Dominica

One of the larger but less affluent islands in the Caribbean's Windward chain, the Commonwealth of Dominica, a former British colony, has entered the tax haven world with passage in 1996 of acts enabling formation of International Business Companies (IBCs) and banking and trust companies. The International Exempt Trust Act was added in 1997. Dominica is also trying to persuade foreign investors to make a sizable commitment in cash or bonds by granting them naturalized citizenship and Dominican passports. 

To prevent rogue banks and shady entrepreneurs from infesting its financial system, the Government enforces extremely close examination of all applicants and empowers the Minister of Finance, Industry and Planning, the Financial Secretary and Attorney General to conduct thorough investigations using search warrants when criminal activity is suspected. 

Dominica is now in the process of drafting exempt insurance, flag-of-convenience, and free trade zone legislation to diversify its financial services. 

Tax Exemptions 

Under the 1996 International Business Companies Act amended in March of 1997, an IBC automatically receives a 20-year exemption from all local taxes (including profit and capital gains), duties and similar charges. Bank licensees conducting their banking business exclusively in currencies other than East Caribbean dollars are classified as "offshore" by the Offshore Banking Act of 1996 and are thereby exempt from all taxes and duties connected with their offshore banking business in Dominica. In addition, offshore banks can undertake some domestic business with Government approval. Trust companies are also exempt from Dominica taxation on offshore trust business carried on from within Dominica. If a trust company requires services of specially qualified persons to do its offshore business and it cannot acquire those services in Dominica or elsewhere without offering business and it cannot acquire those services in Dominica or elsewhere without offering special benefits, the Minister can grant these employees: (1) exemption from specified Dominican taxes; (2) payment in a foreign currency into a trust account without taxation on interest; and (3) payment in another currency than East Caribbean dollars. The International Exempt Trust Act, 1997 grants exemption from all income tax and from stamp duty on all instruments relating to trust property or to transactions conducted by the trustee on behalf of the trusts. 

Domestic corporations and other types of entities not qualifying for exempt company status under the International Business Companies Act, Offshore Banking Act or pending additional acts permitting tax exemption from offshore insurance, shipping, free trade zone or trust legislation are subject to the normal corporate tax rate of 40%. However, tax holidays are granted enterprises according to the category in which they are classified. The tax holidays range from 15 years for Group I Category (50% or more value added) to 12 years for Group II Category (25% to 50% value added), 10 years for Group III (10% to 25% value added) and 15 years for Enclave and Capital Intensive Categories. Individuals are subject to income tax at rates ranging from 10% to 50%, with a 10% deduction allowed on earned income up to a fixed threshold and personal allowances of $333 for the taxpayer, $259 for a spouse and from $148 to £304 for child allowances. Withholding taxes are 30% for independent services and management charges, 20% on royalties, 10% on rents and pensions, 15% for dividends and other distributions of companies and 25% on interest, discounts, annuities and alimony or other payments. Estate taxes graduated from 0.5% to 5% of the value of the estate while all land transfers are taxes 1%. Residents of Dominica pay a 2.5% levy for the Memorandum of Transfer and non-residents are charged 5%. There also is a Land Value Appreciation Tax of 10% where the Government is the second purchaser and 5% when a private individual is the second purchaser. A Property Transfer Tax applies on the sale or voluntary disposition of any property except stock and debentures, with a 4% rate in effect on the value of the transfer, of which 2% is paid each by transferor and transferee. 

Under a revision of the Economic Citizen Program (ECP) introduced in May, 1996, the Government offers investors two options for gaining naturalized Dominican citizenship. So-called "economic citizens" enjoy the following benefits: (1) they do not pay taxes in Dominica except on income earned in Dominica; (2) after being naturalized, they can obtain passports valid for ten years for themselves and family members; (3) they can buy one acre of land for private purposes and three acres for business purposes without seeking Government consent; and (4) they can vote in general elections after a five-year residence in Dominica. 

