That’s right, the tradeoff is that IBCs typically cannot do business locally. For e-commerce businesses operating in a very small country, that might be an easy call to make, as it was for us.

Yes, Dominica introduced a controversial VAT some years back. There’s a big danger in that, though, because raising taxes on the most vulnerable people in society in a weak economy can smother baseline economic activity, leading to a “death spiral” of malaise. Prosperous low tax jurisdictions like the Caymans and Bermuda are probably better examples for the rest of us.

Steve, from what I understand, International Business Corporations (IBCs) enjoy benefits that local registered/incorporated businesses cannot access, such as reduced (or no) corporate income taxes, and tax exemptions on imports. However, IBCs may also be limited in the amount of business they can actually conduct in-country, and so tend to operate more offshore… For online businesses, it would be interesting to understand the extent to which Dominica’s IBC framework could accommodate such operations… Anyone…?

However, going back to the article, the focus was primarily on the sales and other pass through taxes that consumers end up paying. One of the reasons many Caribbean countries, including Dominica, have introduced sales taxes is to widen the pool of people who actually pay/contribute to taxes, beyond those who routinely get tapped via PAYE or personal income tax. Hence, even for an IBC that sells its goods or services on the local market, and provided they fall within the approved categories, those goods and services will most likely be subject to VAT (or GCT).