WORLD TRADE  
ORGANIZATION  G/SCM/N/192/DMA 
6 August 2009 
 (09-3820) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for  
the Elimination of Export Subsidies Pursuant to the Procedures Contained  
in the General Council Decision in Document WT/L/691  
 
DOMINICA 
  
 The following notification, dated 16 July 2009, is being circulated at the request of the 
Delegation of Dominica.    
_______________ 
 
 
 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 pr ogrammes 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, n ecessarily involve export subsidies.   
  
 
 G/SCM/N/192/DMA 
Page 2  
 
  1. Title of the subsidy progra mme, if relevant, or brief descr iption or identification of the 
subsidy  
  The Fiscal Incentives Programme is directed at  encouraging investment in industry through 
tax holidays, import duty and consumption tax waiv ers and exemptions of withholding taxes.   
 
2. Period covered by the notification
 
  Programme status as at 30 June 2009.    Statistical information – January 1996 - June 2009.   
 
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 (inc luding 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 divers ification thrust.  The aim is to achieve a transition 
and reorientation of the economy away from de pendence 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. gr ant, loan, tax concession, etc.)
 
 
 The Fiscal Incentives Act provides for the gran ting 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, reconstructi ng 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/192/DMA 
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  6. To whom and how the subsidy is provided (w hether 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 adde d 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;   
• 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 per cent or more of the entire profits of the enterprise;   
• Export profits accrue from an approved product;   
• The enterprise is not already benefiting fro m exemptions during a tax holiday period 
as indicated above;  and 
• The enterprise engaged in a non-traditi onal 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 enterp rise 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 and 2007, only one manufacturing en terprise received in come tax credits on 
export profits.  In 1995, EC$564.547 worth of tax cr edits 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, 
                                                     
 
1 Being an enterprise producing exclusively for expo rt to countries other than CARICOM Members.   G/SCM/N/192/DMA 
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  EC$ 1,605,866 in 2006 and EC$ 701,886 in 2007, in 2008 no income tax credits on export profits 
were received.    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 2015.   9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statis tics is left to the 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;   
(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 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 1,214 102,958 645,905 
* Revised figure. 
** Preliminary estimates.   
 
 It should be noted that there is no data relati ng to Exports of Subsidized Products.  This is 
because the only company which benefited from these fiscal incentives has been going through a 
restructuring process.  Part of this process included the shutting down of a subsidiary in October 2007 
which benefited extensively from the ex port contingent fiscal incentives.   G/SCM/N/192/DMA 
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  STEPS TAKEN WITH A VIEW TO ELIMINATE EXPORT SUBSIDIES  
 
 In July 2008, as a follow up to the findings of the 2007 TPR, the OECS MS with assistance 
from the Commonwealth Secretariat undertook to outline a plan of action for implementing 
the decision in 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 ha ve been shared with drafters and trade 
officials for their comment.  The proposed legislation is intended to streamline the 
administration of incentive programmes, provi de equal treatment of local and foreign 
investors, increase transparency and estab lish a monitoring mechanism for assessing the 
application and effectiveness of incentive schemes.   
 
 
 
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