Global

Details

  • Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 2/19/2014

Dominican Republic - Goods, services provided from free trade zones 

February 19: The Dominican tax authorities (Dirección General de Impuestos Internos—DGII) issued guidance concerning value added tax (VAT) and excise duty tax (Impuesto Selectivo al Consumo—ISC) when there is a transfer of goods or services by an entity located in industrial or special free trade zones (zonas francas industriales o especiales—ZFIE) to a taxpayer that is subject to the standard domestic tax regime of the Dominican Republic.

General Ruling 01-14 (Norma General 01-14) reiterates a principle that any transfer of goods or services by a ZFIE entity into the local Dominican market constitutes an import and thus is subject to VAT and ISC (when applicable).

Transfers of goods

Concerning the transfer of goods, General Ruling 01-14 specifically provides that a ZFIE entity must issue an invoice containing a taxpayer identification number (NCF). This invoice will be valid for tax credit purposes because it will show the value of the transferred good (excluding VAT).


Also, General Ruling 01-14 provides that a ZFIE entity must file monthly reports with the tax authorities, reporting the total amount of the entity’s sales (using format 607)—however, it is not clearly indicated whether these reports also must include the ZFIE’s tax-exempt sales.


Similarly, the buyer of the goods from a ZFIE entity must remit to the customs authorities (Dirección General de Aduanas—DGA) all taxes and duties applicable to imports, including customs tariffs, VAT, and ISC. These remittances generally are owed to the DGA prior to delivery, in the buyer’s capacity as the importer.

Provision of services

Regarding services, General Ruling 01-14 provides that a ZFIE entity will issue an invoice containing the taxpayer identification number (NCF) that is valid for tax purposes.


Unlike the measures that apply for a transfer of goods, when a ZFIE entity renders a service to the local market, the ZFIE entity itself is the party that is responsible for including VAT in the invoice (in addition to the price/value of the rendered service).


In other words, the ZFIE entity is the party that is responsible of paying VAT and ISC and for filing applicable VAT and ISC returns with the tax authorities, in accordance to the rules under the Dominican tax law concerning the rendering of services.


Read a Spanish version [PDF 136 KB] of this report, prepared by the KPMG member firm in the Dominican Republic.



For more information, contact a KPMG tax professional in the Dominican Republic:


José Manuel Romero

809-566-9161 Ext.1303




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