Countries › Dominican Republic › Guide › 15. Exiting › Mergers, spin offs and tax neutral group reorganizations

Mergers, spin offs and tax neutral group reorganizations

Last verified: 2026-10-30 · Status: Changing

A merger dissolves the absorbed company without a liquidation, and with DGII approval the deal escapes income tax, ITBIS and selective tax. DGII answers within 45 working days, on conditions tested after closing: similar or connected businesses, a valid business reason, and real operations. Assets move at book or adjusted tax cost, losses do not transfer, and selling more than 10% of the new shares within 18 months undoes the relief.

USD figures use the Banco Central de la República Dominicana reference selling rate of RD$60.9007 per US dollar for 29 October 2026, the latest row in its published rate file on the verification date, rounded to the cent.

Key facts

ITBIS on an approved reorganization	Outside the tax if criteria are met textNorma General 01-2022 art. 6, as of 2026-10-30 · in force
DGII response time	45 working daysNorma General 01-2022 art. 5, as of 2026-10-30 · in force
Period for the 10% share disposal test	18 monthsNorma General 01-2022 art. 14, as of 2026-10-30 · in force

The rule

1. Results of a reorganization are outside income tax, and tax rights and duties pass to the continuing entities, subject to prior DGII approval. Reorganization means a merger, a spin off, or sales and transfers within an economic group.Ley 11-92, Código Tributario, art. 323, 1992-05-16 official text · verified 2026-10-30

2. Reorganizations that involve liquidating the companies are treated under the rules on liquidation.Ley 11-92, Código Tributario, art. 324, 1992-05-16 official text · verified 2026-10-30

3. Approval is conditional and checked after closing: similar, connected or complementary activities; valid business reasons and not merely tax advantages; and operations shown in the last tax return.Decreto 408-10, art. 9 paragraph I, 2010-08-12 official text · verified 2026-10-30

4. Companies can consult DGII first. A positive opinion is a conditional approval. A rejection must give reasons. If the conditions fail, DGII can charge the taxes.Decreto 408-10, art. 9 paragraphs III and IV, 2010-08-12 official text · verified 2026-10-30

5. Holding shares or receiving dividends from operating companies does not count as operations for that test.Norma General 01-2022 sobre Reorganización de Sociedades, art. 11 literal c, 2022-01-04 official text · verified 2026-10-30

6. The relief covers income tax including capital gains, ITBIS and selective tax.Norma General 01-2022 sobre Reorganización de Sociedades, art. 6, 2022-01-04 official text · verified 2026-10-30

7. Transfer of registered real estate in a reorganization between national companies is free of real estate transfer tax, but not if the receiving company is foreign.Norma General 01-2022 sobre Reorganización de Sociedades, art. 6 paragraphs I and II, 2022-01-04 official text · verified 2026-10-30

8. Vehicles still pay the 2% tax, on at least the DGII value.Norma General 01-2022 sobre Reorganización de Sociedades, art. 7, 2022-01-04 official text · verified 2026-10-30

9. New shares that raise authorized capital paid the 1% capital tax. Ley 30-26 repeals that tax from 2027.Norma General 01-2022 sobre Reorganización de Sociedades; Ley 30-26, art. 8; art. 58, 2026-06-18 official text · verified 2026-10-30 · changed: From 2027 the 1% tax on capital increases is repealed, so this cost in Norma 01-2022 art. 8 falls away for later deals.

10. DGII answers in up to 45 working days, by approving, returning or rejecting. Returned files can be refiled, and a rejection leads DGII to determine the tax.Norma General 01-2022 sobre Reorganización de Sociedades, art. 4 and art. 5, 2022-01-04 official text · verified 2026-10-30

11. Transfer must be at the book value of the transferring company, or else at adjusted tax cost, and that value is the cost for the continuing company.Norma General 01-2022 sobre Reorganización de Sociedades, art. 10 and paragraph, 2022-01-04 official text · verified 2026-10-30

12. The financial cut off is the day before the effective date. Audited statements for the last year are filed, plus a balance sheet at the cut off date.Norma General 01-2022 sobre Reorganización de Sociedades, art. 9, 2022-01-04 official text · verified 2026-10-30

13. The relief fails if within 18 months of the effective date the surviving companies change their activities, or holders of the merged or spun companies dispose of more than 10% of the shares received. This also applies to group transfers.Norma General 01-2022 sobre Reorganización de Sociedades, art. 14, 2022-01-04 official text · verified 2026-10-30

14. Group sales and transfers qualify if operations are connected, control or financing shows subordination, and the sole aim is not a tax advantage.Norma General 01-2022 sobre Reorganización de Sociedades, art. 12, 2022-01-04 official text · verified 2026-10-30

15. A foreign company with a local permanent establishment can use the relief in a cross border deal only if a Dominican company takes part, with DGII authorization.Norma General 01-2022 sobre Reorganización de Sociedades, art. 18 and paragraph I, 2022-01-04 official text · verified 2026-10-30

16. Losses from other entities with which the taxpayer reorganized are not deductible.Ley 11-92, Código Tributario, art. 287 literal k no. 1, 2012-11-09 official text · verified 2026-10-30

17. Merged companies dissolve without liquidation. The absorbing company replaces the absorbed company as debtor, and prior creditors have 30 days from publication to object.Ley 479-08, General de las Sociedades Comerciales y Empresas Individuales de Responsabilidad Limitada, as amended by Ley 31-11, art. 384 and art. 395, 2011-02-08 official text · verified 2026-10-30

18. The disappearing company files a final return within 60 days, and its breaches of formal duties pass to the survivor for open years. Unpaid advances pass too.Decreto 139-98, Reglamento del Título II, art. 94 and art. 96, 1998 official text · verified 2026-10-30

19. Asset tax paid in the final return of an absorbed company can pass as a credit to the absorbing company for the year of the merger.Norma General 04-2021 sobre el Registro Nacional de Contribuyentes, art. 29 paragraph II, 2021-06-07 official text · verified 2026-10-30

20. DGII asks for a letter with the details, extraordinary meeting minutes and merger or spin off plan, registry certificates, proof of the control link, shareholder lists before and after, the newspaper notice, TSS cancellation of the absorbed company's payroll and its final return.DGII help answer CA1165, Requisitos, 2026-10-30 official text · verified 2026-10-30

Worked example

A foreign group merges a dormant Dominican trading company with a land value of RD$30,450,350 (about US$500,000.00) into an operating sister. The land moves free of 3% transfer tax only if both are Dominican and DGII approves, saving RD$913,510.50 (about US$15,000.00), but the dormant company fails the operations test in its last return, so the relief is at risk. The group should settle that point with DGII first, or price the deal as a taxable sale.

Step by step

Consult DGII first if the group is relying on the relief.
Check all three criteria from the last filed return.
Prepare the plan, comisario report with itemized values and the valuation method.
Approve at each company and publish.
File the DGII request and final return of the absorbed company.
Diary the 18 month window.

Common traps

Tax neutrality does not help a true third party exit, since selling more than 10% of shares received in 18 months breaks it.
A pure holding company fails the operations test.
The absorbing company's old losses stay, but those of the absorbed company die.
Non Dominican receiving companies lose the real estate relief.

Sources

← Final dividends and liquidation payoutsLiability of directors, liquidators and shareholders after exit →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.