Dominican Republic – USA Tax Information Exchange Agreement (1989)

Tax Information Exchange Agreement (1989)

This Treaty was signed on August 7, 1989 and entered into force on October 12, 1989.

AGREEMENT FOR THE EXCHANGE OF INFORMATION WITH RESPECT TO TAXES BETWEEN THE DOMINICAN REPUBLIC AND THE UNITED STATES OF AMERICA

The Dominican Republic and the United States of America, in the interest of assuring the accurate assessment and collection of taxes, preventing fiscal fraud and evasion, and developing improved information sources for tax matters, and understanding the need for mutual collaboration in order to punish the commission of offenses that violate public and social policy, have agreed to render assistance through the exchange of information, as stipulated in the following Agreement for the Exchange of Information with Respect to Taxes:

Article 1. Definitions

1. In this Agreement, unless otherwise defined:

a) The term “competent authority” means:

(i) in the case of the Dominican Republic, the Secretary of Finance or his delegate, and

(ii) in the case of the United States of America, the Secretary of the Treasury or his delegate.

b) The term “national” means:

(i) any citizen of a Contracting State, and

(ii) any legal person, partnership, corporation, trust estate, association, or other entity deriving its status, as such from the laws in force in a Contracting State.

c) The term “person” includes:

(i) any individual, and
(ii) any partnership, corporation, trust, estate, association or other legal entity.

d) The term “tax” means any tax to which the Agreement applies.

e) The term “information” means any fact or statement, in any form whatever, that may be relevant or material to tax administration and enforcement, including (but not limited to):

(i) testimony of an individual, and
(ii) documents, records or tangible personal property of a person or Contracting State.

f) The terms “applicant State” and “requested State” mean, respectively, the Contracting State applying for or receiving information and the Contracting State providing or requested to provide such information.

g) For purposes of determining the geographical area within which jurisdiction to compel production of information may be exercised, the term “United States” means the United States of America, including Puerto Rico, the Virgin Islands, Guam and other United States possession or territory and the territorial waters of the United States.

h) For purposes of determining the geographical area within which jurisdiction to compel production of information may be exercised, the term “Dominican Republic” means the territory of the Dominican Republic, including the adjacent islands and the territorial waters of the Dominican Republic.

2. Any term not defined in this Agreement, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 9, shall have the meaning which it has under the laws of the Contracting State relating to the taxes which are the subject of this Agreement.

Article 2. Taxes Covered

1. This Agreement shall apply to the following taxes imposed by or on behalf of a Contracting State:

a) in the case of the United States of America,

(i) Federal income taxes,

(ii) Federal taxes on self-employment income,

(iii) Federal taxes on transfers to avoid income tax,

(iv) Federal estate and gift taxes,

(v) Federal excise taxes; and

b) in the case of the Dominican Republic,

(i) income taxes, including taxes evaded as a result of breaches of public duty and embezzlement,

(ii) estate and gift taxes,

(iii) excise taxes, including those which arise from the disposition of products of the Contracting States,

(iv) transfer taxes, and

(v) any other taxes that the Government is authorized to collect.

2. This Agreement shall apply also to any identical or substantially similar taxes imposed after the date of signature of the Agreement in addition to or in place of the existing taxes. The competent authority of each Contracting State shall notify the other of significant changes in laws which may affect the obligations of that State pursuant to this agreement.

3. This Agreement shall not apply to the extent that an action or proceeding concerning taxes covered by this Agreement is barred by the applicant State’s statute of limitations.

4.

a) In the case of the United States, this Agreement shall not apply to taxes imposed by states, municipalities or other political subdivisions, or possessions.

b) In the case of the Dominican Republic, this Agreement shall not apply to taxes, if any, imposed by political subdivisions.

Article 3. Object and Scope of the Agreement

1. The Contracting States shall assist each other to assure the accurate assessment and collection of taxes, to prevent fiscal fraud and evasion, and to develop improved information sources for tax matters. The Contracting States shall provide assistance through exchange of information authorized pursuant to Article 4 and such related measures as may be agreed upon by the competent authorities pursuant to Article 9.

2. Information shall be exchanged to fulfill the purpose of this Agreement without regard to whether the person to whom the information relates is, or whether the information is held by, a resident or national of a Contracting State.

