Uncategorized

Law No. 222-20, which modifies Law No. 506-19, on the General State Budget for fiscal year 2020, modified by Law. 68-20, and which in turn modifies articles 7 and 8 of the Law 46-20 of Transparency and Asset Revaluation.

September 9, 2020 by Franco
Prev

BACKGROUND

 

The presidency of the Dominican Republic, in order to mitigate the economic and health crisis that the country is suffering as a result of Covid-19, on September 7 enacted Law 222-20 that modifies Law 506-19 of December 20, 2019 of the General State Budget for this year 2020, in turn modified by Law 68-20 of June 13, 2020 (the “Law”), establishing a Supplementary Budget, and authorizing the Executive Power, via the Ministry of Finance, to increase the financial sources in the budget that is in execution.

 

That said, and with the objective of designing and implementing public policies, programs and activities that are necessary to impact the deficit that affects the country, and especially vulnerable sectors, the Law seeks to rationalize public spending and adopt a contingency plan to promote all productive sectors, and, among other things, contemplates the collection, by the treasury, of a proportion of the income tax generated by residents or domiciled persons, according to their income.

 

For the purposes of this newsletter, we will raise the aspects of the Law that impact and facilitate the compliance of the tax obligations by taxpayers, remaining out team at your disposal to clarify these, or any other aspects referred to in the analyzed regulation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The payment of 3.5% on the average amount of income for fiscal years 2017, 2018 and 2019, in addition to the special tax of 2% established in Law 46-20, closes said periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxpayers against whom the DGII has initiated a criminal judicial process for specific tax obligations may not benefit from the established facilities.

 

 

 

 

 

 

Main aspects of the Law

 

             i.  Approves a new estimate of Central Government revenue for the 2020 budget year.

 

                 ii.   Approves new expenditures to the Central Government

 

             iii.    It authorizes the Executive Power to increase financial sources and to arrange public credit operations.

 

       iv. Adds paragraph IV to article 7 of Law 46-20 to include Tax Amnesty.

 

               v. It modifies article 8 of Law 46-20, on tax debts that are in the process of being collected, regardless of the type of tax.

 

Tax amnesty: 3.5% of average net operating income

 

Article 9 of the Law inserts a new paragraph IV to article 7 of Law 46-20, which establishes tat those people with organized accounting and who are taxpayers of the Tax on the Transfer of Industrialized Goods and Services or added value tax (ITBIS), may close the non-prescribed fiscal years of these taxes, paying 3.5% on the average of the net operating income declared for Income Tax in the fiscal years of 2017, 2018 and 2019, in addition to the corresponding special tax rate, in accordance with the aforementioned article 7.

 

With this payment, the fiscal years 2017, 2018 and 2019 would be closed and firm, not subject to any control, provided that there is no prior pending determination, under discussion or not paid, for any of those periods.

 

Tax Debts Payment Facilities `

 

The Law also includes an amendment to Article 8 of Law 46-20, in order to establish the following payment facilities for tax debts that are in the process of collection at the time of their promulgation, namely:

 

 

1.    A single payment of a 70% of the taxes determined on those debts:

– Originated by determinations of the Tax Administration

– In the process of reconsideration

– In process before the contentious administrative jurisdiction

 

2.    Payment of 100% of taxes and up to 12 months of compensatory interest, in the cases of the following debts that have not been paid in a timely manner:

– From ordinary returns

– Self-assessments and / or

– Voluntary rectifications

 

o   Note: If the taxpayer avails himself of a fractional payment, he will pay the corresponding compensation interest.

If the Tax Debt is in the process of appeal in administrative or jurisdictional seat, the appellant must withdraw from the appeal in process. 

 

 

 

This document contains general information on the subject of reference. Its purpose is merely informative and therefore does not constitute a legal opinion of Franco. It is recommended to seek legal advice for each particular case.