itself on issues of the same nature.

Published Technical Consultations Years

Quantity

2021

290 Published Technical Consultations

2022

319 319 Published Technical Consultations

290

319

Published Technical Consultations

2021

2022

4.2 General Standard For the correct administration and application of taxes, as well as to administratively interpret the provisions of the Tax Code and its regulations, from August 2020 to December 2022, a total of 24 General Standards have been published, the details of which are found below:

19

Management Report August 2020 - December 2022

Published General Standard Year

No.

Concept

Validity

2020

05-2020

Application of the provisions of Law no. 46-20 of Transparency and Equity Revaluation and its modifications, dated October 7, 2020.

2021

01-2021

Promotion and Tax Optimization of the Stock Market.

In Force

2021

02-2021

Reincorporation of the provisions of General Standard no. 05-2020 for application of the provisions of Law no. 46-20 of Transparency and Equity Revaluation.

Repealed

2021

03-2021

Application of exemptions for the agricultural sector.

Repealed

2021

04-2021

About the National Taxpayer Registry (RNC).

In Force

2021

05-2021

Modifies General Standard no. 05-2014 on the use of Telematic Media of the DGII.

In Force

2021

06-2021

Modifies General Standard no. 06-18 on Tax Receipts.

In Force

2021

07-2021

Fiscal Security and Control Mechanisms for Manufacturers, Producers and Importers of Finished Alcohol and Tobacco Products.

In Force

2021

08-2021

Country-by-Country Report

In Force

2021

09-2021

Inventory withdrawals not invoiced

In Force

2021

10-2021

Establishes the procedure for the certification of providers for Electronic Invoicing services.

In Force

2021

11-2021

Establishes the characteristics, issuance procedure and use of provisional plates and transfer plates for motor vehicles and trailers.

In Force

2022

01-2022

Reorganization of Companies.

In Force

2022

02-2022

Procedures related to the payment of the tourist card in air and sea tickets.

In Force

03-2022

Regulates external audits on the prevention of money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction.

In Force

2022

20

Repealed

Management Report August 2020 - December 2022

Normas Generales publicadas Year

No.

2022

04-2022

Incorporation, permanence, exclusion, and affidavit in the Simplified Tax Regime (RST).

In Force

2022

05-2022

Application of exemptions for the agricultural sector.

In Force

2022

06-2022

Regulates the application of the enforceability of the reliable proof of payment by the DGII in the procedures of motor vehicles and trailers.

In Force

2022

07-2022

Regulates the application of the enforceability of the reliable proof of payment by Public Notaries.

In Force

2022

08-2022

Modifies article 3 of General Standard no. 08-2021 on the Country-by-Country Report.

In Force

2022

09-2022

Establishes the procedure for the application to the DGII of sanctions, conservatory, and precautionary measures that, under the protection of the Law, are required by the bodies and entities of the public administration.

In Force

2022

10-2022

Agreement procedures for dispute resolution

In Force

2022

11-2022

Establishes the granting of benefits contained in international conventions to avoid double taxation.

In Force

12-2022

Establishes the refund or compensation of the Tax on the Transfer of Industrialized Goods and Services (ITBIS) for exporters.

In Force

2022

Concept

Validity

4.3 Resolutions To facilitate and make tax actions operational, establishing the required procedures, during the period August 2020 - December 2022, 27 Resolutions have been published and put into effect, which are detailed in the following table:

21

Management Report August 2020 - December 2022

Published Resolutions Year

Numeration

Concept

2020

DDG-AR1-2020-00001

Exemption from advance payment of Income Tax for periods August-December 2020 and Exemption of the first installment of Asset Tax (ISA) for micro and small businesses for the year 2020.

2021

128-20

Appointment of the DGII Administrative Executor.

2021

DDG-AR1-2021-00001

Granting of facilities due to COVID-19, January-April.

2021

DDG-AR1-2021-00002

Information on multipliers, adjustments and various regulations for the December 2020 fiscal year, and others for the 2021 fiscal year.

2021

DDG-AR1-2021-00003

Information on multipliers, adjustments and tax exemptions for the agricultural sector, fiscal year 2021.

2021

DDG-AR1-2021-00004

Informative of the specific amounts of the Selective Consumption Tax on cigarettes and alcohol.

2021

DDG-AR1-2021-00005

Income Tax taxpayers with fiscal closing March 2021 and RST taxpayers for fiscal year 2021.

2021

100-2021

DGII Code of Ethics

2021

DDG-AR1-2021-00006

Facilities for the second quarter 2021, due to Covid-19

2021

DDG-AR1-2021-00007

Indexation of specific ISC amounts and temporary exemption from ITBIS in respiratory devices.

2021

DDG-AR1-2021-00008

Multipliers, adjustments, and various regulations for the fiscal closing of June 2021.

2021

DDG-AR1-2021-00009

Informative indexation of specific amounts ISC and temporary exemption from ITBIS in respiratory devices.

2021

DDG-AR1-2021-00010

Information on multipliers, adjustments, and various regulations for the fiscal closing of September 2021.

2021

162-2021

Designation of the DGII administrative executor.

22

Management Report August 2020 - December 2022

Published Resolutions Year

Numeration

Concept

2021

163-2021

Appointment of the DGII Procurement and Contracting Committee.

2021

DDG-AR1-2021-00011

Abbreviated procedure for unvoiced inventory issues.

2021

DDG-AR1-2021-00012

Informative of indexing specific amounts ISC.

2022

DDG-AR1-2022-00001

Multipliers and adjustments for the fiscal year of December 2021, and others for fiscal year 2022.

2022

DDG-AR1-2022-00002

Tax exemption for individuals and adjustments to the RST, fiscal year 2022.

2022

DDG-AR1-2022-00003

Indexation of specific ISC amounts.

2022

DDG-AR1-2022-00004

Multipliers and adjustments for fiscal closing March 2022.

2022

DDG-AR1-2022-00005

Informative of indexing specific amounts ISC.

2022

DDG-AR1-2022-00006

Multipliers and adjustments for fiscal closing June 2022.

2022

DDG-AR1-2022-00007

Indexing specific amounts ISC for the period October – December 2022.

2022

DDG-AR1-2022-00008

Multipliers and adjustments for fiscal closing December 2022.

2022

56-2022

Repeals Resolution No. 162-2021 and appoints the Administrative Executor of the DGII.

2022

DDG-AR1-2022-00009

Indexing specific amounts ISC for the period January – March 2023.

23

Management Report August 2020 - December 2022

4.4 Reconsideration Appeals During this period, 13,120 reconsideration cases have been worked on, which are classified as detailed in the following table:

General summary of outgoing cases for reconsideration (Aug 2020 – Dec. 2022) Reconsideration resources worked

Quantity

Resources failed and worked

11,229

Not Appealable

365

Extemporaneous

367

Withdrawals

2,238

Total

14,199

General summary of outgoing cases for reconsideration (Aug 2020 – Dec. 2022) Withdrawals

2,238

Extemporaneous

367

Not Appealable

365

Resources failed and worked

11,229 0

2,000

4,000

24

6,000

8,000

10,000

12,000

Management Report August 2020 - December 2022

4.5 Department of External Representation From the area of external representation, the representation of the Institution before the courts is coordinated, in all appeals filed by taxpayers against administrative decisions and tax determination. In that sense, as of August 2020, the following actions have been carried out: Tax Actions (August 2020 – December. 2022) Quantity Contentious Tax Resources worked

2,067

Contentious Tax Resources (retardation)

967

Other actions (Cassation, precautionary measures, amparo, review, delay)

