Dominica is an English speaking country in the Eastern Caribbean with a population of nearly 72,500. The island is one of the largest in the Eastern Caribbean occupying some 289 square miles (749.59 kms). It is situated at the northern end of the Windward Chain of the Lesser Antilles, lying between the two French islands of Martinique and Guadeloupe. Dominica is easily accessible from Antigua, Barbados and San Juan.
Independence was achieved in 1978 and at that time the prior British Crown Colony was officially retitled the Commonwealth of Dominica. As a republic, Dominica enjoys a parliamentary democracy, with election of members of parliament every five years. Dominica is a member of the British Commonwealth with a President as Head of State, though executive power lies with the Prime Minister and his Cabinet of Ministers.
Dominica’s economy is mainly agricultural, with the banana as the main source of profits. However, the Government has boarded on a programme to diversify the economy by developing the island into a high quality offshore centre. The necessary legislative and administrative bases are succeeding well. For example, legislation has already been introduced for the registering of offshore banks, trust companies, and International Business Companies (IBCs), with a ship registration scheme also prepared. There is also the economic nationality plan which has been re-engineered to emphasise the mobilisation of capital for national development and geared for the financing of public sector capital projects.
A Dominican IBC has the following characteristics:
- Directors
A minimum of one director is required and corporate directors are permitted. A copy of the Register of Directors must be kept at the registered office of the company.
- Shareholders
A minimum of one shareholder is required and either registered or bearer shares may be issued. No details of the shareholders appear on the public file but upon the issue or transfer of bearer shares, the registered agent of the IBC must lodge the share certificate, along with a notarised letter containing the name of the beneficial owner, with an approved fiduciary – a chartered accountant practising in Dominica, or a financial institution domiciled in Dominica, recognized by the Minister of Finance.
- Books and Records
Copies of the following must be kept at the registered office of the company:- Minutes of all meetings of directors, shareholders and committees;
- All resolutions consented to by the directors, members and committees;
- All accounts and records as the directors consider necessary to reflect the financial position of the company.
- Taxation
IBC’s pay no taxes, duties or similar charges for a period of twenty years from the date of incorporation.
- Annual Reporting
No annual return or accounts must be filed. It should be noted though that penalty fees of up to 50% of the annual Government fee will be incurred if the licence fee is not paid when due.
- Local Requirements
As a matter of local company law, a company must maintain a registered office in Dominica and must also appoint a Dominican resident as registered agent.
- Restrictions on Name and Activity
Names must end with one of the following words or abbreviations thereof – Limited, Sociedad Anonima, Societe Anonyme, Corporation or Incorporated.
The following words cannot be used: Assurance, Bank, Building Society, Chamber of Commerce, Chartered, Co-operative, Imperial, Insurance, Municipal, Royal, National and Dominica.
In addition, names must not suggest a connection with any branch of the Government, a political party, a university or professional association.
- Secrecy
Section 112 of the International Business Companies Act 1996 make it an offense punishable by a penalty of US$25,000.00 and detention for two years for any officer, auditor or official liquidator to reveal any information regarding the company except by an order of the Court on an application by the Attorney General relating solely to activities criminal under the laws of Dominica.
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Remark:
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice.
The model of the Limited Liability Company (LLC) is relatively new and is possibly one of the most interesting developments in international corporate and trust work in recent years.
An LLC has corporate form and nature but is considered as a partnership under the Internal Revenue Code of the USA. As such, the LLC is not separately taxable but rather its income is taken to flow through to its members who are taxed according to US codes as though they had received the income directly. Non US persons are only taxed on US source income or income connected with the conduct of a US trade or business. If the LLC earns any income which falls outside this definition and the members of the LLC are non US persons with no US presence then no tax would be payable either by the LLC or by its members.
Therefore, a non taxable structure can be created by having non US individuals or companies as the members of the LLC. If the LLC had individual members, those members would most probably suffer taxation on profits received from the LLC in their country of residence, so the suggested structure is to have two offshore companies as the members of the LLC.
The US has signed taxation agreements with most developed countries. The effect of these taxation treaties is to significantly reduce the level of tax which must be pending on the payment of royalties, dividends and interest to a US individual or corporation.
