Dominica Tax Reform Enters Second Phase

by Leroy Baker, Tax-News.com, New York

23 October 2008

The Government of Dominica has released the second phase of its tax reform after the Income Tax (Amendment) Act 2008 was tabled in parliament earlier this week.

In the 2007/2008 Budget Address, Prime Minister and Minister for Finance, Roosevelt Skerrit, revealed the first phase of a comprehensive income tax adjustment programme, expected to take three years to fully implement. The programme was amended in parliament last week, with the details being disclosed to the press this week.

As a result of the amended reform, effective from January 1, 2009, Dominica’s citizens will experience increases in the non-taxable allowance from a previous $18,000 to $20,000, and reductions in tax rates as follows:

• A reduction from 18% to 16% for every dollar of the first $20,000 of taxable income.
• A reduction from 28% to 26% on every dollar of the next $30,000 of taxable income.
• A reduction from 38% to 36% on every dollar of taxable income above $50,000.

The second phase of the income tax adjustment will result in 585 residents no longer paying income tax.

According to the Ministry of Finance and Social Security, the total cost of the second phase of the income tax adjustment is $9.7 million for the full fiscal year.

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