Parameters for Transfer Pricing Analysis in the Dominican Republic

April 20, 2023

Through Decree 256-21, the Transfer Pricing Regulation in the Dominican Republic was amended. In parallel hereto, the OECD published an updated version of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

All these amendments in 2021, along with the provisions related to Pillar 2 of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), have been the basis for the new parameters of the local regulations.

1. Parameters Employed

Some of the characteristics of the new parameters to analyze financial transactions between related parties are not a novelty, as well as those related to the approach to the analysis of intangibles of difficult valuation and those related to the Profit Split method (employed to document the generation of value of the multinational group).  

All these issues suggest the need to validate the quality of previous information used to prepare the Transfer Pricing analysis and to verify that such information is consistent and sufficient, both with the analysis performed and with the requirements and obligations of the standards. 

2. Tax Adjustment Procedure

The current regulations provide for a tax adjustment procedure when supposed the income tax has been affected, given that discussions with tax administrations would only be for validating the conclusions and results of the information to be provided by the taxpayer. 

3. Need to Address the Basis

Therefore, it is necessary to clarify the basis on which a Transfer Pricing analysis is prepared and demonstrate that intercompany transactions do not represent an obligation being a lower questionable taxable income for tax purposes both in the country and globally. 

Source: Listín Diario 17/04/23