One investment option is to purchase 15-year redeemable bonds with a nominal value of $75,000 United States dollars at 2% simple interest. Non-refundable application fees amount to $15,000 for the applicant and children between 18 and 25 years of age, $10,000 for a spouse and $10.000 for each minor under 18 years of age. 

The other investment option is to make a direct cash contribution of $50,000, which qualifies the applicant, spouse and two children under 18 for economic citizenship. An additional $10,000 cash contribution is required for every additional child between 18 to 25 years of age. 

An application package must include a letter of application addressed to the Minister of Legal Affairs, Immigration and Labor along with supporting documentation, including police certificate references, health certificate, character references including one from a bank, and data on existing passports. The package should be addressed to the International Business Unit in the Ministry of Finance, Industry and Planning. After receiving a "comfort letter" from the Minister, the investment should be deposited into a specified account in the Royal Bank of Canada's Government of Dominica Re-engineered Economic Citizenship Program Account #1003698. Required personal interviews with Citizen Committee members are conducted in Dominica or outside the country at the applicant's expense. If the applicant wins final approval, he or she then signs and Oaths of Allegiance before a Notary Public, Justice of Peace, or Commissioner of Oaths and each applicant pays a registration fee of 1,500 East Caribbean dollars ($ 555.00). After a Certificate of Naturalization is issued, the applicant or his agent is responsible for securing passports, which are good for ten years. A person interviewed in Dominica is supposed to be able to get a passport in four to five days, while if an interview is arranged outside the country the wait is one month. 

The International Exempt Trust Act, 1997 grants exemption from all income tax and from stamp duty on all instruments relating to trust property or to transactions conducted by the trustee on behalf of the trusts. The law is silent about estate, inheritance, succession, gift, and capital appreciation taxation. International trusts are also exempt from exchange controls. Criteria for being beneficiaries are at all times non-resident; (2) trust property does not include any Dominica land; and (3) at least one trustee is corporation incorporated under the 1994 Companies Act or 1996 IBC Act, or a licensed bank or trust company doing business in Dominica. Beneficiaries can include the settlor, protector and trustees. Assistance in organizing and servicing and exempt trust, as well as an exempt company or other Dominica entity, is available from the International Business Unit, Ministry of Finance, Industry and Planning, Government Headquarters, Kennedy Avenue, Roseau, Commonwealth of Dominica, West Indies; tel.: 767 448 2401; fax: 767 448 0406. 

The maximum duration of an international trust is 100 years from the date of its creation, except that a charitable trust and purpose trust are not tied down to this limitation. Trust terms may direct or authorize accumulation of all or part of trust income during the trust's lifetime. 

Modern asset protection provisions spelled out in the Act's Part 5, Section 22 on Powers of the Court and Part 9 entitled Miscellaneous offer standard protection against another jurisdiction's forced heir ship and community property laws, except when matrimonial property was designated as community property immediately before it was disposed by a husband and wife to the trust. A registered international trust is enforceable and valid even though invalid according to the law of the settlor's domicile and residence or place of current incorporation. 

A creditor brining an action against a trust must deposit $25,000 in cash as security for court costs if he loses his case. To win a victory in court, the burden is on the creditor to prove fraudulent disposition, including evidence that the creation of a trust or disposition to a trust rendered the settlor insolvent. If the fair market value of the settlor's owns property immediately after a disposition to the trust exceeded the value of the creditor's claim, then the trust is exonerated from the charge of fraudulent disposition. Roadblocks to a successful suit are strengthened by regulations requiring action against the trust to be taken within two years after the creditor's cause of action accrued and within one year after the disposition to the trust took place. An international trust is declared invalid only to the extent necessary to satisfy the obligation of a creditor who is also entitled to costs allowed by the High Court. Should an entire trust be invalidated and a beneficiary has not acted in bad faith, the beneficiary has first rights to the trust property in an amount equal to his defense costs. 

