Year-End Business Closing in the Dominican Republic: legal, tax and corporate aspects companies should assess

The fiscal and operational year-end represents a critical moment for companies operating in the Dominican Republic. Beyond financial statements, a comprehensive review of labor, tax, corporate, accounting and contractual obligations helps mitigate legal risks, ensure regulatory compliance and prepare the organization for the upcoming fiscal year.

From the perspective of a leading law firm in the Dominican Republic such as Pellerano & Herrera, year-end planning should be approached strategically and proactively.

Labor obligations at year-end

Christmas bonus (statutory bonus payment)

Pursuant to Article 220 of the Dominican Labor Code, the Christmas bonus must be paid no later than December 20. Companies must verify that calculations include wages earned during the applicable period.

Outstanding vacations and workforce planning

Companies should review unused vacation balances, prevent excessive accruals and establish clear protocols for collective shutdowns and operational continuity.

Updating employment contracts and internal policies

Before year-end, companies should:

• Ensure employment contracts comply with the Labor Code and are duly filed with the Ministry of Labor.
• Review internal policies related to safety, technology and risk management.
• Validate job classifications, sectoral minimum wages and projected salary adjustments.

Payroll review and labor charges

Year-end payroll reviews should include overtime settlements, documentation of performance evaluations for bonuses or salary increases, and identification of future training needs.

Tax and fiscal year-end review

From a tax perspective, year-end closing requires an orderly review in accordance with Law No. 11-92 (Dominican Tax Code).

Key tax matters to assess

• Reconciliation of expenses, assets, depreciation and provisions.
• Verification of withholding taxes applied to employees, suppliers and independent contractors.
• Review of tax credits, offsets and monthly filings (IT-1).
• Assessment of electronic invoicing systems in line with DGII requirements.
• Preparation for annual income tax returns (IR-2 or IR-1).
• Review of deductible and non-deductible expenses.
• Transfer pricing documentation review.
• Validation of tax receipts (NCF), credit notes and cancellations.
• Review of fixed asset schedules and tax depreciation.

Corporate and governance matters

Year-end provides an opportunity to strengthen corporate governance structures.

Recommended corporate review

• Verify the validity of powers of attorney granted in prior shareholders’ meetings.
• Assess whether the corporate structure remains tax and operationally efficient.
• Ensure annual renewal of the Commercial Registry, when applicable.
• Update shareholder, capital, management and domicile information.
• Approve dividend distributions through the corresponding corporate resolutions.
• Review agreements among shareholders, related parties and affiliated companies.

Accounting and financial closing aspects

Physical inventory

A general inventory count should be conducted and reconciled with accounting records, documenting any discrepancies or write-downs.

Bank reconciliations

Companies should complete bank reconciliations for all accounts and properly document any differences.

Depreciation and accounting provisions

Companies should confirm that:

• Fixed assets are properly recorded and updated.
• Depreciation rates comply with DGII regulations.
• Adequate provisions exist for doubtful accounts, legal contingencies and bonuses.

Organized financial statements

Proper documentation should be maintained for the preparation of audited financial statements.

Licenses, permits and operational compliance

At year-end, companies should verify the validity of sector-specific licenses and permits, as well as compliance with environmental, health, municipal and safety regulations, including ESG policies.

Contract management and legal records

Contracts nearing expiration

Companies should prepare a list of contracts expiring within the next 3 to 12 months and review renewal and termination provisions.

Review of suppliers and clients

• Suppliers: assess performance, concentration risks and update legal files.
• Clients: review receivables, payment behavior and reinforce credit policies.

Updated legal files

An organized legal archive should include bylaws, minutes, active contracts, Commercial Registry and RNC records.

Recommended best practices for year-end closing

Strategic compliance checklist

• Create a secure digital repository.
• Certify key documents when applicable.
• Maintain an annual legal, tax and corporate compliance checklist.