Back in 2019, Dominica's Law on Amendments to the Law on International Business Companies of 2019 (INTERNATIONAL BUSINESS COMPANIES (AMENDMENT) ACT, 2019) canceled the provisions of the Law on International Business Companies of 1996 (INTERNATIONAL BUSINESS COMPANIES ACT , 1996 (ACT NO. 10 OF 1996)), according to which IBC companies registered before December 31, 2018 were exempted from taxes.
International Business Company (IBC) is a type of tax-exempt company in most offshore jurisdictions (Bahamas, Belize, UAE, Seychelles, etc.).
In almost all offshore jurisdictions, the procedure for the registration and operation of international business companies is determined by special legislation - the laws on international business companies. The most common organizational and legal form of IBC companies is the private joint stock company LTD. In some jurisdictions (such as the Bahamas), the liability of IBC members may not be limited to shares, but to guarantees.
To maintain its tax-free status, IBC must comply with 3 main conditions:
- Do not conduct business in the country of registration
- Not receive income from sources in the country of registration
- Its owners must not be residents of the country of registration
By fulfilling these conditions, IBC gains significant benefits:
- omplete tax exemption. Instead, only a fixed annual fee is paid.
- No need to submit financial statements
- Information about the beneficiaries of the company is not provided to the state authorities and is not entered into any registers. However, the names of the beneficiaries must be known to the local registered agent
As of the current moment, the legislation of Dominica still does not contain provisions stipulating the need to create an economic presence of IBC companies in Dominica (economic substance), while these changes have affected a significant part of offshore jurisdictions over the past 2-3 years.
It is worth noting that, in accordance with the above amendments, starting from December 31, 2021, the IBC will be subject to income tax levied on global income at a rate of 30%.
Also, the legislation of Dominica does not yet contain provisions on the introduction of the obligation of IBC companies to prepare and submit audited financial statements and tax returns to the tax authorities of Dominica on an annual basis. However, according to forecasts of local lawyers, these changes can also be expected in the near future.
