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