28 July 2022

Understanding Taxes and Tax Residency In Dominica

Dominica offers a direct path to citizenship with the Citizenship by Investment (CBI) program offering individuals and their families the opportunity to gain a reputable passport in exchange for an investment within the country. In addition to being one of the most beautiful islands in the world, Dominica boasts an attractive tax regime as well.

Individuals looking to move their tax residency status to Dominica, can qualify by residing within Dominica for a minimum of 183 days within the fiscal year.

The tax identification number (TIN) can be requested from the Dominica Inland Revenue Department with a local Dominica driver’s license.
The currency used in Dominica is the Easter Caribbean Dollar (XCD).

Taxes in Dominica

Inheritance, Wealth and Capital Gains Tax

Dominica does not impose any taxes on inheritance, wealth or capital gains for residents or non-residents.

Income Tax

Dominica imposes a progressive income tax scale:

Dominica-Income-Tax

Social Contributions

Employees are subject to 6% social security contributions whereas employers are subject to 7% of the employee’s wage.

Gift Tax

Dominica imposes transfer taxes on certain types of gift exchanges.

Withholding Tax

Withholding tax of 15% is imposed on payments to non-residents including dividends, interest and royalties for both individuals and corporations. Dominica does not impose any withholding taxes on payments to citizens or residents.

Corporate Tax

Resident companies are subject to a corporate tax of 25%.

Non-resident companies are tax exempt on all foreign sourced income, however will be subject to taxes on locally sourced income and a withholding tax of 15% is imposed on dividends, interest and royalties for payments to non-resident individuals and companies.

VAT

The standard VAT is 15% with a reduced VAT of 10% for hotel and restaurants and 0% for certain goods and services such as education, medical and food items such as milk and bread.

Stamp Duty

Dominica imposes a stamp duty of 2.5% for the seller and 4% for the buyer. In addition, the buy is required to pay 2.5% for a judicial fee and 1% assurance fee.

Property Tax

Dominica does not imposes property tax however municipalities in Roseau and Canefield impose municipal taxes of 1.27%.
If property owners chose to lease their property, they will be subject to a least state duty of 1%.

Regulatory

CRS requires financial institutions to identify customer tax residencies and report financial accounts held directly or indirectly by foreign tax residents to local tax authorities. It also requires tax authorities (in participating countries) to exchange this information. Dominica currently holds a bilateral agreement with: Australia, Belgium, Canada, Denmark, Faroe Islands, France, Finland, Germany, Greenland, Iceland, Netherlands, New Zealand, Norway, Portugal, Sweden, and the UK. Please refer to OECD´S website for more information on CRS reporting and TIEAS.

Individuals with accounts and other assets in Financial Institutions operating within Dominica, may have their account and asset information reported to the United States Internal Revenue Service (IRS) where that individual meets the criteria of a U.S. Person, and where the account meets the criteria as a Reportable Account under FATCA.

Double Taxation Treaties

Dominica has signed double taxation with other CARICOM member countries.

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