All international trusts must be registered with the Registrar under a simple procedure. An application for entry on the register should be accompanied by: (1) the prescribed fee; (2) a notice of the name and registered office of the trust; and (3) a certificate from a barrister or solicitor certifying that the trust upon registration will be an international trust. A certificate of registration is valid for one year and must be renewed annually by repeating the original procedure. The trust's obligatory registered office has to be the office of the trust company or of a corporation, which is a trustee. 

Spendthrift (also known as protective), charitable and purpose trusts can be established. As is customary in many other jurisdictions, a charitable trust can be established for purposes beneficial to the community, such as relief of poverty, advancement of education and religion, protection of the environment, and the advancement of human rights and fundamental freedom, and other beneficial purposes. A purpose is not regarded as charitable unless it benefits either the whole or a substantial section of the community, either within Dominica or outside it. 

An international trust may be created for a non-charitable purpose provided that the purpose is specific, reasonable, and capable of fulfillment and is not immoral, illegal, or contrary to Government policy. A protector who can enforce the trust and a successor protector must be appointed. 

A protector is optional for other international trusts. In addition to having the power to remove a trustee and to appoint a new or additional trustee, the protector owes a fiduciary duty to the trust beneficiaries or to the purpose for which the trust is created. Other powers can be conferred upon the protector by the terms of the trust. Although the protector may also be a settlor, trustee, or beneficiary of the trust, in the exercise of the protector's function this official shall not be counted or regarded as a trustee. 

Additional protection for beneficiaries is provided by the Attorney General under the 1996 Offshore Banking Act. If the Attorney General suspects that an offense against this act has been or is being committed, he may take action to preserve assets of trust beneficiaries. 

The proper law of an international trust shall be: (1) the law expressed by the trust terms or intended by the settlor to be the proper law; (2) if no such law is expressed or intended, the law with which the international trust has its closest connection at the time of its creation; (3) if the two previous conditions do not apply, then the proper law is the law of Dominica. A trust's terms may provide for its sever able aspects (particularly those relating to trust administration) to be governed by a different law than the trust's proper law. Also, the law governing a sever able aspect may be changed from the law of Dominica to the law of another jurisdiction, and vice versa. The court has jurisdiction over an international trust when the proper law of the trust is the law of Dominica; a trustee of the trust is resident in Dominica; or any part of the trust's administration is carried on in Dominica. 

 The Minister of Finance has the power to prevent registration of an international trust and to direct it to cease carrying on its business. This official can also issue regulations for the act and sets fees. 

Authorized trustee investments include: (1) Government of Dominica securities; (2) securities issued by or having guaranteed payment of interest by Governments of the United Kingdom, United States, and Commonwealth States, the African Development Bank, Asian Development Bank, Caribbean Development Bank, European Union, European Investment Bank, International Finance Corporation, International Monetary Bank, and International Bank for Reconstruction and Development; (3) deposits in a licensed bank; and (4) shares and debentures quoted on a stock exchange. 

Dominica has a Fiscal Incentives Act and Hotels Aid Ordinance granting tax holidays, exemption from import duty and consumption tax, and accelerated depreciation allowance to qualifying investments. Under the Caribbean Common Market (CARICOM) Fiscal Incentives Act (No. 18 of 1975), Dominica qualifies for the incentives that are available to companies registered in Dominica if they are engaged in (or about to engage in) the manufacture of an approved product, thus granting them the classification of "approved enterprise." Below are some of the most notable advantages allowed an "approved enterprise" in the CARICOM countries: 

