All individuals who are considered resident are required to furnish returns to the Inland Revenue Division by March 31st each calendar year. This includes individuals who are physically present in Dominica for more than 183 days continuously.
The Act states that persons who obtain monies from difference sources are liable to pay tax. These individuals include:
- Every partnership
- Any person who has incurred a loss in the previous year of assessment
- Any person who earned income from (a) business (b) employment (c) rental and royalties (d) interest or discounts (e) premiums, commissions, fees (f) annuities etc.
However, persons whose income are entirely as a result of employment and it is less than $18,000 are not obligated to file an income tax return. It must be noted that income, which accrued from different sources, must be totaled, before claiming the allowable deductions. There is the tendency to report these incomes separately.
Persons are granted deductions, where expenses were incurred in the production of taxable income. However, no such allowances will be granted if they were not wholly, exclusively and in the case of employment income, necessary in the production of income.
Most individuals would be entitled to receive one or more of the following allowances:
- Resident allowance of $20,000.00
- Mortgage interest up to a maximum of $15,000.00
- Donations given to approved institutions
- Student loan relief. An allowance is given, but only up to a maximum of $5,000.00 per student
Resident allowance - Only persons who are considered resident for tax purposes are granted this allowance.
Mortgage Interest Allowance – This deduction is granted to owners of residential properties who reside in thesebuildings. To ascertain that the person is the owner, the Certificate of Title for the property is requested by the Division.
Donations to approved institutions – These are donations made to institutions approved by Cabinet. These include:
- The Education Trust Fund
- A scholarship through the Ministry of Education for Secondary Schools or College within Dominica or the University of the West Indies
- Princess Margaret Hospital Trust Fund
- Community Hostels Incorporated
- Any charitable institution designed by Order of Cabinet as approved charity.(R.E.A.C.H)
- A contribution of not less than one thousand dollars ($1,000.00), but not more than twenty thousand dollars ($20,000.00) to a special fund operated by the Carnival Organizing Committee
Student loan relief – Effective Income Year 2002, individuals are entitled to student loan relief to a maximum of $5,000.00 annually. This loan must be taken with a financial institution in Dominica. To qualify for this deduction, students must be enrolled at a learning institution for at least six months or have graduated and are both domiciled and resident in Dominica. Any person maintaining the loan is also entitled to this relief.
Self-employed persons are also required to furnish returns to the Division. These persons include bus drivers, contractors, electricians, plumbers, Professionals, shop owners, bars and restaurant owners, etc. Attached to the return must be a completed Scheduled G given by the I.R.D. or a statement of earnings.
Persons should be aware that if they are liable to submit returns and fail to do so, their incomes could be estimated in accordance with Section 79 of the Income Tax Act.
In order to enforce the Revenue Laws, penalties have been enacted to ensure that persons comply with the Laws. The nature of the enforcement can be either civil or criminal. The Comptroller of Inland Revenue undertakes civil penalties, whereas the courts administer criminal proceedings.
Civil penalties include:
- late filing penalty, which is five percent (5%) of the taxpayer’s tax on chargeable income
- late payment penalty of ten percent (10%) charged on outstanding taxes, plus interest of one percent, which accrues monthly on taxes unpaid, among others
Criminal proceedings in respect of any offence under the Inland Revenue Law are sanctioned by the Comptroller, but are enforced at the courts. These can range from:
- Failure to comply with the requirements of the Act
- Offences done by employers of employees
- Evasion of taxes in relation to deduction of tax by employer
- Aiding or inctitng an offence
- Mitigation of penalties and compounding of offences, among others
If taxpayers are not in agreement with changes made to their assessments, they can seek redress in the following ways:
- Appeal Commissioners
- The Courts
If persons are aggrieved with the decision taken by the Division, they have the right to object in writing within thirty days of service of the notification, stating clearly the grounds for their grievances. The objection is then reviewed and if the taxpayer is still not satisfied then an appeal can be lodged with the Appeal Commissioners within thirty days of service of the letter or determination. The last resort to settle these issues is with the courts.
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