The LLC is a relatively new product so there is little precedent available which gives support in determining the exact treatment of an LLC by non US countries in relation to the taxation treaties. Thus, although it would appear as though an LLC may be extremely useful in any tax planning exercise, it’s recommend that carefulness be exercised and that a suitable legal opinion is sought.
What is clear is that the US LLC is a low profile no tax company which enjoys the protection and privileges afforded by the US legal system.
It is possible to incorporate an LLC in most US States but considering the details above Delaware is the ideal domicile.
A Delaware LLC has the following characteristics:
- Members
An LLC is required to have only one member but it is assumed that tax free status will only be applicable to LLC’s which have two or more members. Members are comparable to shareholders in a normal corporation but hold “units” rather than shares. The details of the incorporating members appear on the public file but their anonymity will be retained if members would be TCI or other offshore companies. Changes in members do not have to be reported.
- Directors
As the directors’ details can be kept confidential and need not be registered on the public file, many applicants prefer to put their own names as directors. Though, during the course of the business operations of the company there will typically be many documents which require signing by a director so they will lose their anonymity and confidentiality upon signing.
Additionally, most onshore countries have provisions within their tax legislation whereby any company, no matter where it is incorporated, which is managed or controlled from within their jurisdiction can be considered tax resident and taxable on worldwide income at local rates. Thus, for example, any offshore company which had UK based directors would be considered by the UK Inland Revenue as being tax resident in the UK and subject to UK tax on its worldwide income. Most other onshore countries have similar provisions within their tax legislation. So, to guarantee that confidentiality can be retained and in order to help refute any suggestion that the company may be tax resident in the home country of the promoters or any other onshore jurisdiction, applicants may care to ask company services providers to give professional third party directors who are resident in a fiscally neutral location.
- Managers
It is normal for one or more managers to be appointed whose responsibilities and functions would be similar to the directors of a standard company. Alternatively, the members themselves may choose to carry out the administration of the company themselves in a similar manner in which the partners of a partnership conduct their activities. Details of the managers do not appear on the public file.
- Annual Reporting
A simple franchise tax report must be completed each year but this does not give any details about the structure of the LLC. Provided the LLC conducts no US business and receives no US source income neither the LLC nor its foreign members would be required to file US tax returns.
- Taxation
A properly structured Delaware LLC which has no US source income or income effectually related to the conduct of a US trade or business would not be subject to any form of US tax on income
- Restriction on Name and Activity
The name must end with the words “Limited Liability Company” or “LLC”. The following words, and associated activities, cannot be used – Bank, Trust, University, College or School.
- Local Requirements
As a matter of local company law the company MUST maintain a registered office address within Delaware and must also appoint a Delaware resident as registered agent.
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Remark:
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice.
Delaware is a small state placed on the East Coast of the United States of America, often titled the “Gateway to the United States”. Distincted by few regulations and a lack of bureaucracy in seting its affairs up, and with the Delaware Corporation Law being considered throughout the US among the most attractive for organisation purposes, it is a valuable jurisdiction in which to organise new companies.
The policy of Delaware courts has always been to construe the Corporation Law liberally, to interpret any ambiguities or uncertainties in the working of the Statutes so as to reach a reasonable and just construction. This causes the careful saver to have confidence in the security of the investment.
Corporations not having any business in Delaware pay no Delaware Corporate income tax. Franchise tax compares favourably with other states and is payable on the authorised share capital of a company at a rate of 1%. Nonetheless it should be noted that Delaware corporations do fall within the Federal Tax System.
A Delaware corporation has the following characteristics:
- Annual Reporting
A franchise tax report must be accomplished each year showing details of the corporation officers. Though accounts need not to be filed.
- Directors
A minimum of one director is required and there is no restriction on his nationality. The offices of President, Vice-President and Treasurer may be centered in the sole director.
- Shareholders
It’s mandatory a minimum of one shareholder and bearer shares are not allowed.
- Taxation
Shares owned by non-residents are free from all taxes, including State Inheritance Taxes.
- Restrictions on Name and Activity
Corporation names must end with one of the following words or abbreviations thereof – Association, Company, Corporation, Club, Foundation, Fund, Incorporated, Institute, Society, Union, Syndicate or Limited. The following words and connected activities cannot be used: Bank, Trust, University, College or School.
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Remark:
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice.
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