WORLD TRADE  
ORGANIZATION  G/SCM/N/114/DMA 
5 July 2004 
 (04-2875) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
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  
 
Updating Notification  
 
DOMINICA 
 
  The following communication, dated 30 June 2004,  is being circulated at the request of the 
Delegation 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 pr ogrammes for which an extension of the transition 
period was granted for 2004. 
 
 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, necessarily involve export subsidies. G/SCM/N/114/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 2004 
 Statistical information – January 1995-December 2003  
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 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/114/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 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 benefitting 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 ente rprise 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 1995-2003, 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, and in 2002 EC$159,986, and in 2003 EC$213,108. 
                                                     
 
1 Being an enterprise producing exclusively for e xport to countries other than CARICOM Members. G/SCM/N/114/DMA 
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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 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 fo r 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 
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
2003 213 17,771 28,336 271 106,100 343,500
 
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