Verizon's Caribbean Sale Delayed by $500m Dominican Tax Bill

by Leroy Baker, Tax-News.com, New York

25 July 2006

Verizon's planned sale of its Caribbean and Latin American units is being held up because the government of the Dominican Republic is demanding half a billion dollars in tax from the company.

In April, Verizon, the telecommunications firm and internet service provider, announced its intention to sell the three telecommunications operations for $3.7 billion. Two of these units, including its Dominican and Puerto Rican operations, are being sold to Mexico's America Movil SA.

However, according to regional media reports, before the sale can be legally cleared, the government of the Dominican Republic is demanding $500 million in a compulsory tax stemming from the $2.6 billion sale of Verizon Dominica to America Movil.

A lawsuit from the Dominican government's tax authority was reportedly filed in a court at the end of last month.

The court was given sixty days to rule on the case, but representatives of the government were said last week to be engaged in talks with Verizon to resolve the dispute out of court.

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