Dominica

  • Posted By : Admin
  • April 03, 2018
  • Tax havens
  • 0 Comments

Dominica is an island located in the Caribbean Sea, forming part of the Lesser Antilles. It became independent from the United Kingdom in 1967. Dominica is an offshore jurisdiction member of the Commonwealth and is considered by many experts a country expert in asset protection and inheritance planning.

General information

Capital
Roseau
Official language
English
Area
751 km2
Form of government
Parliamentary republic
Currency
East Caribbean Dollar (EC$, XCD)
UTC time zone
UTC - 4
Legal system
Legislation based on English Common law


Taxes for non-residents in Dominica

Dominica maintains favorable tax laws for foreign investment in the country. It is considered a tax haven and natural and legal persons that do not reside in the country and whose incomes don´t not come from its territory are not obliged to pay tax. Investors who decide to open a bank account in Dominica or register a company will not pay taxes such as rent, corporation taxes, VAT, inheritance, donations and will not suffer the dreaded tax deductions for subsequent years. Investors who decide to invest in Dominica and repatriate the money to their country of residence can save on taxes through double taxation agreements.

Characteristics of Dominican Companies

Types of companies
International Business Company - IBC (equivalent to non-resident offshore companies) Limited, Ltd format (ie, limited liability companies)
Share capital
Minimum paid share capital is 100 USD.
Constitution time
12 days
Taxes
IBC are exempt from all types of taxes if their income does not come from the territory of Dominica.
Directors
1 director minimum. The director can be an individual resident of any country.
Shareholders
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Shares
Registered, without par value and Bearer. The same company can issue several types of shares.
Legal address
IBC must have its legal address on the territory of the country. When the director of the company is a foreigner, a registered resident agent must be appointed, whose function will be to receive communications from governmental authorities.
Privacy
The law recognizes as the offense the disclosure of any type of official information related to the company and its beneficiary except for the information requested by judicial order on the criminal activities of the company. Dominican commercial registry is not public.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
It is required to keep accounting records for IBC, however, the submission of annual accounts or auditing of accounts is not mandatory.

Financial system in Dominica

Financial services
Banks in Dominica are specialized in electronic commerce, payment processing, games and real estate investments. The client may request any type of financial services: current accounts, savings accounts, virtual pos, credit cards, foreign currency accounts, investment accounts in the stock market, credits etc.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Dominica can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Dominican banks do not have any type of deposit coverage.

Automatic information exchange in Dominica 

Dominica has signed the automatic exchange of information treaty that has entered into force on January 1 of 2018 but has not signed a bilateral agreement with any country.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


The treaty of automatic exchange of information does not affect the fiscal status of the country, that is, if the tax laws in Dominica establish that people and non-resident companies pay 0% of taxes, the signing of the treaty will not make it pay taxes in Dominica. The treaty of automatic exchange of information is presenting many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, Mexico is interested in exchanging information with Dominica but Dominica is not interested in reporting information to Mexico, there will be NO information exchange and clients privacy will be protected. Currently, 03-04-2018 Dominica has not signed any bilateral agreement to automatically exchange information. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Dominica

Year 2017
No bilateral agreement has been signed for this year.
Year 2018
No bilateral agreement has been signed for this year.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Dominica, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Dominica reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Dominica

Dominica is one of the best offshore jurisdictions to invest for the following reasons: 

  • No tax obligations.
  • Legal security guaranteed by law. 
  • Privacy. 
  • Jurisdiction specialized in asset protection and tax planning.
  • Good telecommunications infrastructure. 
  • Little bureaucracy when it comes to obtaining financial licenses, companies formation and bank accounts opening
  • There is no restriction by nationality. 
  • Excellent geographical location. 
  • Economically stable financial center.