Commonwealth of Dominica

Your Money

Dominica was granted independence by Britain in 1978 (3rd November) so there has been no long record of banking activity in the country. The National Commercial Bank of Dominica was created as the National Development Bank of Dominica in 1976 and began business in 1978 with the Agricultural Industrial and Development Bank (AID) as a wholly owned subsidiary. The latter was made a separate and independent entity in 1982. In 2003 the government divested itself of its interest in the National Commercial Bank which was accordingly privatized and the new company, the National Bank of Dominica succeeded it.

The Dominican attitude to banking privacy can be seen from the policy of the Dominica Agricultural and Industrial Development Bank. It is easy to see why Dominica has the reputation of being a tax haven. This fact can be confirmed by reference to the “Escape Artist” site which also provides a list of banks in Dominica. Just how convenient the jurisdiction makes it to establish an offshore company without the need to be present in the country is clearly stated. The “Ask.com” site also provides details of banks in the country. Opening a bank account in Dominica is not likely to be difficult. Dominica does have agreements with a couple of countries, Ireland and Norway, for the exchange of information relative to financial and tax matters. Also of interest to intending retirees is that there are no exchange controls in the Commonwealth of Dominica.

The East Caribbean Central Bank, in which the NDB has an interest, is the entity which maintains the stability of the local currency, the East Caribbean Dollar, and the integrity of the banking system of member states, which includes the Commonwealth of Dominica. Full details of the rules governing business in the Commonwealth of Dominica is given by the government publication “Doing Business with Dominica”. The “Offshore Manual” also provides details of the business rules in Dominica. This organization, of course, is one that charges for any help that it provides.

None of the above confirmation of the security of the banking system and general financial arrangements and the demonstrated willingness of the government to maintain confidence in the country should deter prospective immigrants from making their own arrangements to secure their own financial arrangements both within their new place of residence and outside it. Risk should always be spread as a safeguard against unforeseen circumstances.

It is not difficult to open a bank account in Dominica as a resident or visitor but it is necessary to be in the country The best course for retirees is to obtain from their home bank details of corresponding banks in Dominica and not to rely on local banks totally. An offshore bank account is vitally necessary for this purpose. For day to day convenience it is useful to know that most banks provide ATM facilities but most charge for their use with foreign cards. The Ross University site provides advice to students which will also be useful for prospective customers of the National Bank of Dominica. The experiences of others is always useful. Flexibility is vital and that all eggs should never be in one basket.

Obviously the banking aspect of Dominican life should be fully investigated both before leaving for and while on a “Golden Rule” (visit before settling) trip to the country. It will still always be useful to have an offshore account at a bank with which business has been satisfactorily done previously, preferably over a long period. No more than the required minimum should be moved to the new country. At all times the risk, changing values and exchange rates should be spread over a number of countries. This minimizes possible losses owing to changing political and economic conditions. Details of the cost of living should determine the amount of funds which should be transferred both initially and subsequently on a periodic basis. Obviously a check can be continuously kept on changes in expenses whilst living in the country.

This important subject is covered in detail in the links at the "Resources" tab of this site, in the "Banking" section of this tab and in the book "How to Retire in the Commonwealth of Dominica" by Les Johns. The book can be bought from this site directly.

Pensions

It is likely that a pension or pensions will form the basis of the income requirements for qualified retired persons. It is necessary to prove to Dominican authorities that income is sufficient to ensure that normal living expenses can be met. Proof that such income is assured and that arrangements to have it paid to a Commonwealth of Dominica bank. This will depend upon the organizations or countries that are the source(s) of the pension(s). This will be either a government paying the pension provided by the social security system or your employer paying a private pension or both. Your freedom of action with respect to moving your funds to your country of retirement may be quite different for each income source. It should first be established which banks offer retail or branch services in the country to which you intend to retire. It must then be discovered which banks are their correspondents in the country(ies) of your income source(s). If your pension is sourced from the British government then it can be paid virtually anywhere in the World and this is the case also with pensions paid by most British Commonwealth countries. Not all private pensions can be transferred in this way and there can be tax implications in the country of origin when lump sums and annuities are involved.

One vital point that has to be mentioned with regard to the British old age pension so far as the Commonwealth of Dominica is concerned is that it will be frozen if you retire to Dominica. It will be frozen at the rate being paid on the date of the move to Dominica. A number of countries are in the same situation. If this matter can be corrected then all British pensioners would receive the increases that accrue from time to time for British residents, living in the thirty countries of the European Union and Switzerland and fourteen countries with which the United Kingdom has reciprocal agreements.

An additional problem for those moving from Australia is that there will have to be references to or contacts with CentreLink via the Australian Government web site. This is a very diffuse organization with offices all over the country which deals with all matters of social security payments including the payment of age pensions. It is present in even very small towns and has multiple offices in the capital cities of Australia. Many of the rural or outback offices find it difficult to deal with the more complex matters.

