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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Dominica Phase 2 report

This report for Dominica has been published on 4 Nov 2016. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.   External companies (foreign companies) carrying on business in Dominica are not obliged to keep or provide to any authority information on their ownership.  Dominica should ensure that ownership information is available in relation to foreign companies that have a place of management and control in Dominica. 
Phase 2 Rating Factors Recommendations
Partially Compliant.   The Registrar of Companies conducts no monitoring of requirements under the Companies Act to maintain ownership and identity information and only very limited monitoring of annual return filing by entities under its purview, despite the fact that the large majority of companies and partnerships are not operational.Further, even among active companies and partnerships, compliance with filing obligations is low. However, the financial regulator does have a system of supervision covering IBCs. The Inland Revenue Department also reviews shareholder information in the course of tax audits where such information is relevant for the purpose of the audit.  Dominica should implement a regular and comprehensive system of oversight to ensure compliance by all relevant entities and partnerships with obligations to maintain ownership information under Dominican law. 
During the review period, no sanctions have been imposed by any Dominican authority for non-compliance with any obligations pertaining to the maintenance of ownership or identity information. Likewise, no companies have been struck off the register for any reason other than voluntary dissolution.  Dominica should sufficiently exercise its enforcement powers when needed to ensure the availability of ownership and identity information in all cases. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is not in place.   It is not explicitly required that international business companies, foreign trusts and international exempt trusts maintain accounting records which enable the financial position of the entities or arrangements to be determined with reasonable accuracy at any time and allow financial statements to be prepared.  Dominica should introduce consistent obligations for all relevant entities and arrangements to maintain full accounting records in line with the Terms of Reference. 
Inadequate obligations exist for international business companies, foreign trusts and international exempt trusts to keep underlying documentation. Further, the keeping of underlying documentation by entities not subject to the provisions of the VAT Act is not fully ensured.  Dominica should ensure that all entities are required to keep full underlying documentation and retain all accounting records for at least five years. 
Phase 2 Rating Factors Recommendations
Non-Compliant.   During the review period, not all IBCs maintained the accounting records required under the IBCA. Although the Financial Services Unit have sensitized registered entities concerning the IBC accounting obligations, the results of such sensitization could not been verified.  Dominica should ensure that all international entities and arrangements are subject to adequate oversight of their compliance with the accounting requirements and enforcement powers are exercised in practice. 
Dominica’s Inland Revenue Department (IRD) is the government authority mainly responsible for ensuring the compliance of domestic companies with their accounting obligations by means of its audit program. However, a significant number of companies registered with the Register of Companies (approximately 50%) are not registered with the IRD. Although Dominica indicated that the vast majority of these companies are inactive, there would also be a risk that they would be carrying on business that do not require local registration and would thus be undetected by the tax administration. Further, the compliance rate of partnerships is extremely low (only 9.23%). It is therefore uncertain whether partnerships in Dominica are subject to adequate oversight in terms of maintaining accounting records as required by the international standard.  Dominica is recommended to ensure that there is adequate oversight of the compliance of domestic companies and partnerships with their accounting obligations. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.   EOI officials in Dominica appear to be unfamiliar with new provisions requiring a court order when the requested information is required for civil or criminal proceedings in the requesting jurisdiction and court procedures for sealing sensitive documents.  Dominica should monitor the application of its access powers provided under the 2015 amendments to the EOI Act and ensure they are effective to gather information for EOI purposes in accordance with the international standard. Dominica should also ensure that EOI officials are kept aware of all relevant procedures. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.   The prior notification procedure in civil tax matters only allows for an exception when the whereabouts of the taxpayer are not disclosed to the Comptroller.  It is recommended that wider exceptions from prior notification be permitted in civil tax matters (e.g. in cases in which the information request is of a very urgent nature or the notification is likely to undermine the chance of the success of the investigation conducted by the requesting jurisdiction). 
Phase 2 Rating Factors Recommendations
Partially Compliant.   The notification provisions of the amended EOI Act came into force only after the current review period and have not yet been applied in practice. Neither has the IRD developed internal procedures or processes to be followed when a taxpayer must be notified. Finally, the Comptroller can make an application to the High Court for an order to compel production of information “without notice” only in certain circumstances; it remains to be seen whether these circumstances will suffice to cover all situations where notification may be detrimental to the execution of a request or to an investigation in a requesting jurisdiction.  Dominica should monitor implementation of its new procedure to ensure that it does not unduly prevent or delay effective exchange of information. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Dominica should continue to develop its exchange of information network to the standard with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Confidentiality provisions in Dominica’s domestic law are not consistent with the standard and information received may be disclosed to persons not authorised by the EOI agreements.  Dominica should ensure that disclosure of information received pursuant to its agreements is consistent with the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.   All documents submitted by the Comptroller to the High Court to obtain an order to compel production of information, including an EOI request, will become a matter of public record. Procedures exist in Dominican law to seal sensitive documents. However, to date, these procedures have not been applied by a court. Therefore, it is uncertain whether such sealing procedures would be effective in practice to ensure the confidentiality of EOI requests. submitted to a court.  Dominica should monitor the application of provisions to seal court documents to ensure that the confidentiality of EOI requests forming part of an application for a court order is protected. 
To prevent the disclosure of EOI requests submitted to a court, the Comptroller must apply for such documents to be sealed. Although legal provisions to seal sensitive documents exist in Dominican law, EOI staff were unaware of this process or legal provisions surrounding such court procedure.  Dominica should also ensure that officials responsible for handling EOI requests are aware of all relevant legal provisions and court procedures for the protection of sensitive information so that it can meet its confidentiality obligations as provided for under the international standard. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Partially Compliant.   Dominica has in place only minimal organisational processes for handling incoming EOI requests. The IRD has neither developed any internal manuals or guidelines on EOI nor provided training to its staff. The organisational processes do not appear adequate to conduct EOI in an effective and timely manner.  Dominica should further develop the organisational processes of the EOI unit, including developing internal guidelines or materials and training EOI staff, to ensure that they are sufficient for effective EOI in practice.