3. In the United States, currency transactions of $10,000 or less are not required to be reported by financial institutions to the Internal Revenue Service under 31 U.S.C. 5313, as in effect on the date of the signing of this Agreement. Further, amounts of $10,000 or less are not subject to the reporting requirements of 31 U.S.C. 5316, as in effect on the date of the signing of this Agreement, when transported at one time by a person:

a) from a place in the United States to or through a place outside the United States, or

b) to or through a place in the United States from or through a place outside the United States.

4. It is possible to carry out any transaction by residents of either Contracting State for the acquisition of immovable properties in the Dominican Republic, such as the sending of remittances less or greater than ten thousand American Dollars (U.S. $10,000.00) from the United States to the Dominican Republic, as long as and when the requirements of United States law are complied with.

Article 4. Exchange of Information

1. The competent authorities of the Contracting States shall exchange information to administer and enforce the domestic laws of the Contracting States concerning taxes covered by this Agreement, including information to effect the determination, assessment, and collection of tax, the recovery and enforcement of tax claims, or the investigation or prosecution of tax crimes or crimes involving the contravention of tax administration.

2. The competent authorities of the Contracting States shall automatically transmit information to each other for the purposes referred to in paragraph 1. The competent authorities shall determine the items of information to be exchanged pursuant to this paragraph and the procedures to be used to exchange such items of information.

3. The competent authorities of a Contracting State shall spontaneously transmit to the competent authority of the other State information which has come to the attention of the first-mentioned State and which is likely to be relevant to, and bear significantly on, accomplishment of the purposes referred to in paragraph 1. The competent authorities shall determine the information to be exchanged pursuant to this paragraph and take such measures and implement such procedures as are necessary to ensure that the information is forwarded to the competent authority of the other State.

4. The competent authority of the requested State shall provide information upon request by the competent authority of the applicant State for the purpose referred to in paragraph 1. If the information available in the tax files of the requested State is not sufficient to enable compliance with the request, that State shall take all relevant measures, including compulsory measures not prohibited by its laws, to provide the applicant State with the information requested.

a) The requested State shall have the authority to:

(i) examine any books, papers, records, or other tangible property which may be relevant or material to such inquiry;

(ii) question any person having knowledge or in possession, custody or control of information which may be relevant or material to such inquiry;

(iii) compel any person having knowledge or in possession, custody or control of information which may be relevant or material to such inquiry to appear at a stated time and place and testify under oath and produce books, papers, records, or other tangible property;

iv) take such testimony of any individual under oath

b) Privileges under the laws or practices of the applicant State shall not apply in the execution of a request but shall be preserved for resolution by the applicant State.

5. If information is requested by a Contracting State pursuant to paragraph 4, the requested State shall obtain the information requested in the same manner, and provide it in the same form, as if the tax of the applicant State were the tax of the requested State and were being imposed by the requested State. However, if specifically requested by the competent authority of the applicant State, the requested State shall:

a) specify the time and place for the taking of testimony or the production of books, papers, records, and other tangible property under oath;

b) place the individual giving testimony or producing books, papers, records or other tangible property under oath;

c) permit the presence of individuals designated by the competent authority of the applicant State as being involved in or affected by execution of the request, including an accused, counsel for the accused, individuals charged with the administration and enforcement of the domestic laws of the applicant State covered by this Agreement, and a commissioner of magistrate present for the purpose of rendering evidentiary rulings or determining issues of privilege under the laws of the applicant State;

d) provide individuals permitted to be present with an opportunity to question, directly or through the executing authority, the individual giving testimony or producing books, papers, records or other tangible property;

e) secure original and unedited books, papers, and records, and other tangible property;

f) secure or produce true and correct copies of original and unedited books, papers and records;

g) determine the authenticity of books, papers, records and other tangible property produced;

h) examine the individual producing books, papers, records and other tangible property regarding the purpose for which the item produced is or was maintained;

i) permit the competent authority of the applicant State to provide written questions to which the individual producing books, papers, records and other tangible property is to respond regarding the item produced;

j) perform any other act not in violation of the laws or at variance with the administrative practice of the requested State;

k) certify either that procedures requested by the competent authority of the applicant State were followed or that the procedures requested could not be followed, with an explanation of the deviation and the reason therefor.

