DOMINICAN REPUBLIC Law and Practice Contributed by: Sarah de León Perelló, Elizabeth Silfa Micheli and Naomi Rodríguez Manzueta, Headrick Rizik Álvarez & Fernández
ance of all debts (D) of the taxpayer that accrue inter - est: 1×3 (C/D). 5.6 Transfer Pricing Transfer pricing rules are applicable, whereby transac - tions between related parties are regulated. Transac - tions between a resident and a related natural person, legal person or entity must be carried out in accord - ance with the prices that would have been agreed between independent parties in comparable transac - tions and under the same or similar circumstances. Such rule also applies when a resident conducts com - mercial or financial transaction with: • a related resident; or • physical or legal persons or entities domiciled, incorporated or located in territories with preferen - tial tax regimes, low or no taxation, or tax havens, whether the latter are related or not. When the prices agreed for commercial or financial transactions between companies in scope of this pro - vision do not adjust to the values of similar transac - tions between independent companies, the Domini - can Tax Administration may challenge them and make the corresponding adjustments. Taxpayers must file a transfer pricing information return (DIOR) with respect to transactions with its related parties, which must be filed annually within 180 days after the fiscal closing date. When operations made with related parties exceed DOP12,193,981.70 in the fiscal year, the taxpayer must have prepared a transfer pricing study or report on the process of the assessment of prices agreed between the related parties at the time of filing the DIOR. 5.7 Anti-Evasion Rules Tax evasion is incurred by those who, through actions or omissions that do not constitute any of the infrac - tions provided for in the Tax Code, produce or could produce an illegitimate decrease in tax revenue, the improper granting of exemptions or damage to the creditor of the tax obligation.
Tax evasion is considered an infraction under the Dominican Tax Code and is sanctioned with a mon - etary penalty of up to two times the amount of the omitted tax, without detriment to the possibility of the Tax Administration ordering the closing of the estab - lishment of the offender, if applicable. 5.8 Tariffs The applicable tariff regimes in the Dominican Repub - lic are established by Customs Law No 168-21. Ad valorem duties on imported goods are set forth under Law No 146-00 on Tariff Reform, as amended. The importation of goods into the Dominican Republic is subject to the following. Custom Duties (Tariffs) Goods are subject to seven different tariff rates, depending on the type of good: 0%, 3%, 8%, 14%, 20%, 25% and 40%. Excise Tax (ISC) Excise Tax is the tax applied to the transfer of certain domestically produced goods at the manufacturing level, as well as their importation, and the provision or leasing of specific services, such as telecommunica - tions services, insurance services and financial trans - actions. Imported goods such as alcohol, tobacco, hydrocarbons, among others, are subject to this tax. The rate will depend on the type of product or service offered. Alcoholic products are taxed through fixed amounts determined by the volume of pure alcohol content, along with an additional 10% ad-valorem based on the suggested retail price. Tobacco products are subject to fixed amounts depending on the cigarette type, plus a 20% ad-valo - rem applied to the suggested retail price. Telecommunications services are taxed at a rate of 10%, while insurance services generally carry a 16% tax. Pursuant to Law No. 30-26, the tax rate applica - ble to life insurance is reduced progressively: 11% in 2027, 6% in 2028, and fully exempt as of 2029. Non- life insurance services remain subject to the standard 16% rate. Hydrocarbons are taxed through specific
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