Taken from Diario Libre
SANTO DOMINGO. – The General Directorate of Internal Taxes ( DGII ) clarified that foreign providers of digital services will be the taxpayers of the tax on the transfer of industrialized goods and services ( ITBIS ) that the Government plans to apply through a simplified registration and payment process, without this tax harming consumers of online platforms.
The draft regulations from (DGII) on this matter, which were open for public comment between February and March of this year, indicate that the procedure for applying the Value Added Tax (VAT) to digital services received in the Dominican Republic and provided by foreign suppliers stipulates that the taxable base for the VAT comprises only the total amount of the services received, regardless of their nature, for services used and consumed in the country. For digital services between entities within the same group, the taxable base will be their normal market value.
It also highlights that foreign suppliers will not be entitled to deductions from the gross tax established in article 346 of the Tax Code, unless they formalize a permanent digital establishment or a fixed place of business in the country.
According to the draft, the process for foreign business owners to pay taxes for offering their services in the country will be carried out through a special declaration that must be filled out electronically in the DGII .
Due to legal changes in Puerto Rico, Netflix notified its users that it will apply a new 10.5% tax to the cost of its membership.
In the Dominican Republic, there is already resistance from users to a possible increase in the price of digital services, who have complained on social media.
Disagree
The fact that the DGII is formalizing a tax responsibility mechanism so that owners of websites such as Facebook, Amazon, Google, Netflix , Spotify, DiDi, Uber, Airbnb and other digital service platforms pay taxes to the Government, worries various productive sectors at the national level.
In this regard, the construction sector considers it inappropriate to begin taxing foreign companies that facilitate short-term rentals through digital platforms , given that the sector "has not yet recovered" from the consequences of the COVID-19 pandemic and is now facing an increase in the cost of construction materials due to the armed conflict between Russia and Ukraine.
Airbnb rentals has been the driving force behind the sector's 23.4% growth in 2021, as much of its economic performance has been made possible by investment in the construction of properties for seasonal rentals by the international platform, Jorge Montalvo, president of the Dominican Association of Housing Builders and Promoters ( Acoprovi ), Diario Libre
Sectors advocate for dialogue
The Dominican Association of Housing Builders and Developers (Acoprovi) and the Association of Real Estate Agents and Companies (AEI) agree that it is necessary to open a dialogue to evaluate various aspects that could affect real estate investment and users. “Any regulations regarding rentals should contribute to promoting the healthy development of the real estate market and not discourage investment by those who buy for this purpose, since a proportion of buyers belong to the middle class,” Acoprovi stated.
Four rules
The DGII considers four special rules for determining the tax base. In the case of online advertising services, the draft regulations indicate that the tax will be applied to the total revenue obtained, calculated as the proportion of times the advertisement appears on devices located in the country, relative to the total number of times the advertisement appears.
For online intermediation services - it adds - in which there is facilitation of deliveries of goods or provision of underlying services directly between users, such as Airbnb , it will apply to the total revenue obtained from the proportion that the number of users located on Dominican soil represents, with respect to the total number of clients involved in that service.
The draft also explains that the taxable base of other intermediation services will be determined by the total amount of income derived directly from users when the accounts that allow access to the digital interface used were opened using a device that was located anywhere in the Dominican territory at the time of its opening.
For data transmission platforms, it stipulates that the ITBIS "to the total income obtained in proportion to the number of users who have generated said data and who are located in the country."
