Information on IBC’s and the Commonwealth of Dominica Trust
The IBC act which allows progressive legislation was legislated on June 26th 1996. Under this IBC act, shareholders privacy is guaranteed. Section 112 deals with this particular privacy clause. This act lets companies to be incorporated quickly and also allow such companies a good deal of flexibility.
The English Common Law is the basis of the commonwealth of Dominica legal system. However, there are a few local modifications made to it. Some of the Acts that were added are the Principal Corporate Legislation: International Business Companies Act 1996. Companies Act 1994. International Exempt Trust Act which was added in 1997. International Exempt Trust Act of 1997
Exemption of Tax
According to the 1997 amended International Business Companies Act, IBC’s are eligible for a 20-year waiver of all charges. This includes Local taxes and duties too. The taxes may be profit and capital gains. Those IBC’s in Dominica that transact in currency which aren’t East Caribbean dollars are eligible for these tax breaks since they now come under the category of “offshore” due to their choice of currency. Business within the commonwealth of Dominica is also allowed provided it’s done with Government approval.
When the trust company finds itself in a position where it cannot conduct its services without the help of people who offer specialized services, then they should either recruit them from elsewhere or from within Dominica to continue operations. In this case the minister concerned with these affairs can grant:
1) Tax exemption to the employees.
2) Ability for the employees to be paid in any currency.
3) Also waiver of taxes that will otherwise usually be levied on the interest.
All this is possible due to the International Exempt Trust Act, 1997 which waives off income tax and stamp duty on the transactions that relate to the trust’s property or those conducted by the trust for the sake of the trustee.
For those who want to protect their assets and estates by planning and reducing the taxes that are levied on them, then Dominica offers the best protection of this kind. Other good reasons for creating a trust is to reduce the tax liability, to simplify legal complexities pertaining to the protecting assets, protecting the specifics of asset transfers being conducted and even ending the legal ownership of assets without losing the benefits one gets. The commonwealth of Dominica through its laws allow benefits for those who conduct a trust in this region.
Information on the 1997 International Exempt Trust Act
This act allows income tax and stamp duty exemption for those activities. And nothing is said about capital appreciation tax, getting gifts, inheriting assets and trusts in the law.
Exchange of currency is also allowed for International trusts through the law. Some of the factors that need to be satisfied before an IBC is approved are:
1) Dominica Land is not allowed to be part of the trust property.
2) There needs to be at least one trustee who is incorporated under the 1996 IBC Act or the 1994 Companies Act or trust company or legitimate bank in Dominica.
3) The IBC owners need to be non-resident.
Any one of the following namely the trustee, protector or settler can be the beneficiary.
One can obtain assistance in servicing and organizing and exempting tax for a Dominica entity from the International Business Unit of the Ministry of Finance
For non-charitable trusts the duration of existence of a international trust is 100 years from when it has been created. But charitable trust don’t have this limit. The terms of accumulation of income made by a trust can be decided by the trust owners.
This clause is present in the Act’s Part 5, Section 22 on Powers of the Court and in the Miscellaneous offer standard protection from other owners claiming ownership and enforcement of community property laws unless this involves the case of a husband and wife who have given away ownership of the property to the trust. Even if a trust is invalid in the settler’s domicile or residence, the trust will be valid internationally according to the law.
If a case of fraudulent is brought against the trust then the person who is claiming injustice should deposit $25,000 as security deposit for the courts and if the value of the trust’s holding is greater than that of the creditor’s claim then the trust is free from the charges that have been levied against him or her. The onus of proving guilt lies in the creditor’s hands alone and he has to take the case to court to prove himself right. The current market price of the trust is taken into consideration for making any comparisons. Action if warranted needs to be taken against the trust within two years once the cause of action of the creditor has been formed and within a year of the disposition to the trust having taken place. The trust will be declared invalid to satisfy the creditor’s claims and that too only to the extent that the costs are reimbursed to the High Court.
If the trust is found to be not valid and the beneficiary hasn’t made any illegal mistakes then the beneficiary has claim to the property of the trust for the same amount he has spent on the defence.
The Registrar is in charge of registering every international trust by a simple procedure. There are three steps to do this. Every application for getting registered should also come with:
1) Fee for registration.
2) Notice mentioning the name of the trust and registered office of the trust.
Certification from solicitor that the trust once registered would be an international trust which is valid for one year and needs to be renewed every year without fail by following the same process. The registered office of the trust should be the same place as that of the company trustee’s office.
Charitable trusts can be established which provide some form of help to the community at large. These trust should at the least be a help to the poor, should aid in protecting the environment, helping improve the human condition and right of the living and the not so well-to-do, aid in increasing or protecting the basic rights of a human being. If any one of these aims are the motto of the trust which is founded then it called a charitable trust. And for the trust to be called this then it must help the people in and around Dominica. It is not mandatory that the people who are helped should only be from Dominica but that they should be real and not an illegal claim.
Provided the purpose of creation of an international trust is for non-criminal means and is not immoral, illegal and against the government establishment in the country, it is perfectly legal to begin an international trust according to the government policy itself. It need not need to be charitable to be started. However there should be a protector who can enforce the trust and also one who can succeed this protector in case something untoward happens.
This is an optional post. The protector has the power to take a trustee away from his position and appoint another one in the previous trustee’s presence. Or add another trustee to the list. The protector is bound to be legally upright and not be dishonest in his dealings with the trust, its members and towards the government. Powers different from these can also be given to the protector by the terms of the trust itself. A settlor, beneficiary or trustee of the trust can also be given the role of the protector with respect to the same trust. But when the protector executes his duty he is bound to act only in the best interests of the company.