US, Dominican Republic Negotiate FATCA Agreement

The Dominican Republic and the United States have begun negotiations on an intergovernmental agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) between the two countries.

It is expected that the Dominican Republic will complete a Model 1A IGA to provide for the automatic exchange of tax information reciprocally between the Dominican Republic’s Directorate General of Internal Revenue (DGII) and the US Internal Revenue Service (IRS).

Meetings were held over two days in Santo Domingo between the Dominican Republic’s Ministry of Finance and the DGII, and the IRS’s International Cooperation Program, led by its senior manager Aziz Benbrahim.

An important part of their talks consisted of reviewing the strength of bilateral procedures and practices for the protection of confidential tax information, both in the US and the Dominican Republic, for when the IGA becomes operational.

FATCA, which took effect on July 1, 2014, is intended to ensure that the US obtains information on accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.