G/SCM/N/284/DMA  
G/SCM/N/290/DMA  
 
15 October 2015  
(15-5404)  Page: 1/5  
Committee on Subsidies and Countervailing Measures  Original: 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 
TRANSPARENCY NOTIFICATION CONCERNING THE EXTENSIONS PROVIDED FOR IN ARTICLE 27.4 
OF THE AGREEMENT ON SUBSIDIES AND COUN TERVAILING MEASURES OF THE TRANSITION 
PERIOD FOR THE ELIMINATION OF EXPORT  SUBSIDIES, GRANTED PURSUANT TO 
THE PROCEDURES IN THE GENERA L COUNCIL DECISION WT/L/691 
DOMINICA  
The following communication, dated 13 October 2015, 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 2015 
Statistical information – January 1996 - June 2015  
 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) 
 G/SCM/N/284/DMA • G/SCM/N/290/DMA 
 
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  Background 
 
For the past several decades the Government of Dominica considered 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 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 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% 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 
                                               
1 Being an enterprise producing exclusively for ex port to countries other than CARICOM Members. G/SCM/N/284/DMA • G/SCM/N/290/DMA 
 
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   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% 
 
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 subs idy information (for the year covered by the 
notification, for the previous year, or both) is not possible, a full explanation 
 
Between 1995 and 2011, only one manufacturing ente rprise received income tax credits on export 
profits 
 
Year Tax Credits Granted 
on Exports EC$'000 
1995 565 
1996 635 
1997 444 
1998 833 
1999 568 
2000 432 
2001 61 
2002 160 
2003 213 
2004 274 
2005 813 
2006 1606* 
2007 702 
2008 NA 
2009 328 
2010 NA 
2011 1607 
 
8. Duration of the subsidy and/or any other time limits attached to it, including date of 
inception/commencement 
 Administratively, tax credits on export profits are no longer granted by Dominica. The incentives discontinued as of January 12, 2012.  Under Section 109 of the Income Tax Act, Dominica Coconut 
Products, the beneficiary company of the former export contingent subsidy regime, was granted a 
Forty percent (40%) tax relief on total profit by way of tax credits for five (5) years starting 
12 January 2012 and ending on 12 January 2017. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy. The specific 
nature and scope of such statistics is left to th e judgement of the notifying Member. To the extent 
possible, relevant and/or determinable, however, it is desirable that such information 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; G/SCM/N/284/DMA • G/SCM/N/290/DMA 
 
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  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. 
* Revised figure. 
**preliminary estimates ***From 2012 -2013, the beneficiary company, in submitting its statistical data to the Ministry, did not take on board the change in the subsidy granted. It was also a complete oversight for Dominica, in the preparation of 
the notification document, to not include the change in the same. This misinterpretation went on until 
January 2015, when the Division of Trade, accompanied by the Invest Dominica Authority visited the beneficiary company and peruse d its financial records. It was at that  time all three Part ies recognised the 
omission of the change made to the subsidy granted to the beneficiary company.   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 N/A 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 0*** 36,515 37,205 1,228 *78,707 525,982  
2013 0*** 35,224 30,063 *2,265 *81,183 *618,287 
2014 0*** 33,504 33,860 2,510 **77,306 645,500 G/SCM/N/284/DMA • G/SCM/N/290/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:  Although the Fiscal Incentives Act is in the process of being reviewed and amended to remove the 
export contingent content within its ambit, administratively, tax credits on export profits are no 
longer granted by Dominica. The incentives disco ntinued as of January 12, 2012. In submissions 
made to the WTO in 2013 and 2014 the information received from the beneficiary company was 
submitted to the Division of Trade, Ministry of Employment, Trade, Industry and Diaspora Affairs, 
in error. This was rectified at a meeting attend ed on the premises of the beneficiary company 
in 2014. In attendance were the Director of Trade,  Officer in Charge (OIC) at the Invest Dominica 
Authority (IDA) and the General Manager of the beneficiary company. 
 It was realised, upon conversation with the General Manager, a perusal of the company's records and comprehensive advice from the OIC IDA that the company was actually benefitting from a 
regime which was no longer export contingent in nature. 
 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 held discussions with the Corporate Finance Team of the beneficiary company all in an effort 
to introduce a revised and conclusive alternat ive WTO compatible programme to mitigate the 
effects of the phasing out of the relevant subsidy programme.   
D.  Description of future actions: 
 The Fiscal Incentives Act No. 42 of 1974 as am ended 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. Th e entire process (which will include a request to 
the Cabinet seeking approval for 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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