On 21 April 2021, the Directorate General of Internal Revenue (DGII) published Decree 256-21, which makes modification on articles 5, 7, 10 and 18 of the transfer pricing (TP) regulation, established by means of the Decree no. 78-14, of March 14, 2014, which aims to repeal and replace articles 5,7,10 and 18 of the aforementioned Decree no. 78-14. The Decree effects from 1 January 2021. Some of the important changes are given below:
Transfer pricing methods
According to new Decree, the new transfer pricing rules include five standard OECD methods.
Transfer pricing return
Under the new Decree, the due date for submitting the Informative Return for Transactions with Related Parties (DIOR) will be within 120 days after the tax year-end, applicable from tax year 2022 and onwards.
Transfer pricing documentation
This Decree incorporated into the documentation requirements the three-tiered approach (i.e. master file, local file and CbC report) by modifying Article 18 of the TP regulations.
- Master file
Under the Decree, taxpayers that are considered related parties under item 1, Article 2 of Decree No. 78-14 must submit the master file. The master file must contain information on the organizational structure, business, intangible assets, financial activities and existing advanced pricing agreements, among other things. Taxpayers that conduct intercompany transactions with resident related parties, given that such intercompany transactions do not result in a tax deferral or overall reduction of tax revenues and having transactions with related parties equal to or in excess of, as a whole, RD$12,193,981.70, adjusted annually for inflation, must submit master file.
2. Local file
The new Decree included that local file must contain specific information on the taxpayer and its intercompany transactions, the amounts of such transactions, functional and economic analyses conducted in the determination of its transfer prices and financial information, among other things. Similar thresholds as master file set for local file submission obligations. Both the local file and master file must be submitted in electronic format within 180 days of the filing date of the transfer pricing information return.
3. CbC reporting requirement
Taxpayers that are part of an MNE group meeting a consolidated revenue threshold to be provided in a general rule from the DGII, including a primary requirement for ultimate parent entities need to submit a CbC report for the 2022 reporting fiscal year in 2023.