1,906

Judgment in favor

2,634

Judgment against

349

Total

7,923

Tax Actions (August 2020 – December 2022) Total

7,923

Judgment against

349

Judgment in favor

2,634

Other actions (Cassation, precautionary measures, amparo, review, delay)

1,906

Contentious Tax Resources (retardation)

967

Contentious Tax Resources worked

2,067 0

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

25

Management Report August 2020 - December 2022

Likewise, during the period mentioned above, the external representation area participated in the following hearings on tax matters: Tax Hearings 2020

2021

2022

Action for amparo

19

72

145

Precautionary Measure

33

94

256

Contentious Tax Resources

0

9

98

Applications for judicial review

6

100

153

Proceedings for delay

2

6

15

Appeals for review

2

63

181

Others

2

12

75

Total

64

356

923

Tax Hearings (2020 - 2022) 1000

923

900 800 700 600 500 356

400 256

300 200 100 0

19

145 72

Action for Amparo

98

94 33 Precautionary Measure

0 9

6

Contentius Applicactions Tax Resources for judicial review

Tax Hearings 2020

181

153 100 2

Proceedings for delay

Appeals for review

Tax Hearings 2021

26

63

2 6 15

75 2 12

Tax Hearings 2022

Others

64 Total

Management Report August 2020 - December 2022

In the civil part, we have: Tax Hearings 2020

2021

2022

Action for amparo

1

4

7

Application for intervention

2

23

16

Referral

5

32

50

On claims registered

4

18

21

Applications for judicial review

4

Claim for damages

3

15

Suit for dissolution

1

Demand for accountability

1 5

Specification requirements i

9

4 1

Demand for return of consigned values Demand for annulment of amicable partition/donation between living persons

1

8

2

Total

18

108

251

Tax Hearings (2020 - 2022) Total Demand for annulment of amicable partition…

Demand for return of consigned values Specification requirements i Demand for accountability Suit for dissolution Claim for damages Applications for judicial review On claims registered Referral Application for intervention Action for amparo

0 Tax Hearings 2022

50

Tax Hearings 2022

27

100

150

200

Tax Hearings 2022

250

300

Management Report August 2020 - December 2022

4.6 Tax Fraud and Crime Investigation Among the processes carried out by the Legal Subdirectorate, is the planning of the processes of investigation and study of those cases, sectors and figures involved in tax evasion schemes, to contribute to the fight against tax fraud. Thus, taxpayers involved in (i) complaints, (ii) cases or sectors investigated are followed up, through which the modus operandi and the impact on the tax administration are identified.

Tax Fraud and Crime Investigation Actions (aug. 2020 – dec. 2022)

Quantity

Tax investigations carried out

571

Complaints answered

422

Request for information answered

4,367

Tax intelligence projects executed

20

Judicial litigation

26

Requests for investigation (complaints and judicial litigation)

38

Total

5,444

Tax Fraud and Crime Investigation (Aug. 2020 - dec. 2022) 5,444 4,367

571

422

Tax investigations carried out

Complaints answered

Request for information answered

20

26

38

Tax intelligence projects executed

Judicial litigation

Requests for investigation (complaints and judicial litigation)

28

Total

Management Report August 2020 - December 2022

4.7 Prevention of Money Laundering and Terrorist Financing In the last three years, the General Directorate of Internal Revenue, in its capacity as supervisory entity in matters of prevention of asset laundering, financing of terrorism and proliferation of weapons of mass destruction (PLAFT), in accordance with Law no. 155-17, has carried out supervisions, all with a risk-based approach, aimed at different sectors of non-financial reporting entities, which has gradually led to compliance with the obligations by reporting entities.

measurement of risks, which will allow a more Iaccurate measurement of the risks of the obligated subjects under its orbit, interrelating quantitative and qualitative elements of the entities, with variables and essential factors of the PLAFT system, thus ensuring that the supervisions have a specific scope, mainly covering the entities with the highest risks.

In compliance with the commitment that supervisors have in this matter to develop regulations that contain the details of the obligations that obligated subjects must comply with, the DGII has issued general regulations 03-2022, 06-2022 and 07-2022; the first one is focused on the obligation of the obligated subjects to carry out external audits of their PLAFT program and the last two focused on the enforceability of the reliable proof of payment.

As a result of the supervisions, administrative sanctioning procedures have been initiated against those regulated entities that are not complying with the provisions related to the prevention of money laundering. In the period, format 647 was published for the submission of statistical information for risk analysis that obligated subjects must send quarterly, as well as Annex E for RNC registration forms (RC-01 and RC-02), to be able to identify For the obligated subjects, the employees of taxpayers who carry out activities that make them non-financial reporting entities under the this DGII and the public to become aware of the regulations issued, as well as the entire supervision of the DGII. legal framework established in terms of asset n addition, the DGII has been immersed in the laundering prevention, an intense day of implementation of a Software for the training nationwide.

29

Management Report August 2020 - December 2022

Prevention of Money Laundering and Terrorist Financing (August 2020 – December 2022)

Quantity

Supervisions

66

Fines

8

Published Rules

3

Trainings (People)

7,801

Prevention of Money Laundering and Terrorist Financing Cantidad 7,801

66

8

3

Supervisions

Fines

Published Rules

Trainings (People)

4.8 Modification project of Title I of the Tax Code The current Title I of the Tax Code of the Dominican Republic dates to 1992 and the legal progress and experiences acquired since then make it necessary to implement a new Title I, establishing better provisions that ensure and preserve the rights and obligations of taxpayers and taxpayers. tax, as well as those of the Tax Administration.

In this sense, in March 2022 the Draft Modification of the reform law of Title I of the Tax Code was presented with the objective of updating and introducing improvements to streamline processes and guarantee the rights of taxpayers.

30

Management Report August 2020 - December 2022

Some of the most relevant points that are included in the Modification Project of Title I, are: • Implementation of the catalog of taxpayer rights in the framework of compliance with their tax and formal obligations.

• Establishment of electronic administration, to streamline the reception and delivery services by the OFV.

• The surcharges, which are currently 10% for the first month and an infinite 4%, are proposed to be set at a fixed 3% and cannot exceed the amount of 100% of the tax.

• Creation of facilitation instruments and others are improved in the payment as a form of extinction of the tax obligation.

• Establishment of interest in favor of the taxpayer in reimbursement procedures where the delay is due to the administration.

• Improvement of the compensation procedure so that excesses or balances in favor can be compensated with any type of tax.

5. Advances in auditing 5.1 Risk-Based Tax Compliance Management Model One of the great challenges that all Tax Administration faces is the materialization of non-compliance with tax obligations by taxpayers, this accompanied by the erosion of tax revenues because of tax evasion and avoidance whose consequence is the reduction of State income to finance public spending and the implementation of social and economic policies for the development of a country.

Recent figures from the tax system of the Dominican Republic place the level of tax non-compliance at around 40% in the Tax on the Transfer of Industrialized Goods and Services (ITBIS), in the case of Income Tax (ISR) a non-compliance is estimated 60% and 40% for the Selective Taxes on Alcohol and Tobacco. (See Default Estimate in Dom. Rep.).

31

Due to the foregoing, the tax administration has chosen to implement novel solutions provided with the successful experiences of modern tax administrations such as: Australia, Canada, USA, Chile, Argentina and Brazil, which carry out the task of taxes under a "Risk-Based Tax Compliance Management Model" which is a process that allows obtaining a comprehensive view of the tax system with the objective of increasing compliance with tax obligations, through strengthening the knowledge of the taxpayer and the analysis of the causes that explain their tax behavior in order to design targeted control and treatment actions that allow the elimination or mitigation of non-compliance.

