In the Dominican Republic, transfer pricing regulations have been established through various legal instruments, including General Norm 04-2011, Law No. 253-12, Regulatory Decree No. 50-13, and Regulatory Decree No. 78-14. A significant update came with Decree 256-2 in April 2021, which introduced the requirement for taxpayers to file a country-by-country report, notifications, a master file, and a local file. While not an OECD member, the Dominican Republic’s tax authorities generally recognize the OECD Transfer Pricing Guidelines as a technical reference.
Related parties are defined based on various criteria, including statutory and economic dependency, shared control, permanent establishments abroad, exclusive sales agreements, substantial production exchange, and transactions with residents in tax havens. Tax haven countries and territories are announced periodically by the tax authority.
Taxpayers must declare loans contracted with related entities, both local and abroad, along with the financial expenses incurred on these loans. The Informative Return of Operations between related parties (DIOR) must be filed within the first 180 days after the fiscal year ends. The DIOR includes transaction details, identification of related parties, and other relevant financial information.
Taxpayers can request APAs with the tax authority, setting values for commercial and financial transactions with related parties before these transactions occur. The APA takes effect for the current fiscal year and the three subsequent fiscal years, extending to previously expired fiscal years with limitations.
Transactions between related parties should reflect what independent parties would have agreed upon under similar circumstances. When transactions’ prices don’t meet the values for similar operations between independent companies, the tax authority may adjust them if they result in lower or deferred taxation in the country.