6. The provisions of the preceding paragraphs shall not be construed so as to impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and administrative practice of that State or the other Contracting State;

b) to supply particular items of information which are not obtainable under the laws or in the normal course of the administration of that State or of the other Contracting State;

c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process;

d) to supply information, the disclosure of which would be contrary to public policy (ordre public);

e) to supply information requested by the applicant State to administer or enforce a provision of the tax law of the applicant State, or any requirement connected therewith, which discriminates against a national of the requested State. A provision of tax law, or connected requirement, will be considered discriminatory against a national of the requested State if it is more burdensome with respect to a national of the requested State than with respect to a national of the applicant State in the same circumstances. For purposes of the preceding sentence, a national of the applicant State who is subject to tax on worldwide income is not in the same circumstances as a national of the requested State who is not subject to tax on worldwide income. The provisions of the subparagraph shall not be construed to prevent the exchange of information with respect to the taxes imposed by the United States or the Dominican Republic on branch profits or on the premium income of nonresident insurers or foreign insurance companies.

7. Except as provided in paragraph 6, the provisions of the preceding paragraphs shall be construed so as to impose on a Contracting State the obligation to use all legal means and its best efforts to execute a request. A Contracting State may, in its discretion, take measures to obtain and transmit to the other State information which, pursuant to paragraph 6, it has no obligation to transmit.

8. The competent authority of the requested State may allow representatives of the applicant State to enter the requested State to interview individuals and examine books and records with the consent of the individuals contacted.

9. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to the competent authority in conformity with Article 1 and, where appropriate, to individuals or authorities (including judicial and administrative bodies) who shall be responsible for determining the legal violation under investigation, the enforcement of the laws, and the proceeding for the adjudication of an offense, in respect of the taxes which are the subject of this Agreement, or the oversight of the above. The persons described above shall use the information only for the purposes indicated in the request for information and may disclose information in public court proceedings or in judicial decisions.

Article 5. Costs

Unless the competent authorities of the Contracting States otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested State and extraordinary costs incurred in providing assistance shall be borne by the applicant State. The competent authorities may mutually agree on the meaning of a term and determine when costs are extraordinary.

Article 6. Mutual Agreement Procedure

1. The Contracting States agree to implement a program to carry out the purposes of this Agreement. This program may include, in addition to exchanges specified in Article 4, other measures to improve tax compliance, such as exchanges of technical know-how, development of new audit techniques, identification of new areas of non-compliance, and joint studies of non-compliance areas.

2. The competent authorities of the Contracting States may communicate with each other directly for the purposes of reaching an agreement under this Article.

Article 7. Implementation

Before this Agreement enters into force and effect, the Contracting States shall agree to a letter which describes, to their mutual satisfaction, the administrative and legal procedures currently in effect in each Contracting State to carry out the terms of this Agreement.

Article 8. Other Applications of Agreement

This Agreement serves the purpose of meeting the standard for an exchange of information agreement described in Section 274(h)(6)(C) of the United States Internal Revenue Code of 1986 (the “Code”) (relating to deductions for attending foreign conventions), and referred to in Section 927(c)(3)(A) (relating to foreign sales corporations) and 936(d)(4) of the Code (relating to the treatment of certain investment income as qualified possession source investment income for purposes of the possession tax credit).

Article 9. Final Provisions

1. The Competent Authorities of the Contracting States shall attempt to resolve by mutual agreement any difficulty or doubt that may arise in the interpretation or enforcement of this Agreement, with the assistance of the authorities responsible for foreign relations in the Contracting States when such assistance would not result in a violation of the confidentiality requirement of Article 4, paragraph 9 of this Agreement.

2. The exchange of information provided in this Agreement shall be subject to the strictest principle of international reciprocity.

Article 10. Entry Into Force

This Agreement shall enter into force upon an exchange of notes by the duly authorized representatives of the Contracting States confirming their mutual agreement that both sides have met all constitutional and statutory requirements necessary to effectuate this Agreement.

Article 11. Amendment and Termination

This Agreement may be modified or amended by mutual consent of the Contracting States.

Either of the Contracting States may terminate this Agreement at any time after it enters into force provided that at least 3 months’ prior notice of termination has been given through diplomatic channels.

Done at Santo Domingo, in duplicate, in the English and Spanish languages, the two texts having equal authenticity, this 7th day of August, 1989.

For the Government of the United States of America:
Paul D. Taylor
Ambassador

For the Government of the Dominican Republic:
Joaquin Ricardo
Secretary of State of Foreign Relations