1. An approved enterprise is entitled to relief from income tax on the earnings and profits from the sale of an approved product from the date of production for at tax holiday period of 10, 12 or 15 years according to the percentage of local value added (15 years if 50% or more is added fro Group I enterprises, 12 years if at least 25% is added for Group II enterprises and 10 years from 10 to 25% for group III enterprises). For companies producing exclusively for export to countries outside the Caribbean Common Market and capital-intensive enterprises (enterprises whose capital investment is not less than 25,000,000 East Caribbean dollars ($9,432,5000.)) the tax holiday period is 15 years. Normal annual depreciation allowances for wear and tear are allowed and any losses are taken into account in computing profits.
2. An allowance not exceeding 20% of the capital expenditures incurred for plant, machinery, and equipment may be taken after the end of the tax holiday period and any unabsorbed losses incurred in the period may be carried forward and set against chargeable profits of the following five years.
3. A tax credit may be granted following a tax holiday but it may be subject to certain exceptions on the profits from the export of approved products to countries other than members of the Caribbean Common Market. Credit may also be given for five years after the tax holiday in the case of exports to Guyana, Jamaica, Trinidad and Tobago, or for five years from July 4, 1973 with respect to exports to the above countries by an enterprise, which has not had a tax holiday. Relief is granted where the export profits amount to 10% or more of profit from the approved product and ranges from 25% to %0% of the tax liability when the export profits are from 61 to 100% of total profits. The 25% rebate applies when export profits are between 10% and 20% of total profits, 35% between 21% and 40% and 45% between 41% and 60% of total profits.
4. Dividends and other profit distributions arising from profits accruing during the tax holiday period from approved products are exempt from tax where the shareholder is resident in a Caribbean Common Market state. When the shareholder is not a resident of CARICOM, the exemption is limited to an amount of the tax, which exceeds his tax liability on that part of the income in his country of residence. However, it should be noted that interest paid by an "approved enterprise" on loan capital in any form is not exempt from income tax.
5. Small business profits are taxed at a reduced rate of 25%.

The Fiscal Incentives Act, 1975 also provides that the four types of enterprises (Groups I, II, III or Enclave Enterprise, depending upon the amount of local value added and realized from the sale of an approved product) are entitled to relief from payment of income tax on the profits for the period of the tax holiday granted. An approved enterprise also may be granted relief from customs duties on imported goods. Following is a breakdown of the five groups:

Computation of Local Value Added

The definition of local value added under the CARICOM fiscal incentives provisions is the sales value of the finished or immediate goods minus:

1. Cost of imported raw materials, components, parts, fuel and services;
2. Wages and salaries paid to foreign nationals;
3. Profits and dividends distributed to non-residents;
4. Interest, management charges and other income payments to non-residents (including companies); and
5. Depreciation of imports of plant, machinery and equipment.

Dominica is currently developing the area near the Canefield Airstrip as an industrial estate. The Industrial Development Corporation near the Canefield Airstrip provides factory shells for enclave and other types of industries. Factory space of 40,000 square feet is available for rental at the rage of $1 per square foot per annum. Industrial Estates also are near the Melville Hall airport and the Portsmouth jetty. Alternatively, investors may purchase or lease land and arrange to have their factories built.

Employers are permitted to pay 5% of the minimum wage during the initial start-up training period of no longer than six months.

Three years after gaining independence from Britain in 1978, Dominica was disrupted by two unsuccessful political coups. Since then it has experienced good political stability. A predominantly agricultural economy accounts for 22% of gross domestic product. Bananas is the chief commercial crop and export, followed by citrus fruits and coconut oil. The financial sector accounts for 12.3% of GDP; manufacturing, 7%; and tourism, only 2.6% but developing rapidly as more resorts open on the island. Dominica's principal tourist attraction is the Morne Trois National Park in the interior that is popular for the many species of birds there as well as restaurants, recreational equipment rentals, natural hot and cold mineral spring spas, and ocean marinas.

Dominica's volcanic soil provides a rich but porous base suitable for growing a wide range of agricultural produce. More than 100,000 acres of land are under cultivation by approximately 9,000 farmers with 75% occupying 10 acres or less. Among the many opportunities for foreign investors are canning/packaging facilities to process fruits such as grapefruit, oranges, mangos and guavas and production of essential oils, flowers and plants. Agro-based investments qualify for incentives under the CARICOM Fiscal Incentives Act.