This methodology proposes to align the control and treatment actions to the level of tax risk that the taxpayer represents.

Management Report August 2020 - December 2022

Figura 1: Acciones de Tratamiento en Función del Nivel De Riesgo Tributario del Contribuyente

Nivel de Riesgo Tributario

Sanciones Pecuniarias Auditorías

Querellas

Mecanismos de trazabilidad Clausuras Revisiones riesgos oficina Infracciones graves Revisiones riesgos distancia Fiscalización Externa

Atenciones telefónicas

Fiscalización tecnológica

Correos personalizados

Revisiones Masivas oficina

Reporte de brechas personales

Revisiones diferencias certeras a distancia Apps: Calculadoras y asistentes

Control en Terreno Acuerdos de Cooperación Tributaria

Guías meotodológicas

Propuestas pre-llenadas

Mensajes emergentes push-up Mecanismos automatizados de habilitación de contribuyentes Campañas de comunucicación segmentada

Acciones de Tratamiento Fuente: Own elaboration based on the Inter-American Center of Tax Administrations (CIAT) (2019).

The Risk-based Tax Compliance Management Model (MGCT in Spanish) is designed to optimize the allocation of resources to manage tax compliance. Its execution requires decision-making at different levels of management, the strategic and tactical levels.

For its part, the operational level, which corresponds to the execution of the treatments, allows feedback on the decisions adopted by the different instances.

The implementation of the MGCT consists of different phases, applied through the Tax Risk Management Process. These phases are: Identification, Analysis, Prioritization and Consolidation, Treatment and Evaluation. On the other hand, as a transversal tool for all stages of the model, the Global Risk Classification (CRG) is constructed, one of the main inputs for the analysis and assignment of risk-based treatments.

32

Management Report August 2020 - December 2022

• Global Tax Risk Classification (CRG in Spanish): taxpayers were categorized based on the probability of tax non-compliance • Identification of Specific Risks and Gaps: and the monetary consequence that said in this process we proceeded to recognize non-compliance represents for the and describe the tax risks and the associated administration. gaps that may impact the achievement of the • High risk: high probability of default and objectives of the General Directorate of high monetary consequence Internal Taxes (DGII), for which multiple tools and instruments have been worked on • Medium risk: moderate probability of that allow the identification and default and moderate or low monetary classification of the different risks and consequence breaches, resulting in the development of: Those that have been developed during the 2020-2022 period are described below.

• Compilation of Tax Risks (Global and Specific).

• Key risk: moderate or low probability of default and high monetary consequence

• Compilation of Tax Treatment actions.

• Low risk: low probability of default and low monetary consequence.

• Survey of Tax Gaps that detect non-compliance by Taxpayers.

• Analysis and assessment of Risks and Tax Gaps: includes a characterization of the taxpayers that present the tax obligation under study, the levels of compliance and other characteristics of the objective universe. It also includes the study of the causes of non-compliance and the detection of risky behaviors and/or characteristics of each taxpayer, in addition, the probabilities that a tax non-compliance could materialize, and the consequence or potential monetary loss in collection, the progress achieved in said development are: • The characterization and valuation of Tax Risks.

• Construction of the Institutional File of Specific Risks.

• Construction of the Institutional Catalog of Tax Treatments.

• Preparation of the Tax Treatment Assignment Policy.

33

• An average of 1,321,979 taxpayers per fiscal period have been classified, covering large, medium and small taxpayers, the result of the classification has allowed us to observe that an average of 74.4% of those classifieds are low risk, 21.7% medium risk, 2.5 % key risk and 1.4% high risk.

Management Report August 2020 - December 2022

Figure 2: Number of Taxpayers Classified by Year by Type of Risk (2020-2022)

Probabilidad Incumplimiento

297,966

2020

333,999

348,670

2021

2022

19,750

18,418

24,401

2020

2021

2022

Riesgo Alto

Riesgo Medio

955,649

2020

972,640

2021

1,007,846

2022

Riesgo Bajo

31,499

42,246

27,228

2020

2021

2022

Riesgo Clave

Consecuencia Monetaria

• Tax Risk Profile Dashboard of the (SIC): A tool for internal use was developed where tax officials can consult the risk classification of taxpayers, as well as the main factors of tax non-compliance that explain their risk profile; as well as the treatments applied to them.

Figure 3: SIC Tax Risk Profile Screen

34

Management Report August 2020 - December 2022

• Catalog of Tax Obligations: an instrument • Map of Gaps in Tax Obligations: an was prepared that compiles all the tax interactive monitor (instrument) was obligations that a taxpayer must comply with designed and developed that shows in relation to the formal duties (registration, indicators of tax non-compliance according information, declaration and payment) to the formal duty of the taxpayer defined in the legal and regulatory (registration, information, declaration and framework of the tax administration. payment) in said instrument it can determine the percentage of taxpayers that comply their obligations on date, out of date and even those who have not complied with them.

Figure 4: Dashboard Tax Gap Map

• Identification of Economically Active • Systematization and automation of the Taxpayers: Taxpayers who represent a tax Process of Prioritization and interest for the tax administration were Consolidation of Risks and Tax Gaps: It is identified, thus developing the economically a tool that allows receiving, processing and active brand whose scope is all natural or analyzing the information sent by the legal persons that carry out an economic analysis areas on the risks and activity that incurs in the generation of a tax non-compliances identified for each obligation. and their amounts or annual taxpayer, for the execution of the income exceed the tax exemption Prioritization Process and Consolidation.

(RD$416,220.00) stipulated in the regulatory This continuous process is being developed framework. through database management and exploitation systems, such as SQL Server, RStudio, among others.

35

Management Report August 2020 - December 2022

within the institution's internal policies and • Consulting on the prioritization process (P procedures. This model seeks to achieve and C): The objective of this consultancy is greater compliance with tax obligations to strengthen the new risk-based tax through a comprehensive and efficient compliance management model, in relation to the process of prioritization and system, as well as establishing the general guidelines as stipulated in the 2020-2024 consolidation of tax risks. Among the main Institutional Strategic Plan. purposes of this consultancy is to understand how to effectively and efficiently • Pilot for the implementation of the Tax allocate resources for compliance Compliance Model based on Risks: management, it being necessary for the Dispatch to the Local Administration of process to take measurements of the Higüey of a list of taxpayers with their effectiveness of their execution cost respective tax non-compliances, extracted treatments and execution capacities, as well through the process of Prioritization and as having risk and gap assessments that are Consolidation of to be treated. comparable to each other, to have good approximations to the potential benefits that • Treatment Action Consolidation Report: would be derived from the management.

This report contains a statistical analysis of a structured process in which the different • Policy Proposal for Risk-Based Tax treatment actions are consolidated: Compliance Management: The purpose of corrective, preventive and facilitation carried creating this document is to establish the out by the tax administration. This report guidelines that will govern the Tax contains the following topics: Compliance Management Model (MGCT)

Figure 5: Dashboard Treatment Actions

01

Acciones de tratamientos y cantidad de RNC’s

Acciones de tratamiento según clasificación de riesgo global

03

02

Acciones de tratamientos según estatus de económicamente activo

Acciones de tratamientos según Administración Local

36

04

Management Report August 2020 - December 2022

The latest statistics on tax treatment actions generated from September to November 2022 are shown below.

Figura 6: Dashboard Treatment Actions 124,731 Registros únicos tratados.

79,124 Acciones de tratamientos aplicadas e identificadas.

98.97% Acciones correctivas; 1.03% Acciones de facilidades.

