Dominican Republic (DO)

Jurisdiction Overview

IDQuestionAnswer
472 *LO Update: Is the update of information on the identity of legal owners mandatory? Yes
 Data Date: 2019

Notes

 
While the update of commercial registry data on legal ownerhip is considered to be insufficient (as occuring only every 2 years), the requirements under tax law mandate that legal ownership data must be updated annually and within 10 days of a change.
 
Update of information with the commercial registry (Mercantile Registry) takes place only every two years (GF 2016: 24; GF 2019: 30). In 2019, the Global Forum indicates that "[s]ince the 2016 Report, an amendment was introduced to the Mercantile Register Law, adding a penalty for not complying with the obligation to provide updated information (including changes in ownership)" (GF 2019: 30). The Global Forum indicates that "any changes to the business (i.e. changes in name, address, activity or capital, opening of commercial establishments, branches or agencies (art. 4 of Law 3-02))" have to be updated within 30 days to the Mercantile Registry (ibid.).There is no indication that changes in ownership information must be updated within 30 days.
 
Following registration with the Mercantile Registry, "all type of companies must proceed to register for tax purposes with the National Registry of Taxpayers" (GF 2019: 32), providing "a] copy of the Mercantile register and a list of all shareholders must be attached to the form" (ibid.). Furthermore, companies are legally required to notify the tax authority of "any change to the information suplpied at the time of the registration within 10 days (art. 50c of the Tax Code)" (ibid.). In addition, all companies are required to file an annual income tax return, providing "any update of the information provided at the time of registration and any changes in shareholding (art. 50 and 330, Tax Code and Regulation No. 139-98)" (ibid.). Also, "if a company fails to renew its business certificate, the RNC number [tax ID] is invalidated and the company would not be able to conduct any commercial activity before the register is updated and the certificate renewed" (GF 2019: 32).
 
Otherwise, the Global Forum informs that out of the 142 131 companies registered with the tax authority (GF 2019: 38), there are 5 656 inactive companies and 80 710 withdrawn companies (inactive for more than 5 years and potentially subject to liquidation) of which 3 389 in process of dissolution/liquidation (GF 2019: 34). Importantly: "the Dominican Republic reported that inactive and withdrawn companies still have a legal existence, and may continue to conduct business outside of the Dominican Republic. This is also the case for companies which failed to renew their business certificate with the Mercantile Registry (GF 2019: 34). Thus, 58% of companies registered with tax authorities are non-compliant with tax filing obligations (either inactive or "withdrawn", and not in process of dissolution). However, the Global Forum informs that "the DGII [tax authority] is in the process of liquidating about 77 000 companies [54% of registered] that never updated their legal status following the reform of the Commercial Entities Law, or that are considered withdrawn." (GF 2019: 35 [TJN's note]). We consider that although non-compliance with filing of ownerhsip information through tax returns is high, the initiative of the tax administration to liquidate such copmanies shows that compliance is being enforced.

Sources

https://www.sib.gob.do/pdf/ley-registro-mercantil.pdf
 
GF 2016: 24-25, 27; GF 2019: 30-38
 
CFATF 2006: 142; CFATF 2012: 43
 
art. 305 and 310 of Commercial Companies Act