With a per capita income of $2,800, Dominica is one of the less affluent Caribbean countries. The country is coping with an $80,000,000 a year trade deficit, as imports amount to $130,000,000 while exports are only $55,000,000. Foreign debt is almost $103 million. On the bright side, Dominica enjoys a real growth rate of 3.7% and a nominal growth rate of 5.3%, while inflation is holding at 1.7%.

A volcanic island in the Eastern Caribbean having an area of 298 square miles, Dominica is situated between Guadeloupe and Martinique in the Windward Islands of the Lesser Antilles. Forests cover more than 60% of the island, which has 365 rivers of which only the Layou and Indian Rivers are navigable. Annual rainfall ranges from 47 inches on the eastern coast to 400 inches in the rain forests in the center of the island. Hot springs and a boiling lake have a potential for being developed into geo-thermal energy. Roseau, overlooking Woodbridge Bay on the southwestern coast, is the capital and chief port. It has a forty-foot draught and can handle 20 to 40 foot containers serviced by roll on/roll off facilities. Cruise ships dock here and a Portsmouth in the northwest on Fort Rupert Bay.

Air service to Dominica from North America is provided by American Airlines, BWIA and Air Canada through Puerto Rico and Antigua, with final flights on American Eagle or LIAT. From Europe passengers can use British Airways and Lufthansa to fly to Antigua or Air France to Martinique and Guadeloupe for connecting flights to Dominica. Larger aircraft arriving from other countries land at Marigot, the third largest settlement, on the northeastern coast, where Melville Hall Airport has a 4,800 foot runway. Smaller planes use Canefield Airport outside Roseau.

Good telephone service is provided by Telecommunications of Dominica, owned by Cable and Wireless of England and the Government of Dominica. While in Dominica it is possible to dial directly to any part of the world. Cellular telephone and fax service are available.

The financial sector in Dominica consists of four foreign commercial banks, Royal Bank of Nova Scotia, Bank of Canada, Barclays, and Banque Francaise Commercial; one publicly owned national bank, the National Commercial Bank of Dominica, and four offshore banks.

Dominica is one of nine members of the Eastern Caribbean Central Bank (ECCB). Its conservative policy of building up exchange cover for the Eastern Caribbean dollar to a much greater extent than required by its basic Agreement has led to monetary stability for member countries and made the EC dollar one of the strongest currencies in the region.

An unusual feature of Dominica's banking structure is that an applicant may obtain both an onshore and offshore license but must operate and report on them separately. In addition, an offshore bank can provide loan financing to local entrepreneurs for earmarked projects approved on a case-by-case basis with the Ministry of Finance, Industry and Planning. Under the Offshore Banking Act of 1996 amended in 1997, offshore licensees are limited to conducting banking business exclusively in currencies other than East Caribbean dollars. Licensees are exempt from all taxes and duties connected with their offshore banking business in Dominica. Trust companies formed under the act are exempt from Dominican taxation on offshore trust business carried on from within Dominica.

Minimum required paid-up capital for an offshore bank is $1,000,000 or its equivalent in convertible currency or in readily negotiable instruments, while for an onshore bank regulated by the Banking Act of 1991, it is 5,000,000 East Caribbean dollars ($1,850,000). Trust companies licensed under the Act are either a company incorporated by special Act or a company registered under the Companies Ordinance having share capital of $250,000, of which $125,000 has been paid up in cash. Annual license fees are as follows: offshore banking license, $48,000; onshore/offshore banking, $20,000; general trust, $4,000; and restricted trust, $100. In the year of incorporation, the annual license is charged on a prorated basis depending upon the month in which the license is issued.

No application fee is charged. Applicants are advised to confer with Government officials before submitting their formal application for an offshore trust, general trust or restricted trust to the International Business Unit, Ministry of Finance, Industry and Planning, Government Headquarters, Roseau. Documents should be accompanied by a Memorandum and Articles of Association either notarized for a company incorporated in Dominica or certified and authorized for a foreign company (branch). The law allows companies to be either public or private, with the latter restricting share transfer, limiting the number of members to 50 exclusive of employees and ex-employees, and prohibiting and invitation to the public to buy shares or debentures.