Cantidad de acciones y contribuyentes septiembre-noviembre 2022

Distribución Contribuyentes según Perfial de Riesgo Global septiembre-noviembre 2022

109,869 89,651

16.12%

24.19%

23.82%

36.34%

38.46%

21.71%

18.36%

17.77%

18.36%

14.56%

sep. 2022

oct. 2022

nov. 2022

85,682 72,434 57.58%

52,382 44,922

11.73%

sep. 2022 Cantidad de Acciones

oct. 2022

nov. 2022

Cantidad de Contribuyentes

Pefil de Riesgo

Riesgo bajo

Riesgo Clave

Riesgo Medio

Riesgo Alto

Source: prepared by the Tax Risk Management with information from the transactional areas.

• Authorization of the Transferable Tax Credit (refund) of the Cinematographic Activities Companies: Within the framework of the improvement of the internal processes of the business areas of the institution, the Tax Risk Management together with the Special Regimes Management developed an Application of Simplified Review, to respond in less time to the requests for approval of the "Transferable Tax Credit Certificate" and 2 with it, the return of the balances generated.

payment and invoices that have a higher level of risk. The main achievements have been:

Broadly speaking, the application allows (1) to unify the information from different sources, (2) to build a history of the film productions evaluated, (3) to identify the means of

• The simplification of the review and audit processes of the films sent by the companies. The time was reduced from 60 days (audit and response) to 25 days, on average.

2

• The automation of the information sent by the companies belonging to this Special Regime.

• The Implementation of a methodology that allows to classify based on risk the means of payment and invoices sent by the companies covered by the regime.

This request must be previously evaluated by the Directorate General of Cinema (DGCINE).

“Article 39. Transferable Tax Credit. Individuals or legal entities that produce Dominican or foreign cinematographic and audiovisual works in Dominican territory may choose to benefit from a tax credit equivalent to twenty-five (25%) of all expenses incurred in the Dominican Republic. Said credit may be used to offset any Income Tax obligation or may be transferred in favor of any natural or legal person for the same purposes.

37

Management Report August 2020 - December 2022

• Risk Profile of Trust Companies and Trusts: In continuity with the improvement of the processes of the Special Regimes Management, a dynamic board or dashboard was built in Power BI that gathers the most important information of the Fiduciaries and Trusts, to monitor compliance and behavior of this Economic group. This tool connects the main data sources of the institution, allowing its continuous updating and verification, given that these groups have become highly relevant for the country in recent years.

5.2 Development projects • Construction of the Tax Scoring for Taxpayers through the Virtual Office (OFV): it is a tool that shows taxpayers the assessment of the tax administration regarding tax compliance with tax obligations of formal duties (registration, information, declaration and payment ) said tool will be available to taxpayers through the virtual office.

• Incorporation of the analysis of the Contamination Effect of Taxpayers: it is a methodology that allows inferring the risk associated with the commercial relations of taxpayers with suppliers, clients and shareholders categorized as risky (medium risk and high risk), it allows taxpayers to be imputed a probability of additional non-compliance resulting from these relationships.

• Identification of Hidden Taxpayers: it is the group of natural and legal persons that have commercial transactions in the national economic environment and do not have tax obligations before the General Directorate of Internal Taxes (DGII).

• Dissemination for the generation of "Risk-Based Tax Compliance Management Policy": this process consists of disseminating the proposal for the formulation of the policy with the different instances, within which the guidelines that will govern the Compliance Management Model will be established. (MGCT) in the DGII, to achieve greater compliance with tax obligations through a comprehensive and efficient system.

38

Management Report August 2020 - December 2022

Figure 7: Progress and Implementation of the Risk-Based Compliance Management Model 3 (MGCT ). Period (2019-2022)

2019

Creation of the Tax Risk Management

The organizational structure of the DGII is adapted

2019 Preparation of the Tax Obligations Gap Map

2020 Survey of resources available in DGII to apply treatments

2020 Incorporation of the CRG in the internal processes of the DGII

2020

3

Tax Compliance Management Model

39

2019 Construction of the Global Risk Classification (CRG)

2020 Beginning of the Tax Risk identification phase

2020 Construction Catalog of Tax Treatments

2020 Construction and publication of the SIC Risk Profile Dashboard

Management Report August 2020 - December 2022

Figure 7: Progress and Implementation of the Risk-Based Compliance Management Model (MGCT 4). Period (2019-2022)

2020 Taxpayer debt management pilot based on the CRG

2020 Incorporation of the MGCT in the 2021-2024 Strategic Plan

2021 Inspection considering risk profile (Key and High)

2021 Compilation report of tax treatment actions

2021 Projects with the Management of Special Regimes (Cinema and Trust)

4

Tax Compliance Management Model

40

Analysis of segments of interest for the Tax Administration

2020 Methodological creation for the valuation of specific risks

2021 MGCT 2021 socialization workshops

2021 Incorporation of compliance goals for Economically Active

2021 The consultancies for the implementation of the MGCT begin

2021

Management Report August 2020 - December 2022

Figure 7: Progress and Implementation of the Risk-Based Compliance Management Model (MGCT 5). Period (2019-2022)

2022 IT requirement update for Scoring development

2022 Closing of the consultancy of the Prioritization and Consolidation Process

2022 Implementation of the MGCT pilot in the local administration of Higüey

2022

Calculation of tax scoring by taxpayer

2022 Incorporation of new elements to the risk profile dashboard published in the SIC

2022 Development of processes and tools for the Prioritization and Consolidation Process

2022 Preparation of the institutional policy Tax Risk Management

2022

Preparation of tax risk certifications for the legal department

2022

5

Global Risk Rating (CRG) Update 2022

Tax Compliance Management Model

41

Management Report August 2020 - December 2022

6. Management and Compliance Advances 6.1 Post COVID Facilities To mitigate the effects caused by the pandemic, the DGII implemented tax measures aimed at broad-based tax relief to protect the most fragile and emerging sectors.

Among the specific fiscal measures taken were: Post COVID Facilities Tax

Facility

Period

Simplified Tax Regime

Extensions for the declaration

ITBIS

Payment agreements and extensions for declaration presentation

May-AprilJune 2020

Income tax

DIOR presentation extension

2020

Income Tax (advances)

Exemption from payment of the first advance

2019

Income Tax (advances)

Exemption from payment of advances

March 2020

Other withholdings and Income Tax Contributions

Payment agreements and extensions for declaration presentation

April 2020

Asset Tax

Exemption of the first installment for micro and small taxpayers

Income tax

Extension in presentation and payment

March 2020

Income tax

Extension of the deadline for filing and payment

June 2020

Income Tax (advances)

Exemption from the payment of ISR advances to legal persons and sole proprietor businesses

June 2020

Likewise, in general terms, the following measures were approved:

• ITBIS rectifications through virtual office, periods 2019-2020.

• Digitization of the process of requests for exemption from ITBIS and Selective Consumption Tax (ISC) of taxpayers under special regimes.

• Exemption from the validity of the ITBIS exemption card for companies in free zones.

• ISR deductions for complementary contributions from employers to the Employee Solidarity Assistance Fund (FASE).

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Management Report August 2020 - December 2022

In addition, single payment facilities are established for certain tax debts with which they can be settled by making a single payment of 70% of the determination, without late fees or compensatory interest. Another additional facility is that in the case of debts that come from ordinary declarations, self-assessments and/or voluntary rectifications not paid on time, the facility will consist of the payment of 100% of the taxes and up to 12 months of interest, without considering the surcharges for delay.

• Deferral of 30 days for the submission of submission formats and presentations of the monthly sworn statements.

• Remission and presentation of contributions made to suspended employees.

• Extension of the temporary suspension of ITBIS in the transfer of medical materials and equipment from the local market.

