Parliament has taken a decision to repeal the International Business Companies (IBC) Act in order to meet international tax obligations.
Dominica enacted the IBC Act in 1996 as an invitation for offshore services to Dominica which were expected to boost the island’s economic revenue.
Speaking at the Seventh Meeting of the Tenth Parliament on Monday June 28, Minister for Foreign Affairs, International Business and Diaspora Relations, Hon. Dr. Kenneth Darroux proposed a Bill to discontinue the current framework by which these companies operate in Dominica.
“Cabinet took a decision to seek Parliament’s approval to discontinue the current framework in which the IBC’s operation will allow this IBC’s, if inclined, to register under the Companies Act Chapter 78:4 of the 2017 Revised Laws of Dominica. To implement this measure, the Cabinet has been advised that repeal of the IBC Act Chapter 78:01 of 2017 Revised Laws of the Commonwealth of Dominica is required. This Bill, which is now being presented to the House, proposes to repeal the Act with effect from January 1st 2022,” Dr. Darroux stated.
Dr. Darroux noted, this Act has functioned at a loss over the last five years thus exposing Dominica to several risks.
“The revenue generated from this sector over the past five years which includes registration and licenses fees, payment for certificates, application and copies of amendments and agent fees amounted to 3.2 million E.C dollars at an average of 640,000 dollars per year. With very little economic return, the IBCs have exposed Dominica to operational, reputational and regulatory risks. In addition the Ministry of Finance, with the Financial Services Unit and the Inland Revenue Division, are required to supervise activities of the IBCs and apply applicable tax laws. The latter is to be enforced if Dominica is to remain compliant with the international obligations. Most of the IBC operations are conducted outside of Dominica and significant financial and human resources are required to effectively supervise and apply the domestic tax laws to this sector,” Honourable Darroux explained.
This Bill is set to take effect as of January 1, 2022, allowing registered IBC’s sufficient time to transition to the new proposed framework.
“January 1st 2022 is approximately six months from today. This six months period that is from July 2021 to December 2021 is proposed to allow the registered IBC sufficient time to transition and to register companies under the Companies Act Chapter 78:04 of the 2017 Revised Laws of Dominica,” Dr. Darroux added.