The financial net worth of each of the company's associates or affiliates must be more than $1,000,000 in cash or readily negotiable instruments independently confirmed to the Minister's satisfaction. Shareholders, directors, and senior officials must supply satisfaction. Shareholders, directors, and senior officials must supply satisfactory references regarding character (i.e. absence of a criminal record) and evidence of sound and practical experience in international banking or trust business supplied by an internationally reputable bank or trust company. Audited and certified accounts of any holding or parent companies for the past three years must also be furnished along with records of other previous financial transactions.

Every company must maintain a representative office in Dominica and appoint an approved authorized agent and alternate authorized agent. Land can be leased or purchased for office space. The company must maintain either $500,000 in permanent capital or 5% of deposit liabilities unless another percentage is fixed by the Minister. Liquidity is regarded as adequate if it amounts to at least 12% of total assets or another amount if determined by the Minister and consists of cash or marketable securities including Treasury Bills or other convertible or time deposits having less than 12 month maturity in an acceptable international bank.

After its first year of operation, every licensed financial institution must annually transfer to a reserve fund 25% of profits until the reserve fund equals paid-up capital. Dividends cannot be distributed until all capitalized expenditure (including losses, preliminary and organization expenses, commissions on selling shares, and brokerage) not represented by tangible assets has been completely written off.

The Government has considerable power to intervene in a licensee's affairs. Regulation and supervision of financial institutions is carried out by:

1. The Minister of Finance, who after obtaining a Court order, has the right to initiate examination of a licensee (sometimes at the licensee's expense) to determine whether the institution is financially sound and complying with the Act. A Magistrate may grant a search warrant authorizing inspection of the company's premises, vehicles, vessels and aircraft and may authorize seizure of records, cash and securities.
2. The Financial Secretary, who is empowered to examine all of a licensee's records, cash and securities. Should he suspect criminal activity, upon an order of the Magistrate he may obtain the name and title of a depositor or settlor's account, name and title of a trust, and other necessary information. An individual who fails to comply with Government requests is subject to a $5,000 fine and six months imprisonment.
3. The Attorney General, if suspicious that an offense against the act has been or is being committed, may take action to preserve assets of trust beneficiaries, depositors, or creditors. Should the Attorney General be asked for information or assistance in connection mutual assistance or criminal matters, the Attorney General has the right to give a licensee notice to furnish the information by a stated time.

Audited financial statements, either composed in English or accompanied by a certified translation, must be submitted to the Financial Secretary and published in the Dominica Official Gazette. Quarterly reports of assets and liabilities meeting similar language requirements must also be filed with the Financial Secretary.

The unit of currency is the Eastern Caribbean dollar divided into 100 cents. Currency notes are issued by the East Caribbean Currency Authority in East Caribbean denominations of $100, $20, $5, and $1. The East Caribbean dollar is officially linked to the United States dollar, and is quoted at $0.37 United States cents equal to one East Caribbean dollar.

The Exchange Control Ordinance does not apply to IBCs. Exchange regulations were liberalized in March, 1966 in Dominica and other ECCB countries. There are no restrictions on movement of funds outside of Dominica by offshore banks and other financial institutions. Dominica maintains a very open trade and payments system, except for a few items on the "negative list" of imports, which require an import license, in keeping with Common Market (CARICOM) commitments.

Funds may be repatriated, generally up to the percentage of the foreign participation in the company. Repatriation of profits is permitted provided that all local tax liabilities have been settled. Foreign exchange bank accounts are allowed upon approval of the applicant must have a source of foreign exchange income. Foreign nationals who retire in Dominica are exempt from Dominican taxation on income earned abroad. Foreigners may purchase land if the non-resident brings funds into Dominica. The Government of Dominica guarantees free convertibility of exchange. However, Dominica does not have a bilateral treaty with the United States providing investment guarantees against nationalization or expropriation, war, revolution or unrest, and inconvertibility of exchange through the Overseas Private Investment Corporation of the United States.