• Automation of services through the Virtual Office (OFV), to remotely manage services and procedures.

The application process of Law 46-20 was completely successful. A collection of RD$29,020.8 million (twenty-nine thousand and twenty million Dominican pesos) were reached since its entry into force. Of the amount collected by this law, a total of RD$23,347.92 million entered during the year 2021, while as of December 31, 2020, RD$5,672.85 million had entered under the same legislation.

6.2 Application Law 46-20 Law 46-20 on Transparency and Patrimonial Revaluation was promulgated on February 18, 2020, as a mechanism to achieve a correct implementation of Law No. 155-17 against Money Laundering and the Financing of Terrorism. The regulation creates a special temporary tax regime to ensure that taxpayers declare and revalue their assets before the DGII, paying a unique and special tax, with a reduced nature, whose rate is 2% on the value of the assets and sincere rights.

In 2021, 80.5% of the total collection was registered under Law 46-20, while the remaining 19.5% of the income was registered in 2020.

Recaudo de la Ley Núm.46-20 Marzo 2020 - noviembre 2021; en millones de RD$ 6,347.7

3,403.8

2,302.3

2,292.1 1,922.2 1,259.4

1,084.9 217.4

41.4

98.6

21

mar

abr

may

jun

333.0

441.3

308.7

jul

ago

sep

1,860.3

1,638.2 1,648.5 1,603.6

891.4

637.6

oct

470.5 nov

dic

ene

2020

feb

mar

abr

may

jun

2021

43

jul

ago

sep

oct

nov

Management Report August 2020 - December 2022

6.3 Agreements to avoid double taxation

• Agreement between the Dominican Republic and the Kingdom of Spain to avoid double taxation and prevent tax evasion in matters of Income Tax.

Currently, the following treaties are in force:

• Foreign Account Tax Compliance Act (FATCA).

• Agreement between the Dominican Republic and Canada to avoid double taxation and prevent tax evasion with respect to Income and Capital Taxes.

• Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

• Agreement between the government of the Dominican Republic and the government of the United States of America, for the exchange of tax information.

Within the framework of these agreements, the following requests have been received:

Applications received Type of request

Requests

Date

Exchange of information (Received)

47

2014-2022

Exchange of information (Submitted)

16

2016-2022

Tax Residence Certifications

410

2021-2022

Technical Consultations

22

2020-2022

Applications received 410

47

Exchange of information (Received) 2014-2022

22

16

Exchange of information (Submitted) 2016-2022

Tax Residence Certifications 2021-2022

44

Technical Consultations 2020-2022

Management Report August 2020 - December 2022

In July 2019, the FATCA Agreement, model IGA 1A, (reciprocal exchange modality) entered into force, at the end of that same year the first information report was made to the United States Internal Revenue Service (IRS), corresponding to the periods 2014-2018. In November 2020, the report corresponding to the year 2019 was made and in November 2021 the report for the year 2020, the year 2021 was sent in September 2022.

Finally, in November 2020, the IRS notified the DGII that all the elements evaluated were considered satisfactory, granting the "in place" status. In this sense, at the end of 2021, the first exchange of information corresponding to Dominican nationals was received, period 2014-2018. The second report was received in September 2022.

Economy for multinational companies, specifically indirect taxation, this General Directorate carried out a survey of taxpayers whose main economic activity comes from the provision of services through digital platforms.

As a result of this survey, since 2021 several socialization meetings have been held with some of the main international platforms, such as Didi, In Driver, Expedia, Spotify, PedidosYa, Uber, AIRBNB, Netflix, Google, among other, to present and communicate the intention of the Dominican State to establish a taxation mechanism for their activities in the country.

For these purposes, a draft Regulation was prepared that regulates the procedure for the application of the ITBIS to digital services prepared by the Legal Sub direction and other related internal areas. Currently this Regulation is in the Legal Department of the Executive Power for evaluation purposes.

6.4 Digital Economy To correctly implement Action 1 of the BEPS Project, related to the challenges of the Digital 45

Management Report August 2020 - December 2022

6.5 Implementation of the Inclusive Framework

• Publication of Decree No. 256-21 that modifies articles 5, 7, 10 and 18 of Regulation 78-14 on transfer pricing, including country-by-country reporting obligations.

After joining the OECD Inclusive Framework, the progress as of December 2022 is as follows:

• Publication of Rule 08-2021 to establish the content of the Country-by-Country Report and the formalities for its submission by the taxpayer.

6.5.1 Action 5: Minimum Standard to Counter Harmful Tax Practices More Effectively:

• Publication of Rule 08-2022 that modifies 08-2021 and includes a modification of the concept of Integrating Entity (Art.3).

• Since 2020, more than 216 exchanges of information have been carried out with other jurisdictions.

• Satisfactory annual evaluations.

• Preparation of the draft of the Exchange Procedure of agreements with the Tax Administration (tax rulings).

• OECD assistance for proper implementation.

• Acquisition of the report exchange platform.

6.5.2 Action 6: Minimum Standard to Prevent Treaty Abuse

• Draft appropriate use guide.

• Preparation of a draft procedure for the granting of the benefits of the agreements to avoid double taxation through tax refunds.

6.5.4 Action 14: Standard to Make Dispute Resolution Mechanisms More Effective • Draft Procedure for the Negotiation of Advance Price Agreements (APA).

• Publication of the General Rule (11-2022) on the granting of the benefits of agreements to avoid double taxation through the refund of taxes. Preparation of draft negotiation procedure for agreements to avoid double taxation

• Draft instructions to request a mutual agreement procedure.

• Publication of Rule No. 10-22 on mutually agreed procedures for dispute resolution.

• Adequacy of the Agreement to Avoid Double Taxation signed between the Dominican Republic and Canada.

6.5.3 Action 13: Minimum Country-by-Country (CbC) Reporting Standard • Entry into force of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC).

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Management Report August 2020 - December 2022

6.6 Coordination and Management 6.6.3 Project for the Institutional and Operational Strengthening of the DGII of International Projects UNDP

Since 2019, the following projects have been carried out with the support of international organizations and agencies such as the Japan International Cooperation Agency (JICA), McKinsey & Company, United Nations Development Program (UNDP, Inter-American Development Bank with the National Tax Service of South Korea (NTS), among others.

With the objective of strengthening the collection capacity of the Dominican State through the implementation of a Fiscal Pact in accordance with the National Development Strategy (END 2010-2030). UNDP provides support in the identification and hiring of program or project personnel, through the performance of competitive recruitment processes in accordance with the rules and regulations in force in the organization.

6.6.1 Project for the Institutional Strengthening and Modernization of the DGII-JICA

6.6.4 Support in the adoption of new technologies in the tax administration with the Korea Public Development Fund for Economic Development (KPC) and IDB.

The main objective of this project is to strengthen the institutional and operational capacity of local administration officials by improving the effectiveness and agility of internal operating processes and procedures.6

The objective of this technical cooperation (TC) is to support the efforts of the Government of the Dominican Republic to achieve its fiscal consolidation through component 1 of the Program 7. Which is formulated to support the DGII in its efforts to strengthen its institutional capacity through the incorporation of international good practices and the adoption of advanced digital technologies to increase operational efficiency that contributes to a better management of the collection of its income.

6.6.2 Data Collection Study on Big Data and Artificial Intelligence (AI) in Tax Administration-2020-2021 with McKinsey & Company and JICA An evaluation of the potential of the use of Big Data and Artificial Intelligence (AI) in the tax administration was carried out, through the gathering of information, the scheduling of interviews, the proportion of performance indicators, the participation in a qualitative survey for the identification practices, current opportunities, and conclusions.

