Offshore Legislation in Dominica

Dominica is an independent country which has been self governed since 1978. The country’s main source of income is agriculture and more recently the tourism industry has contributed greatly to the country’s revenue. In order to generate revenues the government of Dominica in 1996 passed the International Business Companies Act which since then has been revised many times to enforce the competitive nature of International Business Corporations in Dominica. Other legislation passed includes the International Exempt Trust Act and the International Exempt Insurance Act. Revenue gained is used for the renovation of existing infrastructure such as school and hospitals and the construction of new ones.

The Dominica Offshore Banking legislation was passed in 1996 and governs the set up and functioning of Offshore Banks on the island. According to the legislation only licensed financial institutions can provide offshore banking services in Dominica. Applications for banking license are made offshore service providers. The legislation stipulates many factors that must be considered before a license can be granted. These include:

  • Financial reputation and good standing of the applicant
  • International Business record
  • Financial net worth in excess of one million United States Dollars.
  • Character and good standing of all directors
  • Verifiable records for up to three years before the date of application

    The Dominica Offshore Banking legislation requires that any company wishing to register in Dominica have the following:

  • A representative office on the island of Dominica

  • Must be represented by a licensed and registered local agent
  • Capital of US$ 1,000,000
  • Maintain an accounting system
  • Has provisions against loans defaulters, devaluation of currency and deposit loans

The International Business Companies (IBC) act of 1996 regulates the registration of International Business Companies in Dominica. According to the Dominica offshore legislation an IBC wishing to register in Dominica must do so through a local registered agent who maintains a local registered office. A minimum of one director and one shareholder is necessary. The shareholder and director can be the same person. Shareholders meetings can be kept in any part of the world. The company cannot be registered if the name has phrases which link it to the Government of Dominica. Under this legislation International Business Corporations are guaranteed a minimum 20 year period of no taxation and that the true owners and directors of the Corporation will be granted full privacy. According to the act renewal fees must be paid upon the anniversary of the registration of the company.

The citizenship program in Dominica began in the 1990’s as a means of attracting investors to the country. The basic principle was that an investor would qualify for citizenship once and investment of a certain amount had been made. This was initially known as the Economic Citizenship Programme and now comes under the name of Citizenship by Investment since the addition of a real estate element. There are a series of forms that applicants for dual citizenship are required to complete. Agents are designated to ensure that dual nationality applicants are properly guided and submit proper, complete documentation. Agents for Dominica citizenship are licensed by the government of Dominica and collaborate with the necessary government agencies who process citizenship program applications.

The International Exempt Trust Act was passed in 1997. This piece of legislation provides for the registration of non charitable trusts, international trusts and spendthrift trusts. The trusts registered in Dominica are governed by the laws of the country. Each trust has to appoint a protector and the minimum number of trustees required is one. Charitable trusts are afforded four trustees. According to the legislation Trusts can be charitable as along as it is beneficial to a community in or outside of Dominica. Information regarding beneficiaries and administration of a trust can only be divulged with the consent of the trustees. All trusts are exempted from all income taxes, inheritance taxes, capital gains and stamp duties.

The International Exempt Insurance Act was passed in 1997. The legislation allows for the registration of offshore insurance companies whose gains and risks are accumulated outside of Dominica and whose earnings are payable to persons outside of Dominica. The registering company must appoint a local resident representative. Exempt Insurance companies registered in Dominica are exempted from all income tax, capital gains tax on the profits of the company. Insurance Businesses for all of the following classes are registered:

  • Property Insurance
  • Accident and Health Insurance
  • Motor vehicle Insurance
  • Product and Professional Liability
  • Marine, Aviation and Transit Insurance
  • Employer’s liability

The exempt Insurance Company can only engage in the class of insurance specified in its license. The company must possess a minimum of US$100,000 in paid up capital.

The various laws and amendments which have been passed since 1996 regarding the offshore sector have been done with the intentions of providing confidentiality and privacy whilst at the same time maintaining the integrity of Dominica as an offshore jurisdiction attracting offshore investors.