Corporate Tax Residency
Offshore companies can provide for a beneficial corporate tax residency. Qualifying companies may be exempt from local taxation. This is alongside the limited administrative requirements and business-friendly environment for many entrepreneurs a compelling reason to incorporate offshore and in the Commonwealth of Dominica.
From a local perspective in Dominica, the incorporation and registration of the company starts the applicability of local corporate tax residency. This must then be followed by the appointment of a local registered office and retaining a local registered office. These requirements however do not require the beneficiary and the full operation of the company to move to the offshore jurisdiction. However, the offshore company or International Business Company (IBC) with foreign ownership is not allowed to engage in activities on the local market. This does not apply to measures that enhance local substance and presence of the company.
Corporate tax residency relates to both the home state of incorporation as well as the host states where the company operates. In civil law jurisdictions, the center of the corporate activities and the place of effective management determine its corporate tax residency. As such a conflict of laws may unravel. To avoid this situation and strengthen the local position in Dominica, corporate substance and presence should be increased. This can be done by the appointment of local nominee directors and shareholders, and by outsourcing other activities to the offshore jurisdiction.
Local regulation and tax authorities in high tax jurisdictions seek to avoid abuse of their local systems. Therefore they want to have certainty that the rules are followed. In countries where personal income tax is imposed on the basis of a world wide income, the ultimate beneficial owner of an offshore company is required to disclose his offshore holdings even when ownership is shielded via professional nominee services, virtual holdings, or other separated legal persons.
To establish corporate tax residency in Dominica and avoid issues with local authorities in their home country, beneficiaries should structure their business in a legally sound and effective manner. To safeguard its corporate and personal position, beneficiaries must consider local substance and presence of the offshore company in Dominica.
Dominica Corporate Tax Residency
Business professionals who wish to incorporate in Dominica and instantly want to establish corporate tax residency need to plan accordingly. Following the incorporation of the Dominica offshore company and the possible appointed of nominee directors or shareholders, the place of effective management and other relevant factors must be considered. The end-goal is that it is evident for anyone that the offshore company is managed from Dominica.
Global taxation is subject to change. Therefore, the rules for the use of offshore companies in general may change over time. Yet, the stronger the foundation of the international company, the easier it is to get approval to maintain the company and its external services. For more information on Dominica corporate tax residency and to comply with the current international regulation, please complete the contact form below. We will get back with you as soon as we can.