The country's official currency, the East Caribbean dollar (EC$), is used to calculate taxes. Its rate is pegged to the US dollar: $1 is equal to EC$2.7.
Is an investor with Dominica citizenship obliged to pay taxes in the country?
The taxation of individuals in Dominica depends on the status of the taxpayer. They can be tax residents or non-residents of the country.
Non-residents are to pay taxes in Dominica if they receive income from sources in the country, e.g., rent the property out.
Tax residents pay income tax in Dominica on all income received in the country and abroad.
After receiving a passport, an investor does not automatically become a Dominica tax resident. A person gets the status of a tax resident only if they live in the country for at least 183 days a year. Participants in the Dominica citizenship by investment program are not required to live in the country before or after obtaining a passport.
Personal income tax in Dominica
Dominica has a progressive income tax scale:
- 15% on the first EC$20,000 ($7,400) of income;
- 25% on the next EC$30,000 ($11,100) of income;
- 35% on the rest of the income.
The tax is paid on any income earned by a taxpayer: salaries, business income of a self-employed, dividends, renting yield. The exception is income from the sale of real estate: it is not subject to income tax or capital gains tax.
Taxpayers are entitled to tax deductions, which are reductions in the amount on which tax is levied. Deductions are standard and general. A taxpayer can receive several deductions at once: they are added up, subtracted from income, and income tax is levied on the remaining amount.
The standard deductions apply to:
- bank interest on a mortgage — up to EC$25,000 ($9,260);
- donations to funds from the state list;
- payments for university education — up to EC$5,000 ($1,852) per student.
The general deduction for income-related expenses:
- for rental yield: utility bills, property renovation costs, municipal taxes and fees paid by the owner, payments for services on tax returns preparation;
- for self-employed: expenses on tools and supplies, rental of premises, services on tax returns preparation.
The difference in income taxation for tax residents and non-residents of Dominica
Dominica tax residents pay income tax on all income, including global ones. However, non-residents pay taxes only on income earned in Dominica.
Tax residents are entitled to a standard tax deduction of EC$30,000 ($11,100). There are no additional conditions for receiving the deduction. With an annual income of $50,000, a resident pays $3,900 less than a non-resident due to the standard deduction.
An example of tax calculation for the annual income of $50,000
|Calculated parameters||Tax resident||Non-resident|
|Income with deductions||$38,900||$50,000|
|15% on the first EC$20,000 ($7,400)||$1,110||$1,110|
|25% on the next EC$30,000 ($11,100)||$2,775||$2,775|
|35% on the rest of income||$7,140||$11,025|
|Income tax amount||$11,025||$14,910|
Some income of non-residents is subject to a 15% withholding tax: dividends, interest on deposits, royalties, rental yield. The tax is paid by the one who makes the income payment. Withholding tax is retained from the payment amount, and income tax is not levied.
Double taxation in Dominica
If a Dominica tax resident earns income in another state or a non-resident earns income in Dominica, and there may be a duty to pay taxes at full rates in both states. However, the situation can be avoided with international double taxation treaties (DTTs).
Dominica has DTTs with CARICOM countries:
- Antigua and Barbuda;
- Saint Kitts and Nevis;
- Saint Lucia;
- Saint Vincent and the Grenadines.
The list of countries may change, e.g. if the government of Dominica enters into new agreements with other states.
Dominica doesn’t have DTTs with most countries. If an investor receives the main income from a company in the jurisdiction of Dominica and lives in another state, changing the country of tax residence may reduce the tax burden.
How to pay personal income tax
Income tax on salaries is paid monthly: until the 15th of the month following the reporting one. The employer withholds tax from the salary and transfers it to the tax office.
Dominica tax residents file an annual income tax return if they receive income only from salaries and it does not exceed EC$30,000 ($11,100) per year. The deadline for filing the tax return is the 31st of March of the year following the reporting one. The tax return is submitted through a personal account on the tax service website.
