G/SCM/N/275/DMA  
 
7 July 2014  
(14-3872)  Page: 1/4  
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES 
CONTINUATION OF THE EXTENSION UNDER SCM ARTICLE 27.4 OF THE TRANSITION PERIOD FOR 
THE ELIMINATION OF EXPORT SUBSIDIES PURS UANT TO PROCEDURES CONTAINED IN THE 
GENERAL COUNCIL DECISION IN DOCUMENT WT/L/691 
Annual Updating Notification 
DOMINICA  
The following communication, dated 3 July 2014, is being circulated at the request of the 
Delegation of Dominica.  
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 The attached, as per paragraph 1(c) and 2(a) of the General Council Decision of 27 July 2007 and 
the format for extension as stated in paragraph 2(a) of WT/L/691, is the updating notification in 
respect of programmes for which an extension of  the transition period was granted for 2007. 
 
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 there under, necessarily involve export subsidies. 
 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 2014 
Statistical information – January 1996 - June 2014  
 
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 WH ICH 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 G/SCM/N/275/DMA 
 
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  transition and reorientation of the economy away from dependence on one agricultural crop and 
preferential access 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 paym ent of income tax on export profits by way of 
tax credits.  6  TO WHOM AND HOW THE SUBSIDY IS PR OVIDED (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% 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% of more of sales: up to 15 years; 
 Group 2 enterprises, in which local value added is between 25-50% of sales: up to 12 
years; 
 Group 3 enterprises, in which local value added is between 10-25% of sales: up to 10 
years; 
 Enclave
1 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% or more of  the entire profits of the enterprise; 
 Export profits accrue from an approved product; 
 The enterprise is not already benefiting 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 profits Maximum 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% 
 
                                               
1 Being an enterprise producing exclusively for ex port to countries other than CARICOM Members. G/SCM/N/275/DMA 
 
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  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 PR EVIOUS 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 and 2007, only one manufacturing ente rprise received income tax credits on export 
profits. In 1995, EC$564.547 worth of tax cred its were granted, in 1996 EC$634.583, in 1997 
EC$444.000, in 1998 EC$711.704, in 1999 EC$567.922, in 2000 EC$431.659, in 2001 EC$60.948, 
in 2002 EC$159.986, in 2003 EC$213.108, in 2004 EC$274.000, in 2005 EC$813.000, EC$ 
1,605,866 in 2006 and EC$ 701,886 in 2007, in 2008 no income tax credits on export profits were received, in 2009 Export Credits amounted to EC$ 327,768, in 2011 – 2012 Export Credits 
amounted to EC$ 1,606, 910, in 2012 – 2013 Expo rt Credits amounted to EC$ 1,788,542; in 
2013-2014 Export Credits amounted to EC$ 1,141, 502 (preliminary).  
8  DURATION OF THE SUBSIDY AND/OR AN Y OTHER TIME LIMITS ATTACHED TO IT, 
INCLUDING DATE OF INCEPTION/COMMENCEMENT. 
Tax credits on export profits are granted for five ye ars. The current incentives will expire in 2015.  
 
9  STATISTICAL DATA PERMITTING AN A SSESSMENT 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, HOWE VER, IT IS DESIRABLE THAT SUCH INFORMATION 
INCLUDE STATISTICS OF PRODUCTION, CONS UMPTION, 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 th e subsidy or preceding the last major changed 
in the subsidy. 
Year Tax Credits 
Granted on 
Exports 
EC$'000 Production 
EC$'000 Export of 
Subsidized 
Products 
EC$'000 Imports of 
Subsidized 
Products 
EC$'000 Total 
Exports 
EC$'000 Total imports 
EC$'000 
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 3,313 150,448 373,215  
2000 432 36,818 61,789 2,907 144,673 400,952  
2001 61 33,399 55,589 1,865 118,026 355,022  
2002 160 32,125 48,934 1,623 115,192 314,048  
2003 213 17,771 28,336 271 108,002 345,449  
2004 274 39,468 50,233 3,667 111,749 392,031  
2005 813 40,408 26,929 641 112,859 447,761  
2006 1606* 40,217 53,036 *991 111,976 450,619  
2007 702 41,961 26,653 *1,473 *95,826 *528,634  
2008 0 35,707 N/A *2,353 102,958 *666,952  
2009 328 27,795 27,581 2,250 86,326 607,780  
2010 N.A N.A N.A 452,259 14,634 *157,173  
2011 1,607 30,434 30,706 1,314 69, 195 592,160  
2012 1,789 36,515 37,205 1, 228 *78,707 525,982  
2013 1,141** 35,224 30,063 **239, 416 **127,484 *557,950  
* Revised figure. 
**preliminary estimates G/SCM/N/275/DMA 
 
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  DOMINICA'S ACTION PLAN IN ACCORDANCE  WITH THE DECISION OF THE GENERAL 
COUNCIL (WT/L/691) 
A. Description of Programme – Fiscal Incentives Act No 42 of 1974  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. 
 B. Description of domestic procedures necessary to eliminate export subsidies: 
The Fiscal Incentives Act is to be reviewed and amended to remove the export contingent content 
within its ambit. These amendments will allo w for the emergence of a new Investment Policy 
proposing alternative regimes for subsidies/assistance.  
C. Description of actions that have been, or are in the process of being undertaken: 
 In July 2008, as a follow up to the findings of the 2007 TPR, the OECS Member States with 
assistance from the Commonwealth Secretariat undertook to outline a plan of action for 
implementing the decision on the extension of Article 27.4 programmes.  
In 2008 - 2009, with the assistance of TradeCom, the OECS contracted the services of a trade 
attorney and legislative drafter to assist MS with the implementation of WTO, CSME and EPA 
commitments. This included the review of legislation pertaining to fiscal incentive programmes including those notified to the WTO. As of June 2009, the consultant prepared model legislation 
and drafting guidelines that have been shared  with drafters and trade officials for their 
comment. The proposed legislation is intended to streamline the administration of incentive programmes, provide equal treatment of local and foreign investors, increase transparency and 
establish a monitoring mechanism for assessing the application and effectiveness of incentive 
schemes.   
Contingent on instructions from the Honourable Minister for Trade a fruitful consultation was held 
with the Managing Director of the single beneficiary Colgate Palmolive formally Dominica Coconut Products (DCP). He was formally informed of Dominica's obligation to phase out all export and local content contingent subsidies by 2015. The Government representatives from the Division of 
Trade are presently preparing to hold discussions with the Corporate Finance Team of the 
beneficiary company all in an effort to introduce a revised and conclusive alternative WTO compatible programme to mitigate the effects of the phasing out of the relevant subsidy 
programme. It is hoped that this can be completed by year's end as indicated in the 2012 
notification.  
D. Description of future actions: 
 I t  i s  e x p e c t e d  t h a t  w o r k  w i l l  c o n t i n u e  t h r o u g h o u t  t h e  y e a r  2 0 1 4 ,  i n  a n  e f f o r t  t o  p h a s e  o u t  t h e  export continent subsidy programmes existent in Dominica. It is important to signal that the Fiscal 
Incentives Act No. 42 of 1974 as amended by No. 11 of 1983 is currently being reviewed and 
amendments will be made to the same. The export  contingent content in the provisions contained 
in the Act will be removed by amending the relevant provisions thereby bringing them into 
accordance with WTO rules. The entire process (whi ch will include the drafting of a Cabinet Paper 
requesting a decision on the amending of the relevant legislation; directions to the Ministry of Legal Affairs to work on the Legislation promptly and the Parliamentary process) will be completed 
by the 2015 deadline. 
 
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