The Dominican Republic recently published a draft regulation to “regulate the procedure for the application of the ITBIS to digital services captured in the Dominican Republic and that are provided by foreign suppliers”.  The draft is intended to regulate the taxation of digital services “used, consumed or captured in the country”, offered by “subjects not domiciled or resident in the Dominican Republic”.

ITBIS is the local acronym for Impuesto sobre Transferencia de Bienes Industrializados y Servicios, and is the Dominican equivalent of VAT. (The general consumption tax applied to goods and services.)

The draft regulation classifies digital services as “those services that are made available to the user through the internet or any adaptation or application of protocols, technology platforms used by the internet or any other network through which services are provided through online access and that are characterized by being essentially automatic and not viable in the absence of information technology”.

Digital services that would be subject to ITBIS should this regulation be enacted include online advertising, online intermediation (commission), and data transmission or streaming services, among others. The ITBIS tax rate is 18% and this regulation will affect the services offered by companies such as Amazon, Spotify, Uber, Airbnb, and Netflix.  Digital operators would be taxed virtually, presenting the ITBIS through a special declaration that must be settled before the 20th of each month.

The draft also states that digital service operators will not be able to pass on ITBIS, or be permitted to raise their fees to cover the ITBIS cost, unless they establish a permanent establishment in the Dominican Republic.

The Government made the draft regulation available to taxpayers for public consultation and comments, the period for which closed on 21 March 2022. Although this is currently a draft, Auxadi’s professionals are available to all companies and investors interested in knowing more about this measure, or other issues related to the Dominican Republic.

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Manrique Blen
Director HUB Costa Rica

Local Knowledge – International Coverage

Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.

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