Dominica offers an attractive business environment, and understanding the tax obligations is essential for businesses operating on the island. Corporate income tax, VAT, withholding tax, personal income tax, social security contributions, and property tax are among the important taxes businesses should be aware of when operating in Dominica. It is advisable to consult with a tax professional or refer to the official website of the Dominica Inland Revenue Division (IRD) for the most accurate and up-to-date information on tax regulations and requirements.
Corporate Income Tax:
Dominica imposes a corporate income tax on the profits earned by companies operating within its jurisdiction. As of the knowledge cutoff date in September 2021, the corporate income tax rate in Dominica is 30%. This tax is applicable to the worldwide income of resident companies and the locally sourced income of non-resident companies.
Types of Business Taxes in Dominica:
- Value Added Tax (VAT): Dominica introduced a VAT system on February 1, 2006. The standard VAT rate is currently set at 15%. VAT is levied on the supply of goods and services, with exemptions and reduced rates applicable to specific items. VAT registration is mandatory for businesses with an annual turnover exceeding the prescribed threshold.
- Personal Income Tax: Although not directly a business tax, it is worth mentioning that individuals in Dominica are subject to personal income tax. The personal income tax rates are progressive, ranging from 15% to 35% based on income levels.
- Withholding Tax: Dominica levies withholding tax on specific types of payments made to non-residents. This tax is applicable to dividends, interest, royalties, and certain service fees. The withholding tax rates vary depending on the nature of the payment and can range from 0% to 20%.
- Social Security Contributions: Employers and employees in Dominica are required to contribute to the Social Security Fund. These contributions finance various social benefits such as retirement pensions, disability benefits, and healthcare. The rates for social security contributions are determined based on the employee's salary and are subject to certain caps.
- Property Tax: Dominica imposes property tax on real estate owners. The tax is based on the assessed value of the property and the applicable tax rates set by the local authorities. The rates may vary across different regions of the island.
Dominica Inland Revenue Division (IRD) Website:
For detailed and up-to-date information on business taxes in Dominica, it is recommended to visit the official website of the Dominica Inland Revenue Division (IRD). The website provides comprehensive information, downloadable forms, guidelines, and contact details for any tax-related inquiries.
Dominica Inland Revenue Division (IRD) Website: Official Dominica IRD Website