Dominica is a former British dependency and English is the official language. The literacy rate is 95%.

Under the 1996 International Business Companies Act amended In March of 1997, an International Business Company (IBC) is defined as a company that does not: (1) accept banking deposits and insurance contracts; (2) engage in trust business; (3) own property in Dominica except for an office used to communicate with members (4) maintain books; and (5) carry on business in Dominica with persons domiciled or resident in Dominica. Every IBC must be formed with liability limited by share capital.

The Government has appointed an additional Registrar to step up the registration procedure and is establishing an Internet registry, open on a 24- hour basis every day of the year that pledges to register an IBC within an hour. Every applicant wishing to take advantage of Dominica's 20-year exemption from taxes and duties must appoint a registered agent from a list supplied by the Registrar of International Companies and establish a registered office in Roseau. As stated in Article IX of the law, the registration fee is $450, while the annual license fee is $500.

Although an IBC domiciled in Dominica is forbidden to engage in business with Dominica residents, it is permitted to:

1. Make or maintain deposits with someone carrying on business in Dominica;
2. Maintain professional relationships with lawyers, accountants, bookkeepers, trust and administration companies, and investment or financial advisers;
3. Hold meetings of its directors or members in Dominica;
4. Hold shares, debts obligations or other securities in a company incorporated under the IBC Act, or Companies Act, or a company owned by a Dominica resident.

To obtain a license, offshore investors submit to the Registrar a Memorandum of Association and Articles of Association. The Memorandum must include the company's name, address of its registered office and registered agent, its objects or purposes, the currency in which shares will be issued, and detailed information about the shares. The company name must include the words "Limited", "Corporation", "Incorporated", "Sociedad Anonima", "Society Anonyme" or their abbreviations. Names can be reserved for 90 days upon payment of a $25 fee.

Shareholders can be individuals or corporations. No distinction is made in the law between private and public companies and there are no regulations for prospectuses. Shares must be fully paid in and can be issued in any currency, be paid for in kind, and be either par or no par. Dominica permits a wide variety of shares, including registered, bearer, common, preferred, redeemable, Treasury, fractional, voting, non-voting, limited voting, and having limited participation in assets.

Directors can transfer any of the IBC's assets in trust to one or more trustees, another company, an unincorporated association, a partnership or foundation. In making the transfer, directors may provide that the company may be beneficiaries, members, certificate holders or partners of any other similar interest.

Dividends can be paid only out of surplus. No dividends can be paid unless (1) the company will be able to satisfy its liabilities and (2) assets will not be less than liabilities except for deferred taxes.

Annual members' meetings are not required by law and participation can be telephone or other electronic means or by written consent. Directors are obliged to convene a meeting if they receive a written request from members holding more than 50% of outstanding voting shares. Proxy votes are allowed. All shares vote as one class and each whole share has one vote. A quorum consists of one-third of shareholders owning voting rights. Share registers can be examined only by registered shareholders or under Court order.

Only one director is needed and this director can be a corporation. Meetings can be held inside or outside Dominica and participation can be by telephone or other electronic means. Resolutions can also be passed in writing or by electronic means. Directors can appoint a person to be a company officer or agent.

At its Roseau office, the company must keep a register of shareholders that legally may not include trusts; minutes of members', directors' and committee meetings; resolutions; and accounts and records reflecting the company's financial position. It is not necessary to be audited or file financial accounts with the Government.

Any person connected with an IBC who is convicted of revealing information about it without the company's written authorization or a court order has to pay a $15,000 fine and serve a two-year prison term. If an IBC or one of its directors is convicted of fraud and has benefited from the crime, the Court may confiscate the offender's property, including real estate, up to the amount of illegal profit realized.

A company incorporated under the Companies Act or under the laws of another jurisdiction can arrange to be continued as an IBC by presenting either Articles of Continuation written in English or accompanied by a certified translation if written in another language. The Articles must be approved by a majority of directors or other authorities in charge of the company.

