Benefits of the new Law No. 51-23 on special tax treatment

November 23, 2023

Author: Sylvio Hodos

Law No. 51-23, which establishes a special transitory treatment for the examination, management and recovery of tax debts until December 20, 2023, entered into force on August 10, 2023; however, it still does not have an application rule.

The following are the benefits of the new Law No. 51-23:

Abbreviated audit procedure, for ongoing ISR or ITBIS audits.
For this procedure, any taxpayer who is subject to a desk audit (excluding external audits, taxpayers subject to a criminal tax judicial process, and, taxpayers subject to an investigation for tax crimes) of the ISR or the ITBIS, may physically request at Local Administrations of the General Directorate of Internal Taxes (DGII) and through its Virtual Office (OFV), the application of the abbreviated audit procedure (provided by Law 51-23).

After depositing said application, the DGII will respond to the taxpayer with the acceptance or rejection of the request, within a period of no more than 30 calendar days. In case of rejection, or disagreement with the acceptance act or its amount, the taxpayer may appeal for reconsideration before the DGII and in court before the Superior Administrative Court (TSA).

The abbreviated examination procedure allows the taxpayer to request the early termination of their ongoing audit. For income tax purposes, an Abbreviated Procedure Rate (APR) equivalent to the average of the Effective Tax Rate (ETR) -provided by Rule 07-14 for the fiscal years 2019, 2021 and 2022- or for the fiscal years covered by such tax audit, whichever is higher, would apply.

In the case of the ITBIS, the APR will be equivalent to seventy percent (70%) of the TET, under the same conditions.

Once the taxpayer has been notified of the determination resolution by means of abbreviated audit procedure, he/she will have a term of no more than 30 calendar days to make the payment, under penalty of nullity of such procedure.

Payment facilities for tax debts, including tax periods 2016-2021
Law No. 51-23 provides for payment facilities for tax debts, corresponding to fiscal periods from 2016 through 2021, regardless of the type of tax or process that gave rise to it.

a) Tax debts originated in determinations of the tax administration in process of reconsideration or, appealed before the contentious administrative jurisdiction, and existing during the entry into force of Law No.51-23. These debts may be settled by making a one-time payment of 70% of the capital amount of the taxes assessed, without late payment surcharges or compensatory interest.

b) Debts arising from ordinary returns, self-assessments or voluntary rectifications not paid on time, will be settled with the payment of 100% of the taxes, with up to 6 months of maximum interest (6.60%) at a rate of 1.10% per month; unless an installment payment is requested at the time of application. In this case, you must also add said rate of 1.10% per month on the amount owed, until full payment.

Excluded from these facilities are the debts arising from the abbreviated procedure of control of the previous point and, in the payment of the contribution of solid waste.

If the resolution of determination of the tax debt is in the process of appeal in an administrative or jurisdictional venue, the appellant must withdraw the appeal in progress within 3 working days.  These days are counted from the notification of the acceptance of the application for acceptance (not before, since the acceptance must be received before the withdrawal) of the payment facilities.

Those interested in availing themselves of these payment facilities may do so by completing and submitting in person the form provided by the DGII for this purpose, at the corresponding DGII Local Administration, or through its DGII Virtual Office (OFV), no later than December 20, 2023.

The DGII will have a period of 45 business days to accept or reject the request for acceptance. If the administration does not answer within the term indicated, it cannot be interpreted as a tacit acceptance. In case of rejection of the request, the DGII will issue a duly motivated act, subject to the appeal for reconsideration and the contentious-tax appeal.

In case of acceptance, the payment must be made within 3 business days from the notification of the acceptance act in the case of a single payment of 70% of the capital amount of the taxes assessed.

For ordinary returns or self-assessments or voluntary rectifications not paid in a timely manner, they will be settled by payment of 100% of the tax and up to the amount of 6 months of interest, with one of these conditions:

-In a single installment payable within 120 calendar days or;

-Such payment may be divided in up to 4 equal, monthly and consecutive installments, subject to the payment agreement to the corresponding indemnity interest.

Prescription and eventual extinction of tax debts corresponding to fiscal years 2015 and prior, if certain requirements are met.
Law No. 51-23 declares statute-barred all tax debts arising from fiscal years up to 2015, proceeding from tax obligations generated from affidavits, filed by the taxpayer via the Virtual Office  and, which as of the effective date of Law 51-23 are pending payment in the taxpayer’s current account.

This applies only to the following concepts, if they do not have a ruling with authority of res judicata irrevocably in favor of the DGII, or that has acquired the character of a firm debt due to the failure to file any appeal within the legal period:

– Income Tax (ISR).
– Tax on the Transfer of Industrialized Goods and Services (ITBIS).
– Selective Consumption Tax (ISC).
– Tax on Assets (ISA).
– Tax on Real Estate Assets (IPI).
– Taxes on Free Trade Zones.
– Taxes on lottery, betting and sporting banks.
– Taxes corresponding to the fiscal year 2015, even if the payment of one of its installments is due in a subsequent fiscal year, with the exception of income tax advances.

For such statute of limitations, individuals, legal entities, unincorporated entities and undivided estates qualify, first, if their respective debts present these characteristics:

a) Debts arising from tax obligations exclusively of declarative administration. Refers to debts generated from the filing of a sworn tax return, made by the taxpayer in the Virtual Office (such as income tax), up to the year 2015, which appear in the taxpayer’s current account as of the date of each technological sweep.

b) Debts in the process of desk audit at the time of the entry into force of Law No. 51-23.

c) Debts for tax obligations of declarative or presentment administration, generated from 2016 to 2021. The presentment requires that the taxpayer informs the tax administration of the fact generating the tax obligation through the presentation of the legal act or contract in person (for example, a real estate sale contract).

In order to qualify for such ex officio statute of limitations, taxpayers must comply with the following:

-To be up to date in the filing of all returns and, payment of taxes corresponding to fiscal years and periods from 2016 onwards. Therefore, the payment facilities presented above help to comply with this requirement.

-They cannot have filed these returns (from 2016 to date), with no operations (at zero) or with losses, if the volume of gross income reported by such taxpayers is lower than that recorded in the DGII’s cross-reporting system.

-Must not be in the process of or subject to a criminal tax proceeding.

-Must not be the subject of an ongoing audit or tax investigation.

Along the same lines, the tax credit balances originated in fiscal years and periods up to 2015 will be subject to ex officio statute of limitations, except for the tax credit balances reviewed by the DGII through an audit.

The first and second technological sweeps were carried out on September 29 and October 31; however, several taxpayers qualified for these sweeps did not receive the promised certification of the statute of limitations.

Therefore, it is important to analyze the legal requirements for qualification, in order to effectively obtain such certification in the next sweeps, which will take place on November 30 and December 29, 2023.