Dominica Companies and Dominica Trusts

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General Introductory and Offshore Tax Information

Among fast paced financial, technological and legal developments throughout the world, small island economies like Dominica endeavor to keep apace. In fact, not merely wanting success and financial prosperity in order to create a sustainable economy, but rather, making the right decisions through good governance is pivotal to ensuring that Dominica sets sturdy footing on the international arena.

For Dominica, sustaining the development of its offshore sector means stimulating economic growth, allowing for a greater level of assertion on the global market and becoming a key player in world affairs. However, it is not without challenges that Dominica’s offshore sector continues to succeed in light of increasing regulatory demands and standards that seek to bring international/offshore activities under one roof.

In 1996, Dominica began establishing its legislative framework that would allow non-resident foreign nationals to incorporate offshore companies in Dominica. The IBC Act was followed by an Act for Offshore Banking, Exempt Insurance and International Exempt Trusts. Whilst agriculture continues to play a decisive part in Dominica’s economy, society and culture, adapting to new investment trends and finding ways to appropriately accommodate the needs of investors increasingly necessitates a further look at sectors such as asset management, brokerage services, reinsurance and captive business and fund management, which to some extent have been ventured into by lawyers, accountants, bankers and corporate service providers who have accumulated years of experience in offshore and international financial services in Dominica.

In the midst of an international economic meltdown, Dominica continues to move ahead as hosts of opportunities present themselves in offshore outsourcing by large corporations on the look for more affordable, stable locations with friendly business environments for carrying on their operations. As an offshore jurisdiction, not only does Dominica provide high net worth individuals with a pool of expert lawyers, but with the privacy and discretion that is becoming a rare commodity these days. Offshore companies and legal entities are exempt from all local taxes, to include income tax, tax on capital gains and corporate tax, whilst inheritance, death, gift and succession tax which too are not levied on offshore companies are also not imposed on local residents.

As a jurisdiction for incorporating offshore companies, Dominica remains one of the best picks if one were to consider factors such as privacy, good governance, social, economic and political stability; elements which most offshore jurisdictions tend to share in common, and which give investors the grounds on which to express their desire to incorporate an offshore company, establish an offshore trust, insure assets or to open an offshore bank account.

Dominica Offshore Business Entities:

  • Dominica International Business Company (IBC)
  • Dominica Offshore Bank
  • Dominica Exempt Insurance
  • Dominica International Exempt Trust

Dominica International Business Company (IBC)

Main Features:

  • Legislation - Defined and governed by the International Business Companies Act 1996
  • Commonly known as Dominica offshore company
  • Main formation documents include Memorandum and Articles prepared pursuant to the Act the and Certificate of Incorporation, issued by the Registrar
  • Able to be incorporated by a single individual
  • Able to have a body corporate or an individual as beneficial owner
  • Limits the liability of shareholders to investment company
  • Able to issue voting and non-voting shares, registered or bearer shares, common, preferred or redeemable shares, securities that can be exchanged for other securities or property owned or intended to be owned by the company
  • Able to hold, redeem and purchase own shares
  • Sufficiently flexible to be able to modify constitution pursuant to the Act, change business name, directorship, share capital and persons holding shares
  • Registrar to be informed of any alterations made to the offshore company, a register of changes must be kept
  • Registers of directors and shareholders must be prepared and kept pursuant to the Act
  • General meetings can be held in any country of choice
  • Meetings can be conducted electronically, over the phone or using any other electronic device that enables every director to participate fully
  • Business name endings must mean limited liability and can include: Limited, Société Anonyme, Sociedad Anónima, Corporation, S.A., Ltd., Inc. or Corp
  • Able to migrate or continue into another offshore jurisdiction pursuant to the Act
  • Foreign offshore companies can continue/redomicile to Dominica
  • Unable to engage in any business activity for which specific licensing is a must; such as trustee and trust services, insurance and banking business

Dominica Offshore Bank

Main Features:

  • Legislation – Offshore Banking Act 1996
  • Cannot carry on trust business without being licensed for trust services
  • Dominica offshore banks must maintain a registered office in Dominica
  • Requires two authorized agents; one regular and the other to serve as an alternative
  • Authorized may be individuals of bodies corporate
  • Domestic banks with offshore banking licenses must at all times keep offshore banking and domestic banking business separate from each other
  • Dominica offshore banking business done strictly with non-residents
  • Minimum issued and paid-up capital in cash of US $1 million
  • Paid-up capital and reserves of accumulated profits minus accumulated losses must add up to US $1 million or over
  • Must maintain a reserve fund in every financial year, and before distributing dividends out of the net profits must transfer a minimum of 25% of the profits to where the total reserve fund does not exceed the issued paid-up capital
  • Capitalized expenditure which is not in the form of tangible assets must be completely written off before dividends on shares are distributed
  • Must file a statement of assets and liabilities to the Financial Secretary
  • Statements (assets and liability) must be filed by the final business day of each quarter and within 30 days thereafter; an extension may be granted provided that the reason(s) for failing to file are justifiable
  • All documents must be in English
  • Audited balance sheets and profits and loss must be forwarded to the Financial Secretary no later than four months following the end of the financial year; along with annexed auditor certificate on front page
  • Strict privacy laws for Dominica offshore banking clients, pursuant to the Act

Dominica Exempt Insurance

Main Features:

  • Legislation – Exempt Insurance Act, 1997
  • Applicant required to have a paid-up capital of no less than US $100,000
  • If applicant is a mutual insurance company, capital reserves can be no less than Us $125,000
  • Submitted applications and documents to be signed by no less than 2 directors
  • Applicant for Dominica exempt insurance license must first be incorporated under the Companies Act 1994 either as a company limited by shares or as a mutual insurance company
  • Paid-up or contributed reserves may include letters of credit (drawn or confirmed by a bank licensed under the Banking Act, or Offshore Banking Act 1996) with a minimum stated capital of US $105,000, or US $125,000 if involving a mutual insurance
  • Licensees may engage in either long-term or general insurance business, unless otherwise permitted
  • All risks and premiums are situate in a foreign jurisdiction
  • Liquidation monies to be paid to shareholders are distributed exclusively to or for the benefit of foreign residents
  • Beneficial shareholders are all non-residents of Dominica
  • At least one director needs to be resident in Dominica
  • Resident director not allowed to participate in share ownership
  • An exempt insurance company which is based or established in Dominica may be part owner of another licensee
  • Prior approval required from the Minister for mergers or consolidations, name change, amendments to Articles of Incorporation, undertaking another class of insurance business, transferring assets or liabilities

Dominica International Exempt Trust

Main Features:

  • Legislation – International Exempt Trust Act 1997
  • Has either a corporation regulated by the Companies Act 1994, a bank licensed under the Banking Act 1991 or the Offshore Banking Act 1996 as one of its trustees
  • Trust property is situate solely outside Dominica
  • Trust beneficiaries and settlor cannot be residents of the island
  • Maintains a registered office and a registered agent in Dominica
  • Every year must submit audited financial statements and reports to the Financial Secretary
  • May be established for charitable purposes, protection against spendthrift tendencies, or for non-charitable objectives
  • Established upon issuance of a Trust Deed
  • Not subject to the ‘rule against perpetuities’ and the ‘rule against accumulations’
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