The Foreign Agents Law (LAEX) establishes tax obligations for both Withholding Agents and foreign agents, principals, or directors, especially for those who have not been excluded from the tax regime of the law. These provisions seek to ensure transparency and fiscal control over funds entering the country from foreign principals by applying a specific tax of 30% on financial transfers, donations, or imports in kind made by them.
Compliance with these obligations is essential to avoid administrative penalties and ensure the correct application of the special tax regime. In this regard, the Ministry of Finance issued the Guidance on the Application of the Tax Aspects of the Foreign Agents Law, contained in Legislative Decree No. 308.
I- Tax obligations under the LAEX
- Obligations of Withholding Agents
Withholding Agents are financial institutions, entities, or natural or legal persons involved in the receipt, channeling, or transfer of funds from abroad to foreign agents who have not been excluded from the LAEX tax regime. In accordance with Articles 10 to 13 of the law and the Ministry of Finance’s Guidance, their main obligations are:
- To withhold 30% at the time the foreign principals make the transfer or make the funds available to the foreign agent.
- To report the withholdings made within the first ten business days of the month following the period in which they were made, using form F-14v16 (“Monthly statement of payment on account and taxes withheld from income and foreign agents”).
- Report monthly to the Tax Administration, within the first fifteen business days of the following month, using form F-935v1 (“Monthly Withholding Report on Foreign Agents”), detailing withheld agents, amounts, items, country of origin, and other transaction data.
Failure to comply with these obligations will be penalized by the Tax Administration in accordance with Articles 241 and 246 of the Tax Code, applying the procedure regulated in Article 260 of the same legal body.
- Obligations of Foreign Agents
Individuals or legal entities that carry out activities in the country financed or controlled by a foreign principal and that have not been excluded from the LAEX tax regime are subject to the payment of 30% on the funds received. In accordance with the LAEX, its regulations, and the Ministry of Finance’s guide, non-excluded foreign agents must:
- Pay the tax directly when they receive donations within the national territory, using form F-14v16, within ten business days after the end of the month in which the donation was received.
- Report to the Tax Administration, within the first fifteen business days of the following month, on the withholdings incurred and the payments made, using form F-935v1.
Failure to comply with these obligations will result in penalties in accordance with Articles 241 and 247 of the Tax Code, applying the procedure established in Article 260.
II- Other relevant tax aspects
- Imports in kind. Imports in kind or material goods will be taxed at 30% only if so determined by the Register of Foreign Agents (RAEX); for this purpose, documentation supporting such classification must be submitted.
- Donation report. For foreign agents classified as exempt from income tax by the Internal Revenue Service (DGII), the obligation set forth in Article 146 of the Tax Code to report donations remains in effect.
- Duty to report even if there is no activity. Both Withholding Agents and Foreign Agents are required to submit monthly reports even if there are no transactions during the period; failure to report also constitutes a punishable offense.
III- Practical aspects after the expiration of the 90-day period for mandatory registration with the RAEX
Now that the 90-day period established by the LAEX for mandatory registration with the RAEX has ended—a period that expired on September 4, 2025—it is worth highlighting certain points for entities that registered in a timely manner or requested exclusion from the tax regime:
- Confirmation of registration. Verify the official notification of registration of foreign agents, principals, and directors issued by the RAEX. This notification is made by email or telephone, according to the information provided in the forms, and indicates that the registration resolution must be picked up at the registry offices.
- Notification of exclusions. The RAEX continues to notify decisions to exclude entities that qualify under Article 5 of the LAEX from the tax regime. Exclusions may be granted for annual periods—automatically renewable—or for specific projects, depending on the nature of the activities.
- Obligation to report new projects. In the case of annual exclusions, it is mandatory to inform the RAEX of the completion or implementation of new projects during the period of benefit. Failure to comply may result in the revocation or non-renewal of the exclusion.
- Registration or exclusion ex officio. Pursuant to Article 13 of the LAEX Regulations, the Administration may register or exclude ex officio. In practice, resolutions are also issued under annual or project-based criteria. It is recommended that the RAEX be informed of the implementation of new projects for reasons of transparency.
- Residual compliance. Entities excluded from the tax regime are not subject to the withholding, payment, or reporting obligations detailed in this bulletin; however, they must comply with the other obligations of the LAEX, as failure to do so could result in their incorporation into the tax regime and the imposition of penalties.
IV- Conclusion
The tax regime applicable to foreign agents not excluded by the RAEX imposes a rigorous control framework on financial flows from abroad, requiring the withholding, payment, and timely reporting of the 30% tax. Timely compliance with these provisions not only avoids penalties, but also strengthens institutional transparency before the Ministry of Finance and the RAEX. Both Withholding Agents and obligated Foreign Agents must keep their records and reports up to date, using the official forms (F-14v16 and F-935v1) and within the deadlines established by the authorities.
The Guidance Manual for applying the tax aspects of the Foreign Agents Law, contained in Legislative Decree No. 308, issued by the Ministry of Finance, is available on the Ministry of Finance’s transparency portal at the following link:
Guidance Manual DGII-GTR-2024-006
For any additional questions, please contact our team at taxelsalvador@consortiumlegal.com.