To become a tax resident in Dominica, a person needs to register at the place of residence in the country, get a Tax ID and Tax Code, and live in the country for 183 days a year or more.
Taxes and fees when buying, owning and selling property in Dominica
There is no tax on the sale or purchase of the real estate, property transfer and a single property tax in Dominica.
Purchase of real estate. The buyer contributes to the Insurance Fund and mandatory fees: stamp duty, legal and judicial fees. Additional costs for the real estate buyer are about 10.5% of the transaction amount.
Property ownership. The owner does not pay property tax. But there is a municipal tax of 1.25% of the assessed property value located in the largest cities — Roseau and Canefield. If the owner leases the property, he pays the state duty to conclude a lease agreement: it is about 1% of the rental amount per year.
The seller of real estate pays a stamp duty of 2.5% of the transaction amount. Income from the sale of real estate is not taxed in Dominica.
Taxes and fees for car owners in Dominica
A car buyer must register the vehicle and pass the state technical inspection in Dominica. Registration and inspection of a car cost $52.
Owners of cars and motorcycles pay road tax and license fees annually. The amount of fees depends on the category of vehicle: a car, truck, or motorcycle. The purpose of use also matters: whether it is personal or commercial.
The owner of a personal passenger car pays $200 as road tax and license fees annually.
Fees for vehicle owners in Dominica
|One-time payments when buying a car or motorcycle|
|Registration||EC$100 ($37) for a carEC$60 ($22) for a motorcycle|
|Technical inspection||EC$ 40 ($15)|
|Road tax||EC$50 ($18.5) to EC$150 ($55.5)|
|License fee||EC$120 ($44) to EC$6,010 ($2,226)|
Yacht registration in Dominica: cost and procedure
Yacht owners pay a registration fee and an annual license fee.
The registration fee doesn’t depend on the size and displacement of the yacht and is EC$1,900 ($704). The annual fee from the second year is EC$950 ($352). However, it can be reduced to EC$750 ($278) if paid upfront for three or five years.
The Dominica Maritime Administration is one of the five largest private boat registers globally. Citizens of Dominica or another CARICOM country have the right to register a yacht in the country. Foreigners can register a yacht in Dominica by opening an FME — a Foreign Maritime Entity.
Personal yachts are registered remotely without the visit of an inspector of the Maritime Administration.
List of documents for registering a personal yacht in Dominica:
- An application for registration.
- A document confirming the applicant's authority: the owner's passport or a power of attorney from the owner.
- A certificate of ownership.
- A declaration of non-commercial use.
- A displacement certificate.
- A certificate of suitability of the yacht for the purpose of use.
- An insurance policy.
Taxes and fees for companies in Dominica
Dominica companies pay a 25% corporate tax and contribute 7% of employees’ salaries to social funds. Resident companies pay corporate tax on activities performed both in Dominica and abroad. Non-residents pay the tax only from profits earned in Dominica.
Corporate tax is paid no later than three months after the end of the financial year. The financial year in Dominica ends on the 30th of June. The accrued tax can be paid in three quarterly instalments: 25% — 35% — 40%.
Some income of non-resident companies is subject to a 15% withholding tax, like for individuals: dividends, interest on deposits, royalties, rental yield. However, when calculating corporate tax, these types of income are not taken into account.
In two weeks, an international business company (IBC) is registered in Dominica remotely. Registration costs about $2,100, and the minimum annual cost of maintaining a company is about $1,400.
Value-added tax in Dominica
The value-added tax (VAT) is levied on the sale of goods and services in Dominica. The standard VAT rate is 15%. However, there is a reduced rate of 10% for hotels and diving companies.
Some goods have zero VAT. These include goods for export, medical supplies and medications, and basic food like rice, milk, sugar, and flour. In addition, VAT is not charged on the sale of real estate, rent, or financial services.