6 The JICA-DGII project has implemented pilots in the selected Local Administrations with the aim of replicating it in the long term in

the other administrations.

7 Program to Strengthen the Tax Administration and Public Investment in the Dominican Republic.

47

Management Report August 2020 - December 2022

6.7 Coordination and Management 6.7.3 United States Treasury Office of Technical Assistance (OTA) of International Technical Assistance In the year 2019-2022, several assistances focused on the following topics were formalized:

Since 2020, this General Directorate has been working on simplifying its processes to make its services more efficient, increase collections, reduce evasion and avoidance levels, and achieve being an administration close to the taxpayer. In this sense, it has managed and received the following technical assistance from the following organizations:

• Lavado de Activos y Financiamiento al Terrorismo, en materia de formación y fortalecimiento de las funciones de control de los sujetos obligados bajo la supervisión • Money Laundering and Terrorist Financing, in terms of training and strengthening of the control functions of the regulated entities under the supervision of the DGII. During its development, the following were carried out: training, exchange of experience, collaboration for the preparation of sectorial studies and application of best practices.

6.7.1 Public Finance Department (FAD) of the International Monetary Fund (IMF).

In March 2021, a mission was carried out with the objective of assisting in the formulation of an action plan to recover income and tax compliance post COVID-19. Similarly, with this international organization in 2022 a remote mission was carried out to support the drafting process of the proposed Tax Procedure Code (TPC), developed by this General Directorate with the aim of following good international practices.

• Financial Instruments, which focused on reporting statements, compilation, and development of the manual with the inclusion of a segment on Cryptocurrencies, Straddles and Options.

6.7.2 IMF Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic (CAPTAC-DR)

• Insurance, for the preparation of an insurance audit manual, training, advice, guidance on insurance audits, review of laws and regulations related to the insurance sector.

In 2020, Technical Assistance was managed to strengthen strategic planning in information technology. The objective of this mission was to support the updating of the strategic plan for information technologies of the DGII for the period 2021-2024.

• Mining Audit, with the objective of preparing a manual for these purposes and providing training and training for its implementation.

• Internal Audit, to improve the quality review of internal audit reports.

On the other hand, and because of the first mission, other technical assistances during 2021 and 2022, were managed on issues of inspection, registration, collection and to improve tax compliance obligations.

By November 2022, the review of the consultancies and the closure of the Project were carried out with said body, accompanied by the general director and the counterparts of the 2022 work plan.

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Management Report August 2020 - December 2022

6.7.4 Inter-American Development Bank (IDB)

APA, Procedimientos de Acuerdo Mutuo (“MAP”) e Intercambio de Información (“EOI”), así como, incrementar el conocimiento técnico del equipo y desarrollar medidas e informes de desempeño para el Programa APA.

A Support Program for the Transparency and Integrity Agenda in the Dominican Republic (DR-L1150) was started, with the objective of advancing in the dialogue with the main organizations involved, as well as collecting the information required to prepare the "Proposal for the Development of the Operation (POD)”, including its results matrix, risk matrix and institutional agreements required for its execution.

In 2020, an Evaluation on the Confidentiality and Safeguarding of the Automatic Information Exchange Information began, with the objective of carrying out a pre-evaluation of the level of security and protection of the confidentiality of the information within the tax administration for the implementation of the automatic exchange. As a result of this In 2022, assistance was managed and received assistance, recommendations addressed to Electronic Security and Technology were for the review of the ITBIS Application received, which are in the process of Regulation to Digital Services of Foreign implementation.

Providers, as well as its implementation and execution of the procedure.

Likewise, assistance was received in Advance Pricing Agreements and Transfer Pricing, to 6.7.5 Organization for Economic finalize and integrate the existing procedures Cooperation and Development (OECD) of the APAs, Mutual Agreement Procedures Asimismo, se recibió una asistencia en materia (“MAP”) and Exchange of Information (“EOI”), as well as increase the technical knowledge of de Acuerdos de Precios Anticipados y Precios de Transferencia, con la finalidad de finalizar e the team and develop performance measures and reports for the PAC Program. integrar los procedimientos existentes de los 49

Management Report August 2020 - December 2022

6.8 Offer of International Cooperation This tax administration contributes to achieving development objectives through cooperation with other countries and tax administrations through the offer of cooperation and exchange of experiences8.

6.9.1 Made by the DGII.

By 2022, the Guatemalan Superintendence of Tax Administration (SAT) was facilitated, through the technical visit modality of officials, the exchange and experience with Risk management. The objective of the visit was to learn about the existing model in the DGII regarding this issue and to contribute to the efforts of the Supervision Intendency (definition, guidelines, strategies, etc.) of the SAT.

• Information Request-SCAE-SCH 9.

• Consultation Institutional Strategic Plan • Consult ISO 10002 and 9001 Standards

• Exchange of experiences, internal communication, and administration change management.

• Policy or procedure used by different countries for the appropriate use and confidentiality of the Country-by-Country Report (CBC).

• Powers granted by legal system to public institutions on objects or control mechanisms of the TA.

6.9 Management of International Tax Consultations 18 technical consultations have been channeled with other tax administrations to implement good practices and search for continuous improvement of the internal processes and procedures of the tax administration. Namely:

• Agents of Collection and Withholding of VAT or Income Tax. • Legislation/regulation on VAT on digital services.

8 The offer of international cooperation is aligned with the specific objective 1.4.2 of the National Development Strategy (END)

2030, Law 1-12.

9

System for the Control of Ethyl Alcohol (SCAE) and System for the Control of Hydrocarbons (SCH).

50

Management Report August 2020 - December 2022

6.9.2 Received from other tax administrations

• Addition case of erosion of the tax base.

• Taxpayer satisfaction percentage.

• Income Tax Rate.

• Figure of the tax debtor.

• Manual on the control of CIAT international tax planning.

• Consultation on the application of the Closing sanction

• Mechanisms used to identify non-resident companies that supply goods or services in a digital environment.

• Consultation on Administrative Career processes and Performance evaluation Human Resources

• Survey on information exchange, multilateral audits, and mutual agreement procedures.

6.10 Management of International Activities

• Coordination mechanisms between the public sector and the private sector for the exchange of opinions on the proposed regulations and criteria applied by the TA.

The DGII carries out an extensive national and international training program, achieving the technical training of its officials, which allows it to provide a better service and an increase in collections.

• Technical consultation on the "Ombudsman" (Taxpayer Ombudsman).

During the 2020-2022 period, the DGII has participated in 238 training sessions with the • Base Update of Tax Treaties. assistance of 1,608 officials in face-to-face and/or virtual mode, offered by 82 • Study Areas of the Tax Administration. organizations, agencies, tax administrations, universities, and international institutes (see • Survey of Fiscal Transparency in Latin table 1).

America 2022.

Tabla 1. Management of International Activities by organization and activity 2020-2022 Gestión de actividades internacionales según organismo y actividad Período

Actividades

Participantes

Organismos

2020 – 2022

238

1,608

82

51

Management Report August 2020 - December 2022

These trainings were carried out through the different organizations, as detailed in the following graph:

5% 5%

5%

40%

7%

11%

27% CIAT

OCDE

FMI/CAPTAC-DR

CAPTAC-DR

UNED

UNED/IEF/IGAE/DGP

FMI

Source: Technical Assistance Matrix 10 Note: The breakdown of the activities of this period can be seen in the annexes section.

10 International activities can be classified as webinars, workshops, seminars, courses, diplomas, master's degrees, among

others.

