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Dominica 2016 Budget Cuts Real Estate Taxes

by Mike Godfrey, Tax-News.com, Washington

30 July 2015


Caribbean island Dominica has cut real estate taxes and introduced a number of VAT concessions in the 2015/2016 National Budget in an effort to stimulate the tourism and real estate sectors.

Proposed real estate tax changes include:

  • Stamp duty will be reduced from four percent to 2.5 percent.
  • The vendors' fee will be reduced from 2.5 percent to zero percent.
  • The judicial fee will be reduced from 2.5 percent to one percent.
  • An exemption from withholding tax on the rental income of villa owners will be introduced for a period of up to 10 years, for properties that are held for at least three years.
  • A residential levy of XCD2,000 (USD740.74) per year will be introduced for the owners of villas in approved developments – those that meet the requirements outlined in the Hotels Aid Act, with a minimum investment of XCD3m.
  • The Alien Landholding Licence Act will also be amended so that, in place of the licence fee of ten percent of the market value, a flat fee of XCD5,000 will be applied, in addition to an application fee of XCD1,000.

The following VAT measures were also announced:

  • A VAT exemption for meals provided to hotel/resort employees provided free of charge;
  • A VAT exemption for complimentary rooms provided by hotels and resorts for approved marketing activities;
  • A VAT exemption for capital goods for mixed-use resort developments, where part of the development will occur after the commencement of operations. This means that for a hotel that is being constructed in phases, a VAT exemption will be enjoyed by those parts not yet developed.

The Government has also announced that they will introduce new legislation to allow for timeshares, condominiums, and fractional ownership arrangements. The tourism authority will also be granted an additional XCD2m to promote the island internationally.

TAGS: tax | investment | tax incentives | employees | international financial centres (IFC) | tax thresholds | offshore | legislation | tax rates | withholding tax | Dominica | tax reform

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