WORLD TRADE  
ORGANIZATION   
G/SCM/N/226/DMA 
7 October 2011  
 
(11-4873) 
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 5 October 2011, 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 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 there under,  necessarily involve export subsidies. G/SCM/N/226/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 wa ivers and exemptions of withholding taxes. 
 2. Period covered by the notification 
 Programme status as at 30 June 2011. 
 Statistical information – January 1996-December 2010.  
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 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. gran t, 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 duti es 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/226/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 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 a dded is between 25-50 per cent of sales:  
up to 12 years; 
 
 Group 3 enterprises, in which local value a dded is between 10-25 per cent of sales:  
up to 10 years;  
 Enclave
1 enterprises:  up to 15 years; 
 
 Capital-extensive enterprises, in which th ere 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 from exemptions during a tax holiday period 
as indicated above;  and  
 The enterprise engaged in a non-traditiona l 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 ente rprise and "S" represents the proceeds of all sales. 
 
                                                      
1 Being an enterprise producing exclusively for e xport to countries other than CARICOM Members. G/SCM/N/226/DMA 
Page 4  
 
  7. Subsidy per unit or in cases where this is no t 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$813,000, EC$ 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 $ 327,768. 
 
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 statistics is left to the judgement of the notifying Member.  To 
the extent possible, relevant and/or determin able, 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 1,606* 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 1,070 29,637 29,345 1,605 44,567 318.733 
* Revised figure. 
** Preliminary estimates.  G/SCM/N/226/DMA 
 Page 5 
 
 
  STEPS TAKEN WITH A VIEW TO ELIMINATE EXPORT SUBSIDIES  
 
 A. Description of Programme: 
 
Fiscal Incentives Act No. 42 of 1974, as amended by Act No. 11 of 1983.  
 
The Fiscal Incentives Programme is  directed at encouraging investment in industry through 
tax holidays, import duty and consumption tax wa ivers 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 in an effort to remove the export 
contingent content within its ambit.  These am endments will allow for the emergence of a new 
Investment Policy proposing alternative regimes fo r subsidies/assistance which are in accordance with 
WTO rules.  C. Description of Actions which 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 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.  
 It is expected that by 2013, in an effort to phase out the export continent subsidy programmes 
existent in Dominica, the export contingent content in the provisions contained in the ambit of 
the Fiscal Incentives Act will be removed by amending the relevant provisions thereby 
bringing them into accordance with WTO rules.   The process is one which may take some 
time since it involves:  (a) the drafting of a Cabinet Paper giving a comprehensive overview 
of the purpose for the elimination of export contingent subsidies, the time frame and 
requesting Cabinet's approval as it concerns the am ending of the relevant legislation;  (b) the 
amending of the Act promptly, upon Cabinet's a pproval and direction, by the Ministry of 
Legal Affairs;  and (c) the Parliamentary process.   The intention is to have the entire process 
completed by 2015.  
 
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