52

Management Report August 2020 - December 2022

Annexes 1. Statistics on the management of international cooperation 11 in the DGII Management of technical assistance according to international organizations, 2020-2022 Organizations

Activities

FM

7

FMI/CAPCTAC-RD

6

OCDE

2

McKinsey & Company/JICA

3

OTA

5

Total

23

2. International Activities according to organizations 2020-2022 Spanish Agency for International Development Cooperation (AECID) • Seminars: Cycle on Money Laundering and Fight against Organized Crime AECID / Inter-American Center of Tax Administrations (CIAT) / Institute of Fiscal Studies (IEF) • Innovation Laboratory Program on Digitalization of Tax Administrations: Special Reference to Virtual Assistants AECID / CIAT / IEF / Inter-American Development Bank (IDB) / Economic Commission for Latin America and the Caribbean (ECLAC) / Organization for Economic Cooperation and Development (OECD) • Laboratory Public Finance for Development - Public Income

11 Sources: matrix of technical assistance and international activities-ICS

53

Management Report August 2020 - December 2022

Customs Trade Association Against Terrorism (CTPA) / OECD / Directorate of Business and Financial Affairs (DAF) • 2º Seminario Web sobre Política Fiscal y de Inversión “Mejorar la Transparencia de los Incentivos a la Inversión” Japan International Cooperation Agency (JICA) • International Seminar on Taxation (General) IDB • Seminario presencial sobre el Proyecto de Reglamento de Aplicación del ITBIS a los Servicios Digitales de Proveedores Extranjeros • Transformación Digital de la Administración Tributaria en América Latina: Modelo de Madurez Digital • Webinar: Uso de la Facturación Electrónica en las Operaciones de Comercio Exterior: Desafíos y oportunidades IDB / CIAT / OECD • Regional Consultation on International Taxation for Latin America and the Caribbean • Webinar: Fiscal Transparency in Latin America 2021 IDB / General Directorate of Ethics and Government Integrity (DIGEIG) / OECD • Fifth Meeting of the OECD-IDB Latin American and Caribbean Integrity Network IDB / National Tax Service of the Republic of Korea (NTS) • III Tax Administration Forum IDB / CIAT / Internal Revenue Service (SRI) • Good Practices of Offices of Large Companies in Latin America Regional Technical Assistance Center for Central America, Panama, and the Dom. Rep. (CAPTAC-DR) • Control of Normal Obligations as a Pillar of Tax Compliance • Regional Seminar on Strategic Planning • Workshop seminar: VAT Audit Procedures – Practical Cases

54

Management Report August 2020 - December 2022

• Regional Virtual Seminar Audit Procedures in the Industrial Sector • Debt Recovery and Collection Webinar • Web Seminar: Payment Agreements or Debt Fractionation • Webinar: Compliance Risk Management in Tax Administrations • Web Seminar: Compliance Risk Management in Tax Administrations Training Center in Psychology Codex S.L of Spain • Postgraduate Expert in Prevention of Psychosocial Risks at Work and Organizations Inter-American Center of Tax Administrations (CIAT) • 55th CIAT General Assembly • José de Antequera y Castro Scholarship • CIAT Technical Conference 2022 • Electronic Invoice Course - 1st ed • Course on Business Analytics - 1st ed • Collections Course - 6th ed • Tax Code Course – 6th ed • Course on Control of Financial Institutions and Operations - 16ed • Course on Tax Estimates - 4th and 5th ed • Management Skills Course – 4th ed and 5th ed • Information Exchange Course – 9th and 10th ed • Course on Financial Operations between Related Parties - 1st ed • Transfer Pricing Course – 11th - 14th Ed • Diploma in Tax Administration – 10th -11th ed • Diploma in Tax Policy and Technique – 5th -6th Ed • Diploma in Taxation 10th-11th ed • Meeting the Tax Administration and the COVID-19 Crisis • Virtual meeting: Brazil - New Transfer Pricing System 55

Management Report August 2020 - December 2022

• Public Finance for Development - Public Expenditure • NTO “Tax & Covid-19” Peer-Learning: Rethinking Communication Strategies and Relations Between Tax Authorities and Taxpayers.

• Panel on Fiscal Sustainability • CIAT Board of Directors Meeting • Meeting of the Electronic Invoice Network • Meeting of the Financial Advisory Subcommittee of the CIAT Board of Directors • Exclusive Meeting of the Electronic Invoice Network • Finance Subcommittee Meeting of the CIAT Directing Council 2022 • Administrative Session of the 56th CIAT General Assembly • Electronic Billing Workshop • Virtual Workshop on Bilateral Tax Treaties and Mining 'Sharing Tools among CIAT Member Countries' • V Meeting of the CIAT International Taxation Network • Webinar: Launch of the Toolkit for the Design and Effective Application of General National and International Anti-Abuse Standards.

• Virtual Workshop on Support for the Digitalization of the Tax Administrations of Developing Countries in the Latin American and Caribbean Region CIAT / IBD • Webinar on: Other uses of the Electronic Billing CIAT / OECD / IDB • Regional Consultation on BEPS for Latin America and the Caribbean – How to Face the Fiscal Challenges of Digitization: New Advances in the Two-Pillar Solution CIAT / OECD • 10th LAC Policy Forum • Documentation of Transfer Pricing and Risk Management • Advanced Course on Transfer Pricing • Round Table on Tax Morale

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Management Report August 2020 - December 2022

CIAT / Intergovernmental Forum on Mining, Minerals and Sustainable Development (IGF) / OECD • Virtual Workshop on International Taxation and the Extractive Sector CIAT / Intra-European Organization of Tax Administration (IOTA) • Webinar: The Latest Developments of Information and Communication Technologies in Tax Administrations CIAT / Latin American Network for Economic and Social Justice (LATINDAD) • IX Meeting of Tax Administrations on International Taxation, 1st -3rd Session • X Regional Meeting on International Taxation on Progress, Challenges and Proposals for the Control of Multinational Companies and Transparency.

CIAT / Council of Ministers of Finance of Central America, Panama, and the Dom. Rep. (COSEFIN) / German Society for International Cooperation (GIZ-GOPA) • Regional Forum: Use of Information Technologies to Enhance the Efficiency of Central American Tax Administrations CIAT / International Centre for Tax and Development (ICTD) • At the table, off the menu?

• Deepening the Inclusiveness of Global Tax Negotiations CIAT / OECD / General Directorate of Taxation (DGT) • Income Taxability Panel CIAT / COSEFIN / GIZ-GOPA • Interview ¨Tax Culture Diagnosis¨ • Panel Strengthening Tax Culture CIAT / Tax Administration Service (SAT) • Virtual Meeting: Amount B of Pillar 1, within the framework of Action 1 of the BEPS Action Plan CIAT / OCDE / SAT • Seminario - Taller: Actualización en los Precios de Transferencia para América Latina (3ra parte) CIAT / Pride Partners International • Seminar - Workshop: Transfer Pricing Update for Latin America (3rd part) 57

Management Report August 2020 - December 2022

CAPTAC-DR / IMF • Advanced Course for the Management of Tax and Customs Administrations - 2020 Edition • Compliance and Payment Obligations Control Course • VAT Audit Procedures Seminar • Seminar on Compliance Risk Management in Tax Administrations • Web Seminar on Planning and Risk Management in Times of COVID-19 • Webinar on Identifying Tax Compliance Risks After the COVID-19 Crisis • Webinar on Audit Procedures in a Remote Examination • Webinar on Assessment and Prioritization of Tax Compliance Risks • Web Seminar: Supervision Powers • Web Seminar: Compliance Risk Management in Tax Administrations • Face-to-Face Workshop Advanced Course for AT and Customs Management - 3rd -4th ed Cisco Data Center - Productive Business Solutions (CISCO – PBS) • CISCO-PBS Activity • Biofuels COSEFIN • Virtual forum related to the Advance Price Agreement APA and Safe Harbor SH DELL EMC / Global Solutions • DELL EMC Executive Briefing Center Dell Technologies • Dell Technologies World General Directorate of Internal Taxes (DGII) • International Panel for the Modernization and Updating of the Tax Administration Euroinnova Business School • Postgraduate in Design and Decoration of 3D Offices with Sketchup + University Degree