VAT rates in Dominica
|Taxed category||VAT rate|
|Any goods and services||15%|
|Accommodation in hotels and diving||10%|
|Exported goods and services Medical supplies and medications Basic food: rice, milk, sugar, flour||0%|
|Sale of property Rental payments Financial services||No VAT|
VAT can be paid by both companies and individuals, such as self-employed people. The taxpayer is obliged to register as a VAT payer and pay tax if the annual revenue is above the threshold. Goods on which VAT is not taken are excluded from revenue, but goods with zero VAT are included.
The minimum revenue to pay VAT:
- for any goods and services — EC$250,000 ($92,592);
- for accommodation in hotels and diving — EC$62,500 ($23,148).
VAT is paid monthly. The due date is the 20th of the month, following the reporting one.
Exchange of tax information with other countries
Dominica exchanges tax information with other countries but does not disclose the names of the owners of companies registered in the country.
Dominica has joined the Convention on Mutual Administrative Assistance in Tax Matters. Under the Convention, countries provide each other with assistance in:
- exchange of tax information;
- conducting simultaneous tax audits and participation in tax audits abroad;
- assistance in tax collection, including the adoption of interim measures concerning the taxpayer's property abroad;
- document exchange.
Members of the Convention exchange information automatically under the OECD Common Reporting Standards, CRS. As of March 2022, CRS unites 144 countries, including the EU states, the UK and the USA.
How to get Dominica citizenship
The Dominica passport can be obtained by investment. The country’s CBI program offers two investment options:
- $100,000+ as a non-refundable contribution to the Economy Diversification Fund, EDF;
- $200,000+ as a purchase of real estate from the government list.
The investment amount depends on the investor's family composition. Citizenship can be obtained by:
- a spouse;
- children under 30;
- parents of the investor or their spouse;
- unmarried siblings under 25 of the investor or their spouse.
Other than spouses and minor children, family members must be financially dependent on the investor.
The investor also pays Due Diligence, processing and passport fees.
Dominica citizenship costs for a family of 4: an investor, a spouse, children aged 7 and 19
|Contribution to the state fund||Purchase of real estate|
|Due Diligence fee||$15,500||$15,500|
The Dominica passport is issued within 2—6 months. The most lengthy procedure is a government Due Diligence check. The approval of a citizenship application depends on Due Diligence results.
A licensed agent can only apply for Dominica citizenship by investment: it is a requirement under the CBI program. The passport is obtained remotely; it is unnecessary to come to Dominica.
Frequently asked questions
Individuals pay income tax on a progressive scale from 15 to 35%, depending on their annual income. The effective tax rate on income of $50,000 per year is 30%.
Tax residents of Dominica live in the country for more than 183 days a year. They are entitled to a standard tax deduction that reduces the effective rate by 8 percentage points to 22%.
Non-residents pay an indirect withholding tax of 15% instead of income tax on dividends, interest on deposits, rental yield, and royalties.
There is no capital gains tax on the sale of real estate, property or inheritance taxes in Dominica.
Companies pay corporate tax of 25% and 7% of the salary budget to the social fund. In addition, resident companies pay tax on all profits, regardless of where they have been earned — in Dominica or abroad.
Non-resident companies pay an indirect withholding tax of 15% instead of corporate tax on dividends, interest on deposits, rental income, and royalties.
Dominica has a progressive income tax scale from 15 to 35%:
- 15% on the first EC$20,000 ($7,400) of income;
- 25% on the next EC$30,000 ($11,100) of income;
- 35% on the rest of the income.
The taxpayer can receive deductions from taxable income:
- the standard deduction for residents;
- on bank interest on mortgage;
- on donations to funds from the government list;
- on payments for university education.
Dominica tax residents pay taxes on all income, including the global one. Non-residents pay taxes only on income earned in Dominica.
Non-residents pay taxes at the source instead of income tax on dividends, interest on deposits, rent, and royalties.
Non-residents can re-pay the tax on Dominican income in their country of residence. Dominica has entered into a double tax treaty only with CARICOM countries. If the investor’s main income is the dividends from the company in Dominica, then Dominica’s tax residency can reduce the tax burden.