The President of the Dominican Republic signed on January 17, 2025, Decree 30-25, which introduced the obligation for foreign providers of digital services to charge, collect, remit, and pay ITBIS (local VAT) to the Internal Revenue Office.
The presidential decree also mandated that digital service providers register for ITBIS and submit informative reports on their transactions when the conditions were met. The decree introducing ITBIS to provide digital services should have been enacted in July 2025.
However, the enactment of this significant tax decree reached a blocking point when the president signed a new repealing presidential decree, only 45 days after the initial one.
Timeline
The repealing Presidential Decree, published on March 3, 2025, repeals for an undetermined period the applicability of Decree 30-25, which established the obligation for non-resident digital service providers to charge ITBIS on providing these services to local customers.
Regulatory Framework – Digital Services
The Dominican Government was looking into solutions to successfully tackle the rise of the digital economy and the connected impact on competitiveness with traditional businesses. The rise of the digital economy and the e-commerce sector shows that foreign service providers are becoming a predominant force when providing different digital services.
The rise of the digital services sector is significantly impacting local service providers. Local service providers are obliged to register for Income tax, Tax on the Transfer of Industrialized Goods and Services (ITBIS), while foreign platform operators are “free” of this obligation.
Decree 20-45 was adopted to tackle this discomfort and raise the country’s tax revenue from unregistered service providers. The Decree mandated that foreign digital services providers register for ITBIS, levy it at an 18% rate, submit returns, and remit the owed tax to the Internal Revenue Office.
The digital service providers that were (not an exhaustive list) in the scope of the new measures were:
- Video and music streaming service providers (Netflix, Spotify, Disney +, Amazon Prime);
- Online advertising service providers (Google Ads, Facebook Ads);
- Subscription-based service providers (LinkedIn);
- SaaS providers (cloud storage, hosting service providers).
However, as mentioned above, this Decree has been repealed. The Government indicated that the main reason for the repeal is that the technical specifications and related collection system couldn’t be established within 6 months of the original Decree’s issuance.
One reason behind the decision to repeal the Decree could be the newly proclaimed US approach towards jurisdictions that impose digital service taxes on US-based technology companies.
The importance of tax collection from foreign digital service providers (mainly platforms) remains one of the current Government’s priorities. However, at this point, it has been put “aside” for some time. However, following the latest swift changes, it should be followed with caution if something changes in the upcoming months.
The Government of the Dominican Republic, one of the most populous countries in the Caribbean, paved the way for introducing a tax collection regime for foreign digital platforms through Decree 20-45, published in January 2025. However, in March 2025, the Decree was repealed.
One of the digital economy’s principal characteristics is its fast pace of growth and expansion. This pace of unpredictable changes also follows the VAT developments connected with the platform economy and digital service providers.
Considering the financial importance of the digital economy sector in the Dominican Republic, the evolving situation of the tax framework should be followed in the next period because, if we can conclude something from the last change, the situation could change fast, and new implications could arise.
Aleksandar Delic
1stopVAT Indirect Tax Manager – E-Commerce