The RST allows the taxable person to benefit from the following:
• No obligation to file monthly purchases and sales data through data submission formats (606, 607, 608, among others) established by the Dominican tax administration (DTA)
• No advanced payments of income tax
• No payment of the asset tax
• Right to opt for automatic payment agreements for the payment of taxes
• Simplified annual tax returns forms for ITBIS and income tax
Group registration. Although the tax authorities do not apply group registration in practice, under the Dominican ITBIS provisions, the tax authorities may consider as unique taxable persons’ entities, individuals, enterprises or a combination of them, if they supply or render ITBIS-taxable goods or services and if these activities are controlled by the same person or persons (individuals, entities or combinations). If an individual exercises control or administers several businesses or establishments, the ITBIS imposed is the ITBIS of such individual.
Members of an ITBIS group in Dominican Republic are not jointly and severally liable for ITBIS debts and penalties. Instead, the representative member is responsible for ITBIS debts before the tax authorities.
There is no minimum time period required for the duration of an ITBIS group.
Fixed establishment. In the Dominican Republic there is no legal definition of a fixed establishment for ITBIS purposes. However, there is permanent establishment (PE) definition for income tax purposes (which applies for ITBIS) establishing that a PE is a fixed place of business in which an individual, corporation or foreign entity performs all or part of its activities, including management sites, offices, branches, commercial agencies, factories, workshops, mines, petroleum or gas wells, quarries or other type of extraction of natural resources, assembly projects (including monitoring activities), construction or supervision activities derived from the sale of plant or equipment when their cost exceeds 10% of the sales price of those goods, business advisory services, if and when these exceed six months in an annual period, and representatives or agents, whether dependent or independent, when the latter perform all or most of their activities on behalf of the company.
Non-established businesses. A “non-established business” is a business that has no fixed establishment in the Dominican Republic. The Dominican tax law does not provide a mechanism for the withholding of the ITBIS from non-established businesses. Consequently, a non-established business must register to pay ITBIS to the tax authorities if it supplies goods or services in the Dominican Republic. Once registered with the local authorities, the entity will be considered domiciled for fiscal purposes and will have to comply with all tax duties and obligations as if it were a formal established entity. To register for ITBIS, a non-established business must register with the Chamber of Commerce and the tax authorities.
The Dominican tax regulations do not provide a reverse-charge or refund mechanism for these entities.
Tax representatives. When registering an entity as a taxable person, a tax representative must be appointed.
Reverse charge. The reverse-charge mechanism is not allowed in the Dominican Republic. Consequently, if a non-established business supplies goods or services in the Dominican Republic, it must register for ITBIS to pay the ITBIS to the tax authorities, due on the supply made.
Domestic reverse charge. Taxable persons that acquire goods or services from a non-registered local supplier may issue “purchase tax invoices” to support tax deduction, including ITBIS, from
• Butter, margarine and oils
• Powdered cacao (with or without sugar) and unfilled cacao bars
• Sugar
• Live animals
Examples of exempt supplies of goods and services
• Fresh, refrigerated or frozen meat
• Fish for popular consumption or reproduction
• Milk, eggs and honey
• Non-processed fruit for massive consumption
• Cocoa, chocolate and some grains and cereals
• Certain types of medicines
• Certain types of books and magazines
• Education services, including theater, ballet, opera and dance
• Health services
• Electricity, water and garbage collection services
• Financial services (including insurance)
Option to tax for exempt supplies. The option to tax exempt supplies is not available in the Dominican Republic.
E. Time of supply
The time when the taxable event is considered to take place and ITBIS becomes due is called the “tax point.”
The basic time of supply of goods is the earlier of the following: (i) when the invoice or document that supports the transfer of the goods is issued or, (ii) the time of the delivery or the withdrawal of the goods.
The basic time of supply for services is the earlier of the following: (i) when the service is performed, (ii) when the invoice is issued, or (iii) when the price is paid in full or in part.
Deposits and prepayments. The time of supply for deposits and prepayments is when the price is paid in full or in part if it occurs before the issuance of the invoice or the provision of the service.
Continuous supplies of services. When there is a periodic payment/invoicing for ongoing services, the time of supply for the services is the earlier of when the invoice is issued or when the price is paid (in full or in part).
Goods sent on approval for sale or return. The time of supply for goods sent on approval for sale or return is when an invoice is issued by the receiver of the goods once it sells it to a third party. If the goods are returned to the original seller, no ITBIS should apply.
Reverse-charge services. Local legislation in the Dominican Republic does not contain any provision for ITBIS for reverse-charge services.
Leased assets. The time of supply for leased assets is when the lease payment is due according to contractual terms or when it is paid, whichever occurs first. Local legislation does not provide a special rule if the lease results in the transfer of ownership of the underlying assets. Nonetheless, the general time of supply rules should apply.
Imported goods. The time of supply for imported goods is when the goods are placed at the disposition of the importer.
Scope of electronic invoicing. For B2B, B2C and B2G supplies, electronic invoicing is mandatory for all taxable persons in the Dominican Republic.
Mandatory electronic invoicing came into effect on 16 May 2023 with the enactment of Law No. 32-23, which establishes the electronic invoicing tax system, including its characteristics, optimization results, contingencies, entry deadlines, and the fiscal facilities granted to taxable persons. The electronic invoicing law covers natural, legal persons and entities without legal personality domiciled in the Dominican Republic that carry out operations involving the transfer of goods, cession in use or provision and location of services in return for a fee or free of charge. Transactions for which tax invoices are not ordinarily provided are not subject to the provisions of this law.
All taxable persons are required to issue electronic tax invoices (e-CFs) depending on their size within certain deadlines after the effective date of the law (16 May 2023), as follows:
• Large national taxable persons: 12 months from the effective date of the law
• Large and medium local taxable persons: 24 months from the effective date of the law
• Small, micro and unclassified taxable persons: 36 months from the effective date of the law
The tax authorities will issue a list of the taxable persons that are obliged to adopt electronic invoicing per the implementation schedule referenced above.
In some cases, the tax authorities will grant tax credits to taxable persons that become electronic issuers during the voluntary period and, likewise, to taxable persons that comply with the implementation schedule.
Simplified ITBIS invoices. Simplified invoices are not contemplated in the Dominican Republic legislation. Nevertheless, Dominican legislation establishes a “consumer’s invoice,” which can be used to invoice the ultimate consumer of a good or service that will not be used as part of any subsequent commercial operation or activity.
The format is the same as an invoice, except for the customer’s tax information, which is not included in the consumer’s invoice. It is not possible to deduct ITBIS from a consumer’s invoice under any circumstances, provided that this kind of invoice is not used for tax purposes.
Self-billing. Self-billing is allowed in the Dominican Republic. This is only in relation to minor expenses, purchases abroad and purchases to non-registered local suppliers, through the issuance of a special tax-valid invoice by the same taxable person. If ITBIS is applicable, the issuer is obliged to withhold the applicable ITBIS.
Proof of exports. Exported goods are zero-rated for ITBIS purposes. Under the ITBIS law, a compensation and reimbursement procedure is provided for exporters. This procedure allows the compensation or reimbursement of the ITBIS charged with respect to goods to be used for exportation activities. Customs documentation that can be used as evidence to show that exports have left the country include single customs declaration, origin certificate, commercial invoice and shipping list/documents.
Foreign currency invoices. It is acceptable for invoices including NCF to be issued in a foreign currency, as well as the domestic currency, which is the Dominican pesos (DOP).
Supplies to nontaxable persons. Certain businesses could be exempted from issuing individual tax invoices for final consumers based on the volume of their operations (e.g., supermarkets, gas stations, retailers) by being allowed to group tax invoices to final consumers in a single tax invoice, per day. Approval from the tax authority is required for the application of this rule.
Records. In the Dominican Republic, examples of what records must be held for ITBIS purposes include tax returns, reports, documents, forms, invoices, proof of legitimate origin of goods, receipts, lists of prices, etc., related to events generating tax obligations, and in general, provide
all requested clarifications. No special rules for record-keeping are provided for indirect tax purposes.
In the Dominican Republic, ITBIS books and records can be kept outside the country. Records may be held in or outside the Dominican Republic. However, records held outside the Dominican Republic must be readily available upon request by the tax authorities for review.
Record retention period. Conforming to the Dominican Republic tax code, accounting records need to be kept for 10 years.
Electronic archiving. Electronic archiving is allowed in the Dominican Republic. Records can be kept and archived electronically or physically (i.e., on paper). The Dominican Republic legislation does not establish a specific format for said documentation.
I. Returns and payment
Periodic returns. ITBIS returns are submitted monthly. ITBIS taxable persons must file the return by the first 20 days of the following month of the verification of the tax liability. A tax return must be filed, even if no ITBIS is due by the taxable person for the period.
Periodic payments. ITBIS taxable persons must pay the corresponding ITBIS amount through the Form IT-1 by the first 20 days of the following month of the verification of the tax liability. Tax due must be paid in Dominican pesos (DOP).
Withholding obligations for payment processors. Acquiring companies, payment aggregators and electronic payment institutions have been designated as ITBIS withholding agents by General Norm No. 06-23,. This requirement is applicable with respect to transactions carried out through credit cards, debit cards or any other electronic payment instrument. If the affiliate is registered as a taxpayer with an active status with the tax authorities, a rate of 2% withholding tax (WHT) of the invoiced amount will apply. If the affiliate is not registered or has a status of suspended, deregistered, or registered without recurring tax obligations, a rate of 18% will apply when the operation exceeds the amount of DOP300,000. However, in cases where the transaction does not exceed this amount, a WHT of 2% will apply.
A report of transactions and withholdings should be submitted on a weekly basis (every Friday) via the tax authorities’ virtual office (oficina virtual), through Form 200 as well as through Form IT-3.
Electronic filing. Electronic filing is mandatory in the Dominican Republic for all taxable persons. ITBIS returns should be monthly submitted via the tax authorities’ virtual office, through Form IT-1. The virtual office (oficina virtual) is an electronic means that allows taxable persons to make safe and timely inquiries and submit tax returns. It is accessed through the tax authorities’ website (https://dgii.gov.do/cicloContribuyente/accesoOFV/Paginas/default.aspx)
Payments on account. Payments on account are not required in the Dominican Republic. Special schemes. No special schemes are available in the Dominican Republic. Annual returns. Annual returns are not required in the Dominican Republic.
Supplementary filings. Data formats. Along with the ITBIS monthly return, taxable persons must submit data formats 606 (to report purchases made), 607 (to report sales made) and 608 (for invoice cancellation).
Correcting errors in previous returns. Amendments to tax returns from past fiscal periods may be made through the virtual office of the tax authorities. In the case of ITBIS returns, for taxable
Statute of limitations. The statute of limitations in the Dominican Republic is three years. This starts from the day after the filing of the tax return and payment of the tax is due. The tax authorities may review, question and amend the transactions carried out and tax returns filed by taxable persons for a period of three years. Nonetheless, in certain circumstances the statute of limitations may be suspended or interrupted and therefore extended for a total of five years, if:
• The taxable person or person responsible did not file the corresponding tax return or filed it with false information.
Or
• The tax authorities have given notice to the taxable person of an audit or verification.