Discovered by Columbus in 1493, Dominica successfully resisted British and French attempts to settle it for centuries. A 1748 Anglo-French treaty left Dominica in the hands of the Carib Indians, but the island became a British possession in 1815 when France was weakened by Napoleon's defeat at Waterloo. Warfare between the British and Caribs caused the virtual extinction of the Indians, who now number only 500 and live on a reservation on the eastern coast of the island. Dominica has progressed from being a Crown Colony in 1898 to Responsible Government in 1956, Associated Statehood with Britain in 1967 and independence in 1978, when it was renamed the Commonwealth of Dominica. The country has a Parliamentary from of Government, headed by a President whose duties are largely ceremonial, while a Prime Minister wields executive power. The Prime Minister appoints ten Cabinet members. Dominica's legislature, the House of Assembly, consists of 32 members, of whom 21 are elected for five-year terms, nine are appointed Senators, one is the Attorney General and one is the Speaker. The United Workers Party has been in power since 1995.

Dominica's legal system is fused, with no separation between solicitors and barristers. At the lowest court level, a Magistrate's Court deals with civil and criminal matters. At the higher level, there is a High Court of Justice, from which appeals can be taken to the Court of Appeal of the Eastern Caribbean Supreme Court, and from there to the Judicial Committee of the Privy Council in London.

Dominica is a member of the Organization of Eastern Caribbean States, Caribbean Common Market, and Association of Caribbean States. It has preferred market access to Canada, CARICOM countries, OECS territories, the European British Commonwealth, Dominica belongs to three regional trade organizations, the Organization of eastern Caribbean States, Caribbean Common Market, and Association of Caribbean States.

Dominica has a work force of 40,000 persons out of a population of 70,000. The unemployment rate is 10%. The minimum wage is $0.75 an hour, while administrative salaries are a minimum of approximately $400 a month. Employers pay a 7% Social Security tax up to a maximum of 280 East Caribbean dollars ($103.70) per month. Labor turnover is 5 to 10%. The Government encourages private companies to engage in training programs by negotiating on a case-by-case basis to trainees' wages, which can be reduced to 75% regular wages, and trainers' salaries. Technical and vocational education is offered at Clifton Dupigny Community College. Employers can become members of the Dominica Employers Federation, which handles negotiations, which handles negotiations with labor unions.

Foreign investors must adhere closely to the Labor Contract, the Labor Standard Act and the Protection of Employment Act. An accord between the unions and the Government requires that a company must be reasonably established before employees become unionized. Dominica has a good labor relations record and there have been few strikes.

Dominica does not have a free trade zone now, but plans to install one as part of its development program.

Dominica permits the invoicing of foreign trade transactions in United States dollars and various other hard currencies. Residents are subject to exchange regulations but are allowed to retain foreign exchange in Dominican bank accounts. There are no restrictions on the amount of foreign exchange that may be brought into Dominica. Non-residents holding external exchange accounts generally may convert them into foreign currency as approval is usually granted. Importers are not required to make prior deposits in local funds while export proceeds must be sold to authorized banks and other authorized exchange dealers.

Dominica has income tax treaties with Canada, the United Kingdom and the United States, the latter as a result of the original 1957 Income Tax Convention between the United Kingdom and the United States as extended to Dominica. A Mutual Assistance Agreement providing exchange of information regarding criminal matters, fraud and money laundering also is in effect between Dominica and the United States. This Agreement signed under the Caribbean Basin Initiative does not relate to tax matters in any way but does allow Dominica to qualify for United States Internal Revenue Code Section 936 funds accumulated in Puerto Rico under tax-free incentives granted United States companies operating in Puerto Rico.

Find the contact names, addresses, numbers and information for local government offices, banks, accountants, company formation services, investment and management companies, advisors, experts, maildrops, real estate agents and other useful local contacts in the THE OFFSHORE MANUAL & DIRECTORY.