Tax System of Dominica and Its Advantages

One of the main reasons so many pursue a second passport from Dominica is because of the island’s friendly tax system. The tax system of Dominica is widely recognized as one of the main advantages of Dominica citizenship, which is available to qualifying foreigners through its Citizenship by Investment (CBI) program. Dominica taxes are extremely low relative to tax schemes around the world. Regardless of whether you ultimately end up living in Dominica, as an economic citizen, you will pay a low personal income tax rate and zero capital gains. See today’s blog for an overview of the tax system of Dominica, including the current income tax rates, and other basics about Dominica taxes. In addition to tax info, you will also find helpful information about the Dominica economy, including the average salary in Dominica, the Dominica average income, and the general Dominica living cost. As you will soon learn, there are numerous financial advantages to achieving Dominica citizenship.

Tax System in Dominica

• One of the main reasons investors pursue Dominica citizenship is for tax purposes; the island is classified as a tax haven for both investors and corporations.
• Current income tax rates on Dominica are low.
  • If your income is between $0 – $30,000, then no tax.
  • If your income is between $30,001 – $50,000— for every dollar on the next $20,000, your income tax rate would be 15%.
  • If your income is between $50,001 – $80,000— for every dollar on the next $30,000, your income tax rate would be 25%
  • If your income is $80,001 and above— for every dollar in excess of 80,001, your income tax rate would be 35%.
• One of the reasons that Dominica citizenship is so popular with investors is the island has zero taxes on capital gains, allowing businesspersons a safe, stable space to grow their wealth. In addition to lacking capital gains, Dominica also does not collect the following taxes:
  • Inheritance
  • Payroll tax
  • Property tax
• Those looking to incorporate a business on Dominica will pay a corporate tax rate of 25%; international companies are not subject to corporate taxes.
• Dominica also offers tax holidays for certain development initiatives (including for the construction and operation of qualifying resorts and hotels) for up to two decades.
• In addition, certain business (i.e. those which are able to take advantage of the tax holiday exemption) can also be exempt from the payment of import tariffs on materials/hardware shipped from abroad used in production on Dominica.
• Please note that Dominica citizens are responsible for paying a stamp duty tax (rates range from 2.5%-4%), as well as VAT.

The economics of living in Dominica

• Because Dominica does not have residency requirements for citizenship, you do not have to live on the island in order to take advantage of its tax system. However, some investors who achieve Dominica citizenship ultimately decide to reside on the island. One of the main motivations behind residing on Dominica is the low Dominica living costs.
• The Dominica average income in 2019 was around 7,870. Because the average salary in Dominica is so low, those able to afford the cost of the CBI program are able to enjoy high quality of living standards at low cost. Due to the favorable exchange rate between the USD and the XCD, foreigners who become Dominica citizens through the CBI cam enjoy low prices on most goods and services.
• The island’s currency is the East Caribbean Dollar—XCD (this is the common currency of the Organization of Eastern Caribbean States), a group which includes Antigua and Barbuda, Grenada, and St. Kitts and Nevis—among other regional island countries.
• In 2019, the island’s GDP was $596 million. The primary sector of the Dominica economy is agriculture; the cultivation and export of bananas is a dominant industry on the island, which is also rapidly becoming a top regional destination for eco-tourism (as well as a port for cruise-ship tourism).

For help calculating your personal income tax rate in Dominica, and for additional information about obtaining citizenship on the island, please contact us.