58

Management Report August 2020 - December 2022

(GITEX) Gulf Information Technologies Exhibition (GITEX) • GITEX Technology Week 2021 IMF • IMF World Debt Database 2021 Update Dashboard • Sixth VAT Seminar • Workshop: Facilitation and Assistance to Taxpayers as a Tool for Compliance Risk Management: Advances and Experiences • Webinar 2: The VAT and COVID-19: Impact, Response, and the New Normal • Webinar on the Role of Digitization Global Forum on Transparency and Exchange of Tax Information (GLOBAL FORUM) • 9th Conference of Competent Authorities IGF / International Center for Tax and Development (ICTD) • Webinar-Protecting the Right to Tax Mining Income: The Practice of Tax Agreements in Resource-Rich Countries IGF / African Tax Administration Forum (ATAF) / Tax Inspectors Without Borders (TIWB) • Workshop on Fiscal Audits of the Extractive Industry IMF • CIX e-forum post-webinar discussion • Webinar: What Can Revenue Administrations do to Mobilize Revenues During and after the COVID-19 Pandemic?

IMF / World Bank (WB) • Conference on International Taxation: Global Minimum Tax and Developing Countries: What's Next?

IMF / OECD / United Nations (UN) • Webinar on The Draft Toolkit on Tax Treaty Negotiations IMF / CAPTAC-DR • Webinar on Organizational Reforms • Web Seminar "Tax Audit Procedures for Corporate Income Tax" 59

Management Report August 2020 - December 2022

Latin American Financial Action Group (GAFILAT) • Face to Face Meeting • On-site visit of the Evaluators of the Latin American Financial Action Task Force • XLIV Meeting of Working Groups and Plenary of GAFILAT Representatives GrupoSet LATAM • Executive Program Quality of Service and Experience Design Internal Revenue Service: Criminal Investigation (IRSC:CI) • Webinar: Offshore Tax Evasion Izo Academy • Specialized Course in Customer Voice Management & NPS IEF / General Intervention of the State Administration (IGAE) / General Directorate of Budgets (DGP) / UNED • Online Seminar on Trends in Financial Administrations and their Adaptations to the New Environment • In-person Seminar on Budgetary Policy and Administration • In-person Seminar on Trends in Financial Administrations and their Adaptations to the New Environment • Virtual Seminar: Trends in Tax Administrations: Adaptation to the New Environment (SISAP) International Conference on Similarity Search and Application (SISAP) • RSA Conference 2021 NU • Latin America and the Caribbean Climate Week 2022 (LACCW 2022) Network of Tax Organisations (NTO) / GIZ • 1st NTO Conference on Tax&Crime NTO • Web Seminar on "Capital Flight, Tax Planning (aggressive) by Multinational Companies (EM), IFF connected to EM.

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Management Report August 2020 - December 2022

OECD • 10th -11th Meeting of the Inclusive Framework on BEPS • 14th Plenary of the Global Forum • 14th OECD Inclusive Framework Meeting • 1st workshop on the Concept of Foreseeable Relevance • 1st workshop on the Effective Use of AEOI Data • 5th Meeting of the Punta del Este Declaration Initiative • 8th Conference of Competent Authorities of the Global Forum • Global Anti-Corruption and Integrity Forum 2022 • FTA MAP Forum meeting- Tax Certainty Day • GRP VIRTUAL WORKSHOP: Advanced Transfer Pricing • Conference on Taxation and Development 2022 • MAP Workshop • Modules on E-Learning • Training Program: Training the Trainer • Virtual Program on Conducting Financial Investigations • Virtual Specialization Program in Research Techniques for the Effective Use of Banking Information • Virtual Specialization Program: Fight against Money Laundering: Current Trends, Prosecution of Cases and Challenges Posed by Crypto Assets • Virtual Program on Investigation Techniques for Effective Use of Banking Information (Specialization).

• Reporting of 2021 MAP statistics and FTA MAP Forum 2022 Calendar • Second workshop: Supporting Digitalization in Developing Country Tax Administrations • Workshop on the AEOI Effectiveness Review Process • Virtual Workshop Information exchange - The last mile.

• Virtual workshop: Challenges and Opportunities Derived from Digitization

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Management Report August 2020 - December 2022

• Tax Treaties Blended Learning Workshop • VAT Blended Learning workshop • Virtual Class: Transfer Pricing Risk Assessment • Webinar - Fundamentals of International Taxation • Webinar: Overview of the Digitalization Journey • Third Workshop Financial Aspects of the Digitalization Journey • WP6/FTA MAP FORUM • 13th Plenary Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes • Advanced course on Tax Agreements: Specific Issues • FTA MAP Forum • Forum on Tax Administration: Tax certainty day • Public Consultation Workshop for the Draft Toolkit on Tax Treaty Negotiations • Tax Incentives for Investment: Promises and Pitfalls • Training event - Automatic Exchange of Information Standard • Virtual Conference Punta del Este Declaration OECD / G20 International Forum • Virtual Regional Consultation on Erosion of Tax Bases and Transfer of Benefits • 15th Plenary Meeting of the Global Forum OECD / IMF / Intra-European Organization of Tax Administration (IOTA) • E-learning for VITARA's Strategic Management module OECD / Multilateral Center for Taxation (CMI) • Information Exchange (EOI) course: the last mile Organization for Economic Cooperation and Development (OECD) / e-Learning Vitara • Modules on Strategic Management (VITARA-SMG)

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Management Report August 2020 - December 2022

OECD / United Nations Development Program (UNDP) • Webinar Tax Inspectors Without Borders: Fighting Tax Avoidance and Evasion in the Post-Pandemic Era'' Technical Assistance Office (OTA) • Training Manual for Oversight of the Banking Sector • Manual Training Financial Instruments • Construction Manual Workshop UNDP - Global Partnership • Dialogue of Action 2021 of the Dominican Republic SecurID / Asystec • RSA Conference 2022 Tax Justice Network • Webinar Risk Profile Illicit Financial Flows The KPI Institute • Training Key Performance Indicators Tax Inspectors Without Borders (TIWB) • IFSF Stakeholders Workshop • TIWB Program in the Dominican Republic • TIWB Stakeholders Workshop • TIWB Host Management Webinar: Preparing for the Post-COVID-19 Era. Financial Analysis Unit (UAF) • XLIV GAFILAT Plenary European Union (EU) • 21st Session of the UN Committee of Experts on International Cooperation in Tax Matters • Workshop on Carbon Taxation and other Environmental Taxation

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Management Report August 2020 - December 2022

UNED • International Seminar on Budget Policy and Financial Administration • Seminar on Trends in Tax Administrations: Adaptation to the New Environment • Virtual seminar on Fiscal Policy and Tax Administration • Virtual seminar on Budgetary Policy and Financial Administration • VI and VII edition Official University Master's Degree in Public Finance and Financial and Tax Administration: Specialty in Financial Administration.

• VI and VIII edition Official Master's Degree in Public Finance and Financial and Tax Administration: Specialty in Tax Administration Iberoamerican University (UNIBE) / European Open Business School S.L • Master’s in marketing and Digital Communication - Study Tour Antonio Nebrija University • Master's Degree in Project Management and Organization

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