The larger administrative hubs of CentreLink are also spread across the capital cities. There is a problem of co-ordination among this widely spread concern because certain offices "specialize" in particular aspects of its responsibilities. The Hobart, Tasmania office deals with "international" matters and one can learn from there that an Australian age pension can be paid almost anywhere in the world. What is not always volunteered is the fact that international payments are made on a four week cycle rather than the two week period that is normal in Australia. Also not commonly offered is that a pension will not be paid to an overseas bank unless the recipient states clearly and in writing that the intention is to reside overseas for at least a year.This can easily result in a pensioner, having moved abroad, finding that even though, apparently, all necessary forms and formalities have been completed no payments are forthcoming. Given also that the department's toll free overseas telephone numbers do not always work it easy to see that a person can become frustrated, angry and financially embarrassed. Co-ordinated Australian Government and CentreLink internet sites are improving and this is probably the best way to keep in touch with matters relevant to Australia pensions.

The British Pension Service, part of the Department for Works and Pensions, is, compared with the Australian CentreLink, easy to deal with by telephone or by letter. There is a reluctance to deal with or comment upon anything of a confidential nature over the telephone and this even more the case when e-mail communication is used. The Department's web site is not easy to follow but in writing, by letter, communication is concise and accurate. There is no hesitation in providing information, all forms that may need to be completed and any explanatory publications, booklets or pamphlets that may be available

An important point to consider is whether or not to have your pension paid directly to the country in which you have chosen to retire. As has been mentioned earlier countries can change. It would not be a good outcome to have to leave your "paradise" and leave your money in it. There are ways to mitigate this potential problem although, for the moment, this is not a difficulty that arises in the Commonwealth of Dominica because of the lack of exchange controls on personal capital movements but caution is necessary with respect to inter-bank communications and fees. Recent events in Greece and especially in Cyprus are indicative of what can happen. In the case of Cyprus the British government was quick to stop payments of British pensions to Cypriot banks thus limiting recipients’ losses.

For those with pension arrangements to which contributions are still being paid or which have partly matured there are ways to move benefits to Dominica and many other countries. There are many firms which deal with such transfers which are known as "Qualifying Recognized Overseas Pensions Schemes” (QROPS) and “Qualifying Non-British Overseas Pensions Schemes” (QNOPS). The latter is also known as a “Qualifying Non-U.K. Pensions Scheme” (QNUPS). A QROPS Pension Designer site explains such plans but there are others such as Horizon QROPS which offer a range of plans. Details of QNOPS and QNUPS arrangements are also available.

Other Income

As a retiree it is unlikely that local income will be derived by you but this is permissible in Dominica for a resident. Dominican tax is payable on worldwide income but there are differences depending upon the kind of residency that is enjoyed. The “expatblog” site provides a good deal of information on living in the Commonwealth of Dominica.

The simplest "one size fits most" solution to the problems of moving about the world and having access to your funds is accomplished by opening an offshore bank account. This is true and in spite of the privacy available in the Commonwealth of Dominica. It not unlawful to open an offshore bank account. Many very respectable banks offer offshore facilities to their customers and most now have signed disclosure agreements with the taxation authorities in many countries. Unless clients agree to abide by the disclosure rules the banks are required to withhold a percentage of funds deposited with them to cover any possible tax liability. Banks have agreed to such arrangements in order to avoid draconian restrictions on their own activities. The Foreign Account Tax Compliance Act (F.A.T.C.A.) of the U.S.A. is particularly onerous for U.S. citizens and residents.

There is a myriad of organizations, such as this one, offering to open an offshore bank account for you. They will charge anything from $400 or $500 to perform a simple operation that you can do equally well yourself. As in dealing with any bank for the first time it is best to do things in person.If a company structure or trust is more suited to your needs then you can look at firms such as Ocra World Wide. They may be useful but they will not be cheap. The whole of the European Union area should be viewed with caution since the recent (2013) events in Greece and Cyprus. The Cayman Islands, Belize, St Kitts and Nevis and the Cook Islands are well established as financial centres for both offshore bank accounts and companies. One bank for non-US citizens or residents is the Euro Pacific Bank of which the C.E.O. is Peter Schiff. There are advantages to having your offshore account in the same jurisdiction as the source of the majority of your income or an adjacent one. Whereas organizations such as DeltaQuest should be avoided for the simple task of opening an offshore bank account such sites can provide good information about the purpose and advantages of these accounts.

It is essential to keep abreast of changes in regulations regarding banking, exchange control and financial matters in general. The rules governing the movement of money between countries can change in an instant with devastating results if adverse effects cannot be at least mitigated. Having just a “nodding acquaintance” with political matters in all countries which may have a bearing on the safe keeping and transmission of your funds can allow the anticipation of changes and the quick adjustment of arrangements.

An interesting development in dealing internationally with funds is the currently expanding use of digital currency. Details of this system which eliminates banks and governments from the transfer of funds can be found at this site or for a graphic demonstration of this monetary phenomenon go to this youtube video. Although interesting the use of Bitcoin may not yet be a practical solution to financial difficulties likely to be encountered by retirees.

The links at the "Resources" tab of this site and information in the book "How to Retire in the Commonwealth of Dominica" by Les Johns will provide more information on the above points. The book can be bought from this site.