Dominican Republic: Transfer pricing rules, updated compliance and documentation requirements

Implement provisions under BEPS Action 13 and require transfer pricing documentation

Updated compliance and documentation requirements

Decreto 256-21 updates the transfer pricing compliance and documentation requirements in the Dominican Republic.

The Dominican Republic joined the Organisation for Economic Cooperation and Development (OECD) in 2018 as part of its efforts to apply the highest international standards in terms of transparency and to address tax evasion and avoidance. Pursuant to the OECD’s base erosion and profit shifting (BEPS) project, BEPS Action 13 addresses transfer pricing documentation—the objective of which is to require multinational group entities to provide  information related to the global distribution of income, taxes paid, and business activities of each of the group entities and to allow for the automatic exchange of this information through reports and declarations.

The Dominican Republic issued Decreto 256-21 to implement the provisions under BEPS Action 13 and to require the following transfer pricing documentation:

  • Country-by-country (CbC) report
  • Master file

In addition, the guidance in Decreto 256-21 also reflects modifications with regard to the requirements for the transfer pricing study (Local file).

In general, taxpayers subject to the transfer pricing rules must provide more accurate information about how their business and financial activities function or operate. Similarly, when applicable, taxpayers must provide information about their transactions with related entities (versus third parties) in order to be able to compare items such as the prices of products and services, profit margins, and interest rates, and in instances when there are differences, to justify these items through financial information.

The tax administration of the Dominican Republic is in the process of preparing the forms and standards to implement the provisions of Decreto 256-21.

Read a 2021 report (Spanish) [PDF 382 KB] (English) [PDF 452 KB]prepared by the KPMG member firm in the Dominican Republic that outlines the requirements for the CbC report and Master file as well as other transfer pricing documentation.

 

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