In March 2019, Parliament of Dominica has adopted a series of new laws, which were also imposed many other independent OECD states, as a global effort to fight against tax evasion and destruction of the financial services sectors of these small independent nations.
The following new laws were adopted:
- Offshore Banking (Amendment) Act, 2019
- International Business Companies (Amendment) Act, 2019
- Fiscal Incentives (Amendment) Act 2019
The adopted amendments to the Acts stipulate the following changes:
- Starting from December 31, 2021, all international business companies (IBCs) registered before December 31, 2018 will be required to pay corporate tax on its worldwide income at the rate of 30%
- Starting from December 31, 2019, all IBCs registered after January 1, 2019 will be required to pay corporate income tax at the rate of 30%
- The laws of March 21, 2019 do not require international business companies to maintain a substantial presence in Dominica
- Currently, the laws do not stipulate the submission of the annual declaration to the Internal Revenue Department (IRD) or to the Registry of Companies
- All offshore banks registered and licensed in Commonwealth of Dominica will be required to pay corporate taxes in the same way as the IBCs mentioned above.
All offshore banks registered and licensed in Commonwealth of Dominica will be required to pay corporate taxes in the same way as the IBCs mentioned above.
The reasons for taxation of IBCs in Dominica
Changes in Dominica legislation are aimed to cooperate with the European Union. In practice, last year the EU excluded from the “black list” such former offshore companies as Barbados, Macao, Panama, the United Arab Emirates, Tunisia and others. It is expected that the same positive decision will be made in relation to Dominica after these amendments to the acts are in force. Dominica will also have to be excluded from the “black list” of the European Union.
Probably by the end of 2019, there will be additional amendments to the acts, which will require an IBC:
- to prepare audited financial statement, regardless of the size of the balance;
- to provide annual reports to the registrar’s office;
- to pay corporate tax at the rate of 30%.
We shall monitor the situation and keep you posted.
Please contact one of our consultants if you have any questions.
