WORLD TRADE
ORGANIZATIONG/SCM/N/95/DMA
G/SCM/N/99/DMA
2 July 2003
(03-3527)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the Agreement
on Subsidies and Countervailing Measures
Extension Under SCM Article 27.4 of the Transition Period for the
Elimination of Export Subsidies Pursuant to the Procedures
in Document G/SCM/39
DOMINICA
The following communication, dated 30 June 2003, has been received from the Permanent
Mission of Dominica.
_______________
The attached, as per paragraph 1(b) of the procedures for extension under SCM Article 27.4
in G/SCM/39, is the notification in respect of programmes for which an extension of the transition
period was granted for 2003.
The legislation underlying the notified programmes has not changed and was submitted
previously dated 25 February 2002.
It should be noted that not all elements of the notified programmes/relevant legislation,
including subsidies provided thereunder, necessarily involve export subsidies.G/SCM/N/95/DMA
G/SCM/N/99/DMA
Page 2
1. Title of the subsidy programme, if relevant, or brief description or identification of the
subsidy
The Fiscal Incentives Programme is directed at encouraging investment in industry through
tax holidays, import duty and consumption tax waivers and exemptions of withholding taxes.
2. Period covered by the notification
Programme status as at 30 June 2003
Statistical information – January 1995-December 2002
3. Policy objective and/or purpose of the subsidy
The objective of the programme is to promote, encourage and develop industry in Dominica
for increased employment, exports, and economic growth.
4. Background and authority for the subsidy (including identification of the legislation
under which it is granted)
Background
For the past several decades the Government of Dominica considers it a priority to create the
necessary conditions for encouraging investment of national and foreign capital.  This has been and
continues to be a critical part of the economic diversification thrust.  The aim is to achieve a transition
and reorientation of the economy away from dependence on one agricultural crop and preferentialaccess to market.
Authority
The Fiscal Incentives Act No. 42 of 1974 as amended by Act No. 11 of 1983.
5. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
The Fiscal Incentives Act provides for the granting of tax concessions during a period called
the tax holiday period as follows:
• Exemption from the payment of customs duties on plant, equipment, machinery,
spare parts, raw materials, or components thereof for;
• Constructing, altering, reconstructing or extending the enterprise;  or
• Equipping such enterprise for the purpose of manufacturing a product.
• Exemption from the payment of income tax.
The Act also provides for exemptions from the payment of income tax on export profits by
way of tax credits.G/SCM/N/95/DMA
G/SCM/N/99/DMA
Page 3
6. To whom and how the subsidy is provided (whether to producers, to exporters, or
others;  through what mechanism;  whether a fixed or fluctuating amount per unit;  if
the latter, how determined.)
Exemption from customs duties during a tax holiday period is granted to any enterprise for
which there is at least 10 per cent local value added of the amount realized from sales.  The length of
the tax holiday period is determined as follows:
• Group 1 enterprises, in which local value added is 50 per cent of more of sales:  up to
15 years;
• Group 2 enterprises, in which local value added is between 25-50 per cent of sales:
up to 12 years;
• Group 3 enterprises, in which local value added is between 10-25 per cent of sales:
up to 10 years;
• Enclave1 enterprises:  up to 15 years;
• Capital-extensive enterprises, in which there is investment of not less than
US$10 million:  up to 15 years.
Exemption from income tax on export profits are granted for up to five years to any enterprise
if the following applies:
• Export profits amount to 10 per cent or more of the entire profits of the enterprise;
• Export profits accrue from an approved product;
• The enterprise is not already benefitting from exemptions during a tax holiday period
as indicated above;  and
• The enterprise engaged in a non-traditional industry exporting a product not
traditionally exported from Dominica.
The percentage of the tax credit is in accordance with the table below.
Amount of export profits expressed
as a percentage of the entire profitsMaximum percentage of tax relief
10% or more but less than 21% 25%
21% or more but less than 41% 35%
41% or more but less than 61% 45%
61% or more 50%
Export profits is determined by the formula (E x P)/S where "E" represents proceeds from
export sales, "P" represents profits made by the enterprise and "S" represents the proceeds of all sales.
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in
the previous year).  Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a full
explanation.
Between 1995-2000, only one manufacturing enterprise received income tax credits on export
profits.  In 1995, EC$564.547 worth of tax credits were granted:  in 1996 EC$634.583, in 1997
                                                     
1 Being an enterprise producing exclusively for export to countries other than CARICOM Members.G/SCM/N/95/DMA
G/SCM/N/99/DMA
Page 4
EC$444.000, in 1998 EC$711.704, in 1999 EC$567.922, in 2000 EC$431.659, in 2001 EC$60.948,
and in 2002 EC$159,986.
8. Duration of the subsidy and/or any other time limits attached to it, including date of
inception/commencement.
Tax credits on export profits are granted for five years.  The current incentives will expire in
2005.
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific
nature and scope of such statistics is left to the judgement of the notifying Member.  To
the extent possible, relevant and/or determinable, however, it is desirable that suchinformation include statistics of production, consumption, imports and exports of the
subsidized product(s) or sector(s):
(a) For the three most recent years for which statistics are available;
(b) For a previous representative year, which, where possible and meaningful, should be
the latest year preceding the introduction of the subsidy or preceding the last majorchanged in the subsidy.
Year Tax Credits
Granted on
Exports
EC$'000Production
EC$'000Export of
Subsidized
Products
EC$'000Imports of
Subsidized
Products
EC$'000Total
Exports
EC$'000Total
imports
EC$'000
1995 565 N/A 43.567 3.838 121.751 304.083
1996 635 N/A 53.847 4.224 138.537 358.683
1997 444 N/A 53.327 4.100 141.258 363.292
1998 833 59.184 72.494 1.337 167.453 356.992
1999 568 41.684 64.164 3.313 147.600 378.448
2000 432 36.818 61.789 2.907 146.027 399.115
2001 61 33.399 55.589 1.865 111.717 355.022
2002 160 32.125 48.934